SEY.L Regulatory News (SEY)

7 Apr 2008 07:01

Sterling Energy PLC07 April 2008 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, JAPAN, CANADA OR AUSTRALIA. 07 April 2008 STERLING ENERGY PLC ("Sterling" or "the Company") PROPOSED SALE OF U.S. BUSINESS Sterling Energy (AIM: SEY), an independent oil & gas exploration and productioncompany with interests in North America, Africa and the Middle East, todayannounces that it has retained BMO Capital Markets to manage a sales process forits U.S. oil & gas exploration and production business (the "U.S. business"). The Board of Sterling has recently undertaken a comprehensive strategic reviewof the Company's assets and prospects and has concluded that it would be inshareholders' best interests to sell the U.S. business. The Board believes thatthe U.S. business has grown to a size that makes it attractive to prospectivebuyers. The Board has therefore mandated BMO Capital Markets to manage thesales process. The Board expects that the proceeds of any sale will enable it to repay theCompany's borrowings and leave it with significant net cash. This, together withcash revenues from its Mauritanian producing interests, will provide funding toincrease the Company's investment in the very considerable upside potential ofits key assets in Africa and the Middle East. Sterling will focus on an increasing number of higher impact explorationprospects, which currently include Madagascar, Kurdistan, Gabon, AGC (a jointexploration zone between Senegal and Guinea Bissau) and Cameroon. It will alsopursue new opportunities including potential acquisitions. Studies by an independent consultancy, RISC, covering two of the Company'sprospects in Kurdistan and offshore Madagascar, were recently completed. Theseindicated unrisked best estimate net prospective resources of over 500 millionbarrels of oil with a high net estimate of over 1,900 million barrels of oil forSterling's current interests on those two prospects. Sterling will update shareholders further in due course. Background to U.S. Business Sterling's U.S. operations include a substantial inventory of low-riskdevelopment and exploration projects, primarily in the onshore Gulf Coast andshallow water Gulf of Mexico. On 14 March 2008, Sterling announced a gas discovery from its Marlin #1 well.The well has since come on stream at initial rates of over 4.5 mmcfged (750boed) net to Sterling, some 25% higher than the initial announced test rate. Anoffset to this well is scheduled to be drilled in May. Other projects in SouthTexas, Southeast Texas and state waters offshore Texas, some of which haverecently been farmed out, will be drilled in the near-term. At the end of March 2008, Sterling's U.S. net production was a record 32 mmcfged(5,333 boed). Based on independent petroleum consultants reports, year-end 2007 U.S. 2Preserves were 111 bcfge (18.5 million boe), of which proved reserves constituteapproximately 65%. Possible reserves add a further 70 bcfge (11.6 million boe). Graeme Thomson, CEO of Sterling, commented: "We believe that this is a very opportune time to sell our U.S. business,against a background of growing production and rising gas prices. The sale willleave Sterling financially well positioned, adequately resourced and moresharply focused on high impact 'company making' exploration prospects. Inparticular, I am very excited about Kurdistan and Madagascar where independentstudies have indicated a combined unrisked net economic value at potentiallyover $2 billion if both prospects are successful at the best estimate level. Ittherefore makes sense for Sterling to position itself such that our shareholdershave the appropriate level of participation in the exploration and exploitationof these and other major prospects." Enquiries Sterling Energy Plc (+44 20 7405 4133) www.sterlingenergyplc.comGraeme Thomson, CEOHarry Wilson, Deputy ChairmanJon Cooper, CFO Evolution Securities (+44 20 7071 4300)Rob Collins, Director BMO Capital Markets (+1 713 546 9704)Stewart Frankel, Director Citigate Dewe Rogerson (+44 20 7638 9571)Media enquiries: Martin JacksonAnalyst enquiries: Kate Delahunty In accordance with the guidelines of the AIM Market of the London StockExchange, Harry Wilson, BSc (Hons) Physics (1973), Executive Deputy Chairman ofSterling Energy Plc, who has been involved in the oil industry for over 33years, is the qualified person that has reviewed the technical informationcontained in this press release. Definitions 2P - proven and probablebcfge - billions of cubic feet gas equivalentboe - barrels of oil equivalentboed - barrels of oil equivalent per daymmcfged - millions of cubic feet of gas equivalent per day This information is provided by RNS The company news service from the London Stock Exchange