Sterling (AIM: SEY), the independent oil and gas exploration and production company
with interests in the Middle East and Africa, provides the following update for the Sterling
operated Sangaw North block in Kurdistan (53.33% working interest).
Flow testing operations have been completed in the cased hole section of the Sangaw
North-1 well. Two flow tests were conducted; the first across a 100 metre interval within
the Jurassic aged Sargelu formation and the second across a 100 metre interval within
the Cretaceous aged Kometan formation.
During the first flow test, formation gas and water were observed in small quantities at
surface but sustainable flow rates were not achieved. The Company believes that the
Jurassic aged Sargelu formation does not contain a sufficient natural fracture network to
support sustained flow.
During the second flow test, within the Cretaceous aged Kometan formation, the well
flowed at a stabilised rate of approximately 0.4 million standard cubic feet of gas and
4,500 barrels of formation water per day during an 8 hour flow period through a 60/64ths
inch choke with a wellhead pressure of 280 pounds per square inch. Approximately 83 per
cent of the produced gas was hydrocarbon gas with the remainder comprising 10 per cent
hydrogen sulphide and 7 per cent carbon dioxide.
Neither flow test produced hydrocarbons at commercial rates and the Sangaw North-1
well will now be plugged and abandoned. The operations to plug and abandon the well
are expected to take approximately 2 weeks, after which the drilling rig will be demobilised
from the location.
The current exploration phase of the Production Sharing Contract for the Sangaw North
area will expire in November 2011 and the joint venture partnership (Sterling, Addax and
KNOC) may elect to enter the next exploration phase which runs until November 2013;
the Sangaw North-1 well has fulfilled the work commitment for this next phase. During the
coming months Sterling will integrate and analyse the seismic, drilling, logging and testing
data before making recommendations to the joint venture group.