Sterling Resources is a Canadian listed, European focused oil and exploration company with interests in the United Kingdom, France and Romania, both onshore and offshore.
Casimir Capital maintains target on Sterling Resources, "several options remain to bolster funding position"
Casimir Capital maintained its $2.80 target price on Sterling Resources (CVE:SLG) Thursday, after third quarter results and cash balance were "as expected", with several options remaining to bolster the crude oil and natural gas explorer's funding position.
The energy company operates primarily in the UK, Romania, the Netherlands and France. It has three key projects: Breagh, Cladhan and Ana/Doina.
As of the end of the third quarter, Sterling held $27million in unrestricted cash, $20 million in cash restricted to its Breagh asset, plus $3.9 million of escrowed funds related to the Netherlands.
With the $45 million raise cancelled last week, the company is seeking alternate funding to bridge the gap between Breagh development, available cash and the debt facility.
Casimir analyst Ryan Galloway says that several options remain to ensure adequate funding position over the next two quarters.
"Refinancing/renegotiation of the credit facility, which, with only $141mm (prior to claw-back) of the $168mm total line currently available to Sterling, would likely resolve the current gap if made fully available."
Galloway notes that short term bridge or mezzanine financing also remains on the table, with other solutions including the re-evaluation of the potential sale of all or a part of Cladhan or further farm downs on the 65% interest in offshore Romania.
Casimir estimates that Sterling now has less than $54 million in remaining costs for Breagh, Eugenia and general and administrative expenses until first gas, while total cash sources amount to $64 million.
Galloway stood by his $2.80 price target and "strong buy" recommendation for Sterling, as he remains optimistic that alternate financing arrangements and the company's "robust asset portfolio" can support a solution.
First production of Breagh is still anticipated between March and May of next year.