Madagascar: Ambilobe

Sterling’s Ambilobe and Ampasindava blocks are located in the Majunga and Ambilobe deep water basins, respectively, offshore north-west Madagascar. Exploration activity in these blocks continues to be delayed due to the political situation in the country following a change of Government by non-democratic methods in March 2009. The Government of Madagascar has not been recognised by the African Union or by the United Nations. In September 2011, the political parties in Madagascar agreed a process, prepared by the Southern African Development Community, leading to elections expected by the end of 2012.

During 2011, discussions have been undertaken with OMNIS, the state regulator, to prolong the current exploration period of both the Ambilobe and Ampasindava production sharing contracts. These discussions have been positive and an outcome is expected in 2012, however, the possibility exists that these licences will not be prolonged.

The PSC for Ambilobe is in the second phase of the exploration period. All work commitments have been fulfilled by completing geological and geophysical studies and acquiring approximately 1,000km of 2D seismic. A number of large Cretaceous and Tertiary leads have been identified, located in both shallow and deep waters, which will require additional seismic data to develop into potential drillable prospects.

During 2011, an environmental impact assessment was undertaken in preparation for future exploration activities in the area. The Company plans to complete this study in 2012. The Company may undertake the acquisition of aeromagnetic data in 2012 to optimise the planning of subsequent seismic data acquisition.