Sterling Resources withdraws from Romania
Sterling Resources Ltd. has announced on March 26 it has entered into an agreement to sell its entire Romanian business to Carlyle International Energy Partners (CIEP), an affiliate of The Carlyle Group. The sale includes licence blocks 13 Pelican, 15 Midia, 25 Luceafarul and 27 Muridava, structured as a corporate sale of the Company’s wholly-owned subsidiary Midia Resources SRL.
Carlyle Group manages assets of over USD 194 billion through 128 investment funds and other 142 associated vehicles. The group has 40 offices in North America, South America, Europe, Middle East, Africa, Asia and Australia. According to a statement issued by Sterling Resources, this transaction is expected to be completed in the second quarter of 2015, subject to certain customary conditions where such operations, including obtaining necessary approvals from the Romanian authorities and other participants in the agreement concessions in Romania. According to Sterling release, the sale is expected to complete around the end of the second quarter of 2015 subject to satisfaction of certain conditions typical for a transaction of this nature, including statutory Romanian approvals and the consent of certain participants in the Romanian concessions.
CIEP will pay a cash consideration of USD 42.5 million to Sterling at completion (prior to any Romanian tax liabilities). Concurrent with the above sale Sterling has entered into an agreement (“Termination Agreement”) with Gemini Oil & Gas Fund II, L.P. (“Gemini”) to terminate an investment agreement signed with Gemini in 2007. Under the investment agreement, Gemini provided funding to Sterling towards its drilling costs of the successful Ana discovery well on the Midia block in return for an entitlement for Gemini to receive payments equivalent to a share of Sterling’s gross revenue from any future production from a designated area within the block.
“Sterling has had a presence in the Romanian Black Sea since 1997. As operator, we discovered the Ana gas field in 2007 and built up further contingent and prospective resources through further drilling, seismic acquisition and interpretation, and gaining new licences. While we believe firmly in the significant future potential of these assets, we face material ongoing well commitments on our licences and potentially very material development costs which are inappropriate for a company of our size. We believe that the full value can only be realized by a company with much greater financial strength and with a longer term investment horizon. We have therefore decided to sell in order to focus our financial resources on the UK North Sea,” said Jake Ulrich, Sterling’s Chief Executive Officer.
Sterling holds a 65 percent operated interest in blocks 13 Pelican and 15 Midia, a 50 percent operated interest in block 25 Luceafarul, and a 40 percent non-operated interest in block 27 Muridava, all in the Romanian Black Sea.