UPDATE 1-Sterling Resources ends farm-in agreement with Melrose

Mon Nov 1, 2010 8:00am EDT

Related Topics

* Ends farm-in agreement for two blocks in Romania

* Plans to move forward with other offshore activities

Nov 1 (Reuters) - Canadian oil and gas company Sterling Resources Ltd (SLG.V) ended its farm-in agreement with U.K.-based Melrose Resources Plc (MRS.L) for its blocks in Romania, but said it plans to move forward with offshore activities with other assignees.

In March 2009, Calgary, Alberta-based Sterling had entered into a fully termed farm-in agreement with Melrose, under which Melrose would incur up to $90 million in development costs on behalf of Sterling in return for a 32.5 percent stake in the Midia and Pelican blocks offshore Romania.

The company said the inability to get approval from a Romanian governing body impeded progress on the Ana and Doina discoveries, both on the Midia block, as well as further exploration and appraisal activities on the blocks.

Sterling, with a market value of about C$499 million, said it now intends to proactively move forward with offshore activities with its other intended assignees, PetroVentures Europe BV and Gas Plus International BV.

Sterling Resources shares, which have lost 4 percent in value since the company that more oil was found at the Cladhan field in the North Sea, in which it is a 39.9 percent stake holder [ID:nLDE69314C], closed at C$3.15 Friday on the Toronto Venture Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Unnikrishnan Nair) ((isheeta.sanghi@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: isheeta.sanghi.thomsonreuters.com@reuters.net))

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