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Sterling Energy, the Aim-listed oil and gas
group, has become the first UK company to sign an
exploration agreement with the government of
Kurdistan in northern Iraq.
The group has signed a memorandum of understanding
with the authorities in Kurdish-controlled northern
Iraq and can now start field work in the oil-rich
but under-explored region.
But Graeme Thomson, finance director, said work was
at a "very early stage". Many oil companies are
holding back from doing deals with the Kurdish
government in Iraq because it is not yet
internationally recognised.
Sterling's main operations are in the Gulf of Mexico
and Mauritania, west Africa. The group increased its
gas production in the US by 4 per cent in 2005
despite serious disruption from hurricanes and,
combined with higher gas prices, this pushed
revenues up from £11.5m to £13.6m in 2005. Pre-tax
profits rose to £5m (£4.2m).
Mr Thomson said Sterling's profits should jump
substantially in 2006, following the beginning of
oil production at a Chinguetti oil field in
Mauritania in February.
Evolution, the broker, yesterday forecast that the
group's pre-tax profits would reach £24m this year,
mainly because of earnings from Chinguetti, but also
because of new wells coming on stream in the US.
"Our cashflow will increase very materially this
year," said Mr Thomson.
Sterling has exploration projects in the US, Gabon,
Guinea-Bissau and Madagascar. Mr Thomson said the
group would drill three to five wells in Mauritania
this year and four to six wells in the US.
He added that acquisitions were less likely this
year because of high valuations in the oil and gas
market. "It is very easy to buy things, but getting
them at the right price is tough," he said.
The shares were unchanged at 27½p, giving the group
a market value of some £350m. The stock has risen 54
per cent since the start of the year.
FT com
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