SOUTH CRAIOVA
Sterling obtained the South Craiova concession under an agreement with the Romanian National Agency for Mineral Resources (NAMR) in August 2000, since then Sterling has had fiscal and legal representation in Romanian while operating their interests from local offices.
The Concession extends over some 1.5 million acres and was selected given its location on trend between the producing fields in Romania and Bulgaria. South Craiova lies to the south and west of Bucharest with fairly gentle topography providing ease of access for operations.
Since obtaining the concession Sterling has undertaken considerable geological and geophysical work. Wells have been drilled on the concession in both 2005 and 2006. In 2005 the Cetatuia well was drilled in the north east part of the block to a depth of approximately 2,600 meters. The well did encounter some non commercial gas but was unsuccessful in the main target zone. In 2006 the 2942-Piscu Sadovei (also referred as Boar) was drilled in the south east part of the concession to a depth of 2,673 meters, Although unsuccessful in finding hydrocarbons, the well encountered two excellent reservoir sections in the Jurassis Dogger and upper Triassic intervals.
Despite the disappointing results of the Cetatuia and Boar wells, Sterling maintains the view that the area is under-explored and still has significant potential. Work in 2007 has concentrated on the Goshawk area located in the central portion of the block and several locations have been identified for testing shallow Tertiary gas prospects.
During August of 2008, Sterling reached agreement with Grove Energy Romania to acquire the other 40% of the South Craiova Block and subsequently farmed out a 50% working interest to TransAtlantic Petroleum Corporation. Following the farm-out, Sterling will retain a 50% working interest and operatorship through Midia Resources SRL, a wholly owned Romanian subsidiary of Sterling.
In return for their working interest of 50%, TransAtlantic agreed to conduct a work program of three exploratory wells, covering Sterling's costs through drilling and testing. This three well program was completed during the first quarter of 2010 and all three of the wells were plugged and abandoned, being deemed non-commercial in terms of a sufficient hydrocarbon presence. During 2010 three studies were undertaken to examine the Silurian Shale in the Craiova Block. A well is now planned in conjunction with TransAtlantic during 2011 in order to test the Silurian Shale potential of the area. As at year-end 2011, Sterling has added Unconventional Best Estimate (P50) Prospective Resources of 1.5 Tcf on an unrisked basis for onshore Romania indicating the potential of the Silurian Shale in the area.
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