Sterling Energy Plc: Chinguetti Oil Field - Termination of Funding Agreement
Monday 29 January 2018
In light of the cessation of production from the Chinguetti oil field, the Company, the Government of Mauritania and SMHPM have agreed to terminate the Funding Agreement. The Deed of Termination provides for a payment by Sterling to the Government of Mauritania and SMHPM of a fixed sum to settle any and all claims under the Funding Agreement, including Sterling’s obligation to pay for its share of A&D costs and outstanding 2018 operational expenditures. The fixed sum payment will be made forthwith and Sterling will have no residual exposure to the A&D costs. In the Company’s 2016 annual report, the Company reported that the present value of future decommissioning costs for Chinguetti, as at 31 December 2016, was USD$31.45m (consisting of USD$16.98m in short term provisions (2017) and USD$14.47m in long term provisions (beyond 2017)).
The quantum of the payment under the Deed of Termination is confidential but is not materially different from that provided for in the Company’s 2016 annual report.