Focus Returns to Delivering Shareholder Value
After £62.5 million Fund Raising
Sterling Energy PLC (AIM: SEY) an independent oil and gas exploration and production company with interests in the Middle East, Africa and the USA, today announces its financial results for the six month period ending 30 June 2009.
Highlights
Financial position strengthened post period end following successful £62.5 million gross ($103 million) placing and agreed bank waiver to mid-February 2011. Proposed open offer to raise up to £20.6 million gross ($34 million) expected to be offered to shareholders in November.
Board and management team revitalised by appointment of Alastair Beardsall as Executive Chairman and Keith Henry as a Non-executive Director.
Preparations to drill the first exploration well on Sangaw North, Kurdistan progressed with unrisked best estimate prospective resources for the Upper Cretaceous reservoir of 804 mmbbl.
Sterling remains committed to selling the USA business. USA gas prices have declined further during the period.
Average Group first half production fell 13% to 4,563 boe/d (1H 2008: 5,242 boe/d), 5% below the average production rate for full year 2008. USA accounted for 77% of production (1H 2008: 82%).
Group turnover decreased 24% to $43.3 million. Operating loss $1.6 million before non-cash impairment write-downs of $40.6 million (H1 2008: operating profit $3.4 million before non-cash impairment write-downs of $30.4 million).
Current unrestricted cash is $67.1 million and debt of $74.4 million. $49 million of bank debt repaid to date since start of 2009.
Prospects and Outlook
The Board will conduct a full review of the Group’s exploration and production assets and seek to add new projects which will be opportunity led rather than geographically limited.
Intention remains to dispose of USA assets. Proceeds are expected to repay remaining debt and supplement working capital. With the immediate pressure of bank debt relieved, Sterling is in a stronger negotiating position to achieve this.
The future of the Chinguetti Field is linked to Phase 3 development programme economics; the Field could be abandoned as early as 2011.
The Sangaw North (53.33% WI) Kurdistan prospect is on track for a December 2009 well spud. RISC (UK) Ltd assigns unrisked best estimate gross prospective resources for the Upper Cretaceous reservoir at 804 mmbbl with a 27% chance of success, and an equal chance of oil or gas condensate. Historical success rates for recent exploration wells drilled in the Kurdistan region are around 50%.
The very large Sifaka prospect in the Ampasindava block, offshore Madagascar - one of the last undrilled exploration frontiers in Africa - is ready to drill and awaits confirmation from the operator Exxon on timing for the well. RISC (UK) Ltd estimates the gross un-risked mean prospective resources for the Sifaka Prospect is 2 billion bbl.
Sterling is seeking farm-in partners to its operated Ambilobe block offshore Madagascar, where large leads have been identified, and to its highly prospective Ntem deepwater block offshore Cameroon, which has recent discoveries to its north. The maritime border dispute between Cameroon and Equatorial Guinea is expected to be resolved soon.
Alastair Beardsall, Executive Chairman of Sterling, said:
“As a result of the new funding, shareholders can now look forward with renewed optimism. We shall remain focused on delivering value using Sterling’s new financial strength and I look forward to working with my new colleagues to achieve this.”
For further information contact:
Sterling Energy PLC (+44 (0)20 7405 4133)
Alastair Beardsall, Executive Chairman
Graeme Thomson, Chief Executive
Jon Cooper, Finance Director
Evolution Securities (+44 (0)20 7071 4300)
Rob Collins
Chris Sim
Neil Elliot
Citigate Dewe Rogerson (+44 (0)20 7638 9571)
Martin Jackson
Ticker Symbol: SEY
