Interim Management Statement

RNS Number : 6309B

Sterling Energy PLC

19 April 2012

 



Sterling Energy Plc

19 April 2012

INTERIM MANAGEMENT STATEMENT

Sterling Energy Plc ("Sterling" or the "Company") is today issuing its Interim Management Statement for the period beginning 1 January 2012.

HIGHLIGHTS

·      Production, net to Sterling from the Chinguetti field, averaged 401 bopd for the first quarter 2012 (Q1 2011: 629 bopd).

·      Adjusted EBITDA in first quarter of $4.9 million (Q1 2011: $0.6 million) (unaudited).

·      Profit after tax in first quarter of $3.1 million (Q1 2011: profit $0.5 million) (unaudited).

·      Cash as at 31 March 2012 of $118.0 million (unaudited), including partner funds of $0.7 million.

Angus MacAskill, Sterling's Chief Executive, said:

"The Company continues with its focus on expanding the existing exploration portfolio and, having materially strengthened our technical team, we have been evaluating a number of potentially attractive opportunities. We also await resolution of the external constraints that continue to delay the drilling of exploration wells on our attractive deep water exploration acreage in Cameroon and Madagascar. We are confident these constraints will be removed but can give no specific timetable."

Cameroon

The Ntem concession area is a highly prospective deep water block, offshore Cameroon, in water depths ranging from 400 metres to 2,000 metres.

The Company holds a 50% non-operated working interest in the Ntem licence, following the introduction in 2011 of Murphy Cameroon Oil Co. Ltd, a wholly-owned subsidiary of Murphy Oil Corporation, a successful deep-water operator, as a 50 per cent working interest partner and operator.

The Ntem block remains in force majeure and 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.

Madagascar

The Ampasindava and Ambilobe blocks are highly prospective blocks located in the deep water basin to the northwest of Madagascar. The Company holds a 30% working interest in the Ampasindava license, containing the Sifaka prospect which is independently estimated to have gross un-risked best estimate prospective recoverable resources of 1.2 billion barrels, and 100% working interest in the Ambilobe license.

The incumbent government, formed by non-democratic means in March 2009, is engaged in a "roadmap", developed in co-operation with their African neighbours, towards the holding of democratic elections in 2012.  After these elections, Sterling and ExxonMobil, our partner and the operator of the Ampasindava Block, expect to resume exploration activities.

The current exploration periods for both the Ambilobe and Ampasindava licences were due to come to an end in November 2010. Sterling and ExxonMobil continue in discussions with OMNIS, the state oil company of Madagascar, with regard to an extension of both licences.

Kurdistan

The second, and final, sub-period of the exploration phase of the Sangaw North PSC commenced in November 2011 and has a duration of 2 years. The drilling of the Sangaw North-1 well, completed in 2011 and which encountered non-commercial gas, has already fulfilled the work commitment for the second sub-period.

Following the integration of the 2D seismic acquired in 2009 and the Sangaw North-1 well information within the geological interpretation, the joint venture partners have elected to acquire additional 2D seismic data to better define a possible secondary target along the flank of the main structure. The Company has completed tendering for seismic acquisition services and is ready to award a contract, subject to the approval of the Ministry of Natural Resources. The Company plans to acquire the 2D seismic data during the second and third quarter of 2012 and this may lead to the drilling of an exploration well in 2013.

Mauritania

First quarter 2012 production from the Chinguetti field net to Sterling totalled 36,529 barrels, an average of 401 barrels of oil per day, compared to 629 bopd for the same period in 2011. Production in the period was reduced due to two operational interruptions to the supply of gas from the adjacent Banda field that is used for artificial lift in Chinguetti field production wells. Production was shut down in the period between 26 January and 11 February due to a hydrate blockage in the gas pipeline connecting Banda to Chinguetti; this blockage was cleared prior to re-starting production. Production was also shut down in the period 22 March to 30 March due to a failure in the subsea instrumentation controlling the operations of the gas well in the Banda field; the flow of gas from this well was re-instated on 31 March.   

Production is stored on location in the floating production storage and offloading vessel (FPSO) until a suitable volume is accumulated which is then sold and transported away by sea tanker. A single cargo was sold in the period, with loading taking place in January 2012.

There are no approved plans for further development of the Chinguetti field.

New Ventures

Sterling continued to strengthen its technical team during the first quarter, and remains focused on expanding the existing exploration portfolio. The Company's technical and commercial team has completed a preliminary screening of a number of opportunities and evaluated a smaller number in more detail. 

Financial Position

In the first quarter of this financial year, Sterling reports the following unaudited results:

		Q1-2012 (Unaudited)	Q1-2011 (Unaudited)	FY 2011 (Audited)
		$ '000	$ '000	$ '000
Revenue	(1)	6,575	346	19,146
Adjusted EBITDA	(2)	4,906	569	11,589
Profit/(Loss) after tax		3,099	(461)	18,420
Cash and cash equivalents at period end	(3)	117,971	115,846	115,826

(1)   Revenue is sourced from a partial cargo sold in the first quarter 2012 and 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.

(3)   Cash balances at the end of Q1 2012 totalled $118.0 million, including $0.7 million of partner funds, (Q4 2011: $115.8 million, including $1.0 million partner funds). The Group continues to remain debt free.

For further information contact:

Sterling Energy Plc [phone]

Alastair Beardsall, Chairman

Angus MacAskill, Chief Executive

www.sterlingenergyplc.com

Liberum Capital [phone]

Simon Atkinson

Tim Graham

 

END

 

 

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