Canada's Melrose Resources Announces Farm-In to Two Black Sea Blocks, Offhore Romania

The completion of the transaction will be subject to the finalisation of a fully termed agreement and the appropriate government, partner, regulatory and financial approvals, with completion targeted for early 2009, Melrose Resources said in a statement.

Under the terms of the farm-in, Melrose will earn a 32.5% interest in the blocks in return for a cash payment of $12 million (9.4 million euro) to Sterling when the transaction completes in the first quarter of 2009, it said.

"A further cash payment of $12 million will be made at the time of the first development project sanction, or one year after completion whichever is the earlier, and Melrose will also carry Sterling for a proportion of their future development costs."

The amount of the cost carry will be between $58.0m and $72.7m, depending on the gas price achieved for the development projects.

Sterling will also keep a 32.5% working interest in the Pelican and Midia Blocks, the company said on Friday.

Midia XV contains the undeveloped Ana and Doina gas fields, which are expected to be sanctioned for development in late 2009 or early 2010.

($=0.7831 euro)