Sterling Energy (LON:SEY), the AIM listed oil and gas group operating in Africa and the Middle East, reported earlier that drilling work on its Sangaw North #1 exploration well in Kurdistan was encountering gas shows, which it said could signal the presence of hydrocarbons in the well. The Sangaw North #1 well lies on Sterling’s Sangaw North production sharing contract, where it has a 53.33% working interest, and is currently drilling ahead at 1,505 metres. Shares in the company responded by rising 28% to 147p in trading.
In May, Sterling reported that drilling operations on the well remained “challenging”, however good progress was being made towards the top of the Cretaceous reservoirs, expected at 1,699m. Here, the company reckons the well may contain best estimate gross resource of 804 million barrels of oil. In its latest update, Sterling said the well bore was currently being drilled through the Shiranish horizon, the uppermost of the prospective Cretaceous aged formations in the Sangaw North prospect. While drilling this section, it said that gas shows and drill cuttings with fluorescence had been observed, both of which are indications of hydrocarbons being present in the well bore. The well plan is to drill through the Shiranish and then continue drilling to evaluate the prospectivity of the Kometan and Qamchuqa horizons in the Cretaceous and the deeper potential reservoirs in the Jurassic.
Alastair Beardsall, Sterling's chairman said: “The gas shows while drilling are encouraging; we will continue our drilling and evaluation programme to determine the prospectivity of Sangaw North.”
Last December, Sterling raised £20.4m in a placing and open offer of which US$28.5m was earmarked to fund the company's share of the testing of the exploration well and further appraisal work on the Sangaw North block if the latest exploration well is a success. Another US$3.5m was set to be directed towards working capital costs relating to Sangaw North.
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