Gas Shows at Sterling’s Ioana Prospect Offshore Romania

Gas Shows at Sterling's Ioana Prospect Offshore Romania

Sterling Resources Ltd. announces the results of the exploration well on the Ioana prospect in Block 15 Midia in the Romanian Black Sea.

The well was drilled to a total depth of 1,950 metres measured depth (“MD”), 1,513 metres true vertical depth subsea (“TVDSS”). Gas shows from drilling mud gas measurements were experienced from a depth of 500 MD down to total depth of 1,950 metres MD.

The primary objective identified by 2D seismic was encountered as prognosed with gas shows from drilling mud gas measurements over a 70 metre interval between 1,186-1,422 metres TVDSS. Analysis of the open-hole logs across this interval indicate that the formation comprises of thin-bedded sands within lower permeability siltstone and gas saturations similar to the siltstones present within the gas leg of the Doina and Ana fields.

Shallower sands of 55 metres thickness between 831-910 metres TVDSS with gas shows from drilling mud gas measurements were identified prior to setting intermediate casing. Only gamma ray and resistivity data from Logging-While-Drilling (“LWD”) tools are available across this shallow zone, but cased-hole logs have been run to further evaluate these intervals and log interpretation of the shallower sandstone should be completed over the next few weeks.

“We are encouraged by the gas saturations in the primary objective, thereby proving up potential trap and gas sourcing to the structure,” stated Patrick Whitley, Sterling’s Vice President, International Exploration. “However, the reservoir development is poorer than expected in this up dip area of the prospect and will require further work with seismic and drilling to appraise the large Ioana structure further to the east,” Whitley added.

The Ioana-1 well is situated on the western edge of a very large areal structure of some 150 square kilometres. The well location was selected at the deepest water depth location possible in which the only available jack-up drilling unit, the Grup Servicii Petroliere SA rig “GSP Jupiter”, could safely operate. The Ioana-1 location was defined by 2D seismic data, which has proved successful for the Ana and Doina discovery and appraisal wells, but the complexity of the formations encountered in the Ioana-1 well now suggest that 3D seismic might be needed for reservoir thickness predictions and further drilling on this structure.

“We gave strong assurance to the Romanian government early this year, having received their approvals, to resume our long-awaited exploration of the Midia Block by drilling the Ioana-1 well as soon as possible in 2012,” stated Mike Azancot, Sterling’s President and CEO. “While the results from this first well on the prospect have not confirmed commercial resources, the extensive gas shows confirm the presence of an active gas system within the Ioana prospect. We will now be assessing the potential follow on program for the Ioana prospect for next year, which might commence with the acquisition of a 3D seismic survey over Ioana and other Midia Block prospects. Subject to contracting a drilling vessel rated to operate in deeper water (circa 100 metres), we would plan to drill in the most promising part of the Ioana prospect to the south east of the Ioana-1 well, where stronger seismic amplitudes and direct hydrocarbon indicators suggest a better quality gas-bearing reservoir (see Figures 1 and 2). In addition, we plan to drill exploration wells on one or more other prospects in the Midia Block. All of the above work will be subject to financing, regulatory and partner approvals,”Azancot added.

The drilling of the Ioana-1 well is now complete and abandonment operations are being conducted. Following these operations the rig will be moved to the second exploration well location, Eugenia-1, some 70 kilometres to the north. This well will be the first to be drilled in the oil prone Pelican Block and is estimated to take approximately 30 days to complete.

Midia Resources SRL, a wholly owned subsidiary of Sterling Resources Ltd. (65 percent working interest), is the operator of the Midia and Pelican Blocks in offshore Romania, with partners Petro Ventures Europe BV (20 percent) and Gas Plus International BV (15 percent).

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Press Release, November 7, 2012

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