North Sea oil firm Sterling Resources has farmed into a Somaliland prospect after striking a deal with Petrosoma.
The initial $2million (£1.23million) contract for a 10% interest in the Odewayne Block (PSC), located onshore Republic of Somaliland, covers 22,840 square kilometres on block SL6 and part of blocks SL7 and SL10.
Subject to meeting operational milestones, Sterling will pay additional $8million for its minimum work obligation of 500 kilometres of 2D seismic testing by November 2014 (the third period) and further 500 kilometres of testing and one exploration well by May 2016 (the fourth period).
Finalisation of the deal is subject to approval by the local government.
“We are very pleased to have entered into a Farmout Agreement for the Odewayne Block in Somaliland; by purchasing a 10% carried interest our financial exposure during the third and fourth periods is limited to the immediate and deferred consideration,” said Alastair Beardsall, Sterling Energy chairman.
“We consider the Odewayne Block to be highly prospective and look forward to working with our joint venture partners in the exploration of this largely unexplored block.”
Surveying and fieldwork on the Odewayne Block earlier this year indicated the presence of production-quality hydrocarbons in the area, similar to Jurassic and Cretaceous deposits found in Yemen.
Genel Energy is the operator with a 50% interest; Jacka Resources Somaliland and Petrosoma hold 30% and 20% respectively.