Sterling Energy Mauritania (SEML) has signed an agreement with Tullow Mauritania to acquire a 13.5% interest in the production sharing contract for Block C-10, located off the West African country's coast.
As operator, Tullow Mauritania owns 90% in the PSC and the remaining 10% is owned by Société Mauritanienne des Hydrocarbures et de Patrimoine Minier (SMHPM).
Upon completion of the deal, SEML, the wholly owned subsidiary of Sterling Energy will pay $50,000 and assume a 13.5% participating interest in the contract from Tullow.
"We consider the block highly prospective with a drill-ready prospect in an untested play segment."
After completion, the holders of the PSC will be Tullow Mauritania with 76.5%, Sterling Energy Mauritania with 13.5%, and SMHPM holding 10%.
Awarded in 2011, the PSC covers Block C-10 offshore Mauritania and is said to be in the second phase of exploration.
The current phase has a minimum work obligation of one exploration well and is set to expire on 30 November 2017.
Surrounding the Chinguetti field, the block lies in water depths of between 50m and 2,400m with full 3D seismic coverage, and lies within a petroleum basin that offers exposure to multiple play-types.
After identifying a drill-ready Neocomian carbonate prospect in water depths 100m, the company plans to start technical work to focus on maturation of the prospect inventory.
Sterling Energy and Tullow expect to drill the exploration well in 2016, which will involve costs of around $77m.
During the PSC's exploration period, both companies will carry SMHPM's 10% interest proportionally.
Sterling Energy chief executive officer Eskil Jersing said: "We consider the block highly prospective with a drill-ready prospect in an untested play segment."