(Adds company comments, share price)
LONDON (Thomson Financial) - Sterling Energy Plc., the AIM-listed oil and
gas producer, said it has decided to sell its gas business in the United States
so it could concentrate on its major oil exploration projects in Madagascar and
Kurdistan.
Studies recently completed by independent consultants RISC showed that two
of the group's prospects in Kurdistan and Madagascar have unrisked net
prospective resources of over 500 million barrels of oil "with a high net
estimate" of over 1.9 billion barrels for Sterling's interests in those fields.
Graeme Thomson, the chief executive, said these prospects have a combined
"unrisked net economic value at potentially over $2 billion" based on RISC's
resource estimates.
"It therefore makes sense for Sterling to position itself such that our
shareholders have the appropriate level of participation in the exploration and
exploitation of these and other major prospects," he said.
Proceeds from the planned sale, which will be handled by BMO Capital
Markets, will be also used to wipe out the group's debts of over $140 million
and finance potential acquisitions, Sterling said.
Analysts estimate the group's U.S. business to be worth around 150 million
pounds.
A Sterling spokesman told Thomson Financial News the company hopes to
complete the sale before the end of the year.
Drilling work in Kurdistan is expected to start late this year. In
Madagascar, it could begin next year, he added.
Sterling owns a 100 percent stake in the Sangaw North license in Kurdistan
and a 30 percent interest in a 25,000-km offshore block in Madagascar operated
by US oil group ExxonMobil Corp.
Sterling's U.S. projects, located mainly in the Gulf of Mexico and Texas,
have estimated proved and probable reserves of 111 billion cubic feet of gas
equivalent or 18.5 million barrels of oil equivalent, around 65 percent of which
were proved.
The company's share in the daily output of these fields was about 32 million
cubic feet of gas equivalent or 5,333 barrels of oil equivalent at end-March.
At 9.35 am, Sterling Energy shares were up over 10 percent at 9-1/4 pence.
monicca.egoy@thomson.com
mbe/wj/mbe/rfw
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