27 Apr 2011 16:23
Sterling Energy Plc
27 April 2011
INTERIM MANAGEMENT STATEMENT
Sterling Energy Plc ("Sterling" or the "Company") is today issuing its Interim Management Statement for the period beginning 1 January 2011.
HIGHLIGHTS
·; Sangaw North-1 exploration well is drilling ahead at 3,760m.
·; Production, net to Sterling from the Chinguetti field, averaged 629 bopd for the first quarter 2011 (Q1 2010: 714 bopd)
·; Adjusted EBITDA in first quarter of $0.6 million (Q1 2010: $2.1 million) (unaudited).
·; Loss after tax in first quarter of $0.5 million (Q1 2010: loss $1.3 million) (unaudited).
·; Cash as at 31 March 2011 of $115.8 million (unaudited), including partner funds of $10.8 million.
·; Exploration programme funded from existing cash, cash flow and partner carry.
Angus MacAskill, Sterling's Chief Executive, said:
"Drilling operations at the Sangaw North-1 well continue to make progress; the parted drill pipe incident that took place during the fourth quarter of 2010 and subsequent fishing and side-track operations took some 115 additional days. However, these latest challenges have been overcome and we are now drilling ahead to evaluate the prospectivity in the Jurassic and Triassic formations."
Kurdistan
The drilling operations at the Sangaw North-1 exploration well continued to present operational challenges during the first quarter of 2011. The well control and parted drill pipe incidents were successfully overcome with the drilling of a side track well bore to a depth of approximately 3,360m and the subsequent running and cementing of a 7" liner.
Sangaw North-1 exploration well is drilling ahead at 3,760m. The original well design had a planned total depth of 3,660m with an option to continue drilling to a depth of 4,160m. The joint venture partnership has elected to continue drilling to the deeper depth to explore the prospective targets within deeper Jurassic and Triassic formations. For the Sangaw North-1 well, Sterling's share of drilling costs are carried by Addax, with Sterling paying only its participating interest share (53.33%) of testing costs.
Drilling and wireline logging operations are expected to be concluded within one month. Evaluation of the well data yet to be acquired will assist in the determination of intervals where flow testing operations may then be undertaken. Flow testing operations, if undertaken, are expected to take approximately 15 days per flow test.
The first sub-period of the exploration phase of the Production Sharing Contract ("PSC") for the Sangaw North Block has been extended by one year to November 2011, to allow for the completion of operations in the Sangaw North-1 well and the evaluation of the results of this well. The second, and final, sub-period of the exploration phase of the PSC has a duration of 2 years.
Cameroon
The Ntem Block, offshore Cameroon, remains in force majeure. The Company believes progress continues towards a resolution of the border dispute between the governments of Cameroon and Equatorial Guinea, but no specific timetable can be forecast. The Company currently holds 100% of the Ntem licence and expects to farmout a portion of its interest in exchange for being carried for its share of drilling costs.
Madagascar
The incumbent government, formed after the coup in March 2009, has not been recognised by its African neighbours or by many other governments. Sterling and ExxonMobil, our partner and the operator of the Ampasindava Block, will look for an improvement in the political situation before undertaking any significant expenditure.
The current exploration periods for both the Ambilobe and Ampasindava licences were due to come to an end in November 2010. Sterling and ExxonMobil are in discussions with OMNIS, the state oil company of Madagascar, with regard to an extension of both licences. The outcome of these discussions is expected in 2011.
Mauritania
During the first quarter 2011 production from the Chinguetti field net to Sterling totalled 56,597 barrels, an average of 629 barrels of oil per day, compared to 714 bopd for the same period in 2010. Production is stored on location until a suitable volume is accumulated which is then sold and transported away by sea tanker. There were no cargos sold in the first quarter 2011; it is anticipated that sales will be made in second quarter 2011.
There are no approved plans for further development of the Chinguetti field.
Financial Position
In the first quarter of this financial year, Sterling reports the following unaudited results:
Q1-2011 (Unaudited) | Q1-2010 (Unaudited) | FY 2010 (Audited) | ||
$ '000 | $ '000 | $ '000 | ||
Revenue | (1) | 346 | 4,759 | 25,314 |
Adjusted EBITDA | (2) | 569 | 2,097 | 11,339 |
(Loss)/Profit after tax | (461) | (1,331) | 5,845 | |
Cash and cash equivalents at period end | (3) | 115,846 | 110,570 | 111,679 |
(1) No oil cargos were sold in the first quarter 2011; revenue is sourced from royalty incomes relating to interests in the Chinguetti field.
(2) EBITDA is earnings before interest (and other finance income and costs), tax, depreciation, depletion, amortisation and write-offs of oil & gas assets. Adjusted EBITDA is calculated before share based payments, charged to the income statement under IFRS 2 and pre-licence costs.
(2) Cash balances at the end of Q1 2011 totalled $115.8 million, including $10.8 million of partner funds, (year end 2010: $111.7 million, including $10.1 million partner funds). The Group continues to remain debt free.
Director Resignation
Jonathan Cooper, Financial Director and Company Secretary, tendered his resignation on 19 April 2011. He is working his six month notice period during which time the Company will seek to appoint a successor.
Investor Presentation
An updated investor presentation will be available to view and download from the Company's website tomorrow, 28 April 2011.
For further information contact:
Sterling Energy Plc +44 (0)20 7405 4133
Angus MacAskill, Chief Executive
Jonathan Cooper, Finance Director
www.sterlingenergyplc.com
Evolution Securities +44 (0)20 7071 4300
Chris Sim
Neil Elliot