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.
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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.
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(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 +44 (0)20 7405 4133
Alastair Beardsall, Chairman Angus MacAskill, Chief Executive
www.sterlingenergyplc.com
Liberum Capital +44 (0)20 3100 2222
Simon Atkinson
Tim Graham
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