Sterling Energy plc has agreed to acquire five producing gas fields from Osprey Petroleum Partners, LP offshore Texas in the shallow water Gulf of Mexico. The acquisition will increase Sterling’s current gas production by over 6 million cubic feet of gas equivalent per day (mmcfed), and will more than double its US proven and probable reserves. It also includes a gas gathering system with shore facilities.
The acquisition increases Sterling’s gas production to around 12 million cubic feet of gas equivalent per day and is expected to add operating cash flow after direct costs, of about $1 million per month at recent gas prices. Proven producing reserves in the fields acquired are assessed to be 21.6 billion cubic feet equivalent (bcfe) at 1st November 2003. In addition there are substantial undeveloped reserves.
As a result of this transaction, Sterling becomes an operator for the first time in the Gulf of Mexico. Sterling expects to be able to add considerably to the existing production levels through a drilling and work-over programme of the undeveloped reserves acquired.
The consideration for the acquisition was $39.5 million paid in cash with an effective date of 1st November 2003. The consideration was funded from a further $25 million loan facility from Hibernia Bank and existing cash resources.
