Sterling Energy, the AIM listed (symbol: SEY) independent oil and gas exploration and production company operating in Africa, the Middle East, the Gulf of Mexico and onshore USA, today announces its 2007 Preliminary Results together with an update on progress and outlook.
2007 HIGHLIGHTS
Revenues for the year of $97.2 million (2006: $81.0 million)
Group sales averaged 5,760 boepd, up 31% (2006: 4,400 boepd)
Gross profit of $22.0 million (2006: $26.6 million)
EBITDA $56.6 million (2006: $59.6 million)
Group 2P reserves increased by 65% to 21.3 million boe at end 2007
Secured the highly prospective Sangaw North licence 492 sq km, in the Kurdish region of Northern Iraq
Proposed drilling in Madagascar being “fast tracked” for 2009 and very large structures identified
Bank funding re-financed successfully, with a current facility of $158 million
$147 million cash acquisition of US onshore WEC completed end March 2007
Year end bank debt of $153.3 million
2008 ACTIVITY AND OBJECTIVES
Sales process for the USA business commenced in April 2008 after a comprehensive strategic review of the Company's assets and prospects. The Board expects that the proceeds of any sale will enable it to repay all of the Company's borrowings and leave it with significant net cash
The US sale, together with cash revenues from its Mauritanian producing interests, will provide funding to increase the Company’s investment in the considerable upside potential of its existing key assets in Africa and the Middle East, as well as to develop new opportunities
Sterling will focus on an increasing number of higher impact exploration prospects
Independent consultants, RISC, in a review in April 2008 of two prospects in Kurdistan and Madagascar, indicated unrisked best estimate net prospective resources of over 500 million bbls of oil with a high net estimate of over 1,900 million barrels of oil for Sterling’s current interests
Conduct a 2D seismic programme in Kurdistan ahead of drilling in 2009
Conduct well site survey in Madagascar and secure rig for high impact near-term drilling
The Chinguetti development programme in Mauritania has recently commenced, comprising three workover wells and two development wells with an initial target of doubling production. An appraisal well on the Banda gas discovery encountered gas and oil columns with contacts similar to those seen in the discovery well
Exploration well on the Charlie prospect, mean case 21 million bbls and upside case 40 million bbl, offshore Gabon is planned for May. A well in Themis Marin drilled in January 2008 was plugged and the licence has expired
Strategy includes farmouts to enhance risk-reward ratios and enable development of a wider portfolio of opportunities
First quarter 2008 production averaged 5,824 boepd (year 2007, average 5,760 boepd)
Cash and undrawn facilities of $16.4 million at end Q1 2008
Sterling has signed letters of intent to sell peripheral USA properties for US$8.7 million and has completed six USA farmouts in 2008
NEW STRATEGY
Sterling is a UK AIM listed exploration and production Company, which is redefining its strategy in order to focus its resources on higher impact opportunities in Africa and the Middle East.
The Board of Sterling has recently undertaken a comprehensive strategic review of the Company's assets and prospects and has concluded that it would be in shareholders’ best interests to sell the USA business. The Board believes that the USA business has grown to a size that makes it attractive to prospective buyers. On 7 April 2008 the Board announced that it had therefore mandated BMO Capital Markets to manage the sales process.
The Board expects that the proceeds of any sale will enable it to repay the Company's borrowings and leave it with significant net cash. This, together with cash revenues from its Mauritanian producing interests and farmouts, will provide funding to increase the Company’s investment in the considerable upside potential of its key assets in Africa and the Middle East.
Sterling will focus on an increasing number of higher impact exploration prospects, which currently include Madagascar, Kurdistan, Gabon, AGC (a joint exploration zone between Senegal and Guinea Bissau) and Cameroon. It will also pursue new opportunities, including potential acquisitions.
Studies by an independent consultancy, RISC, covering two of the Company’s prospects in Kurdistan and offshore Madagascar, were recently completed. These indicated unrisked best estimate net prospective resources, which are dependent on exploration success and other factors, of over 500 million barrels of oil with a high net estimate of over 1,900 million barrels of oil for Sterling’s current interests on those two prospects.
Graeme Thomson, CEO of Sterling, commented:
“Sterling Energy management has made significant progress in its strategy to re-position the Company with a sharp focus on high impact exploration prospects and make available the resources necessary to deliver on the potential of these assets. During the months ahead, we will complete a seismic programme in Kurdistan and a well site survey in Madagascar, both precursors to drilling in 2009. These two prospects alone have been valued by independent studies at over $2bn. We expect the sale of the US business to complete by the year end, transforming the balance sheet from net debt to significant net cash, enabling us to fully participate in the planned 2009 drilling campaign. It is going to be an exciting year for our shareholders.”
The full text of this release together with results presentation is available in the downloads section.
