Sterling Energy PLC - Interim Management Statement
INTERIM MANAGEMENT STATEMENT
• Production, net to the Company (including royalty barrels) from the Chinguetti field, averaged 1881 barrels of oil per day ('bopd') (Q3 2016: 351 bopd).
• Adjusted Earnings before Interest, Tax, Depreciation and Amortisation and Exploration Expense ('EBITDAX') loss for the Group of
• Loss after tax of
• Net cash (zero debt) to the Group as at
• Issued notice of contract surrender on 1 November to exit block C-10 ahead of
• Completion of 1,000 kms 2D Seismic acquisition program, Odewayne, Republic of Somaliland.
• Continued mandate to execute M&A driven transformational growth at both corporate and asset levels.
• Focus on capital discipline with move to a smaller office in early Q4 2017 and further reductions to achieve forecasted G&A of ca.
1Operational shut-in during the period, detailed below.
We continue to persevere with Société Mauritanienne des Hydrocarbures et de Patrimoine Minier ('SMHPM') and key stakeholders to safely and effectively implement the Abandonment and Decommissioning ('A&D') project, subject to Government of Mauritania approval. As per Operator's plan the Chinguetti oil field is due to cease production 30 December 2017; decommissioning operations will commence with a temporary well suspension phase from late December 2017.
As soon as the Chinguetti A&D project is formally approved by the Government of Mauritania (expected Q4 2017), we will fully update the market of the A&D project costs and schedule for this asset.
The Operator group are pleased to have completed the Government sponsored 1,000 kms of full fold 2D seismic over the Odewayne block, on time and safely without incident in late
On the C-10 Mauritania block, an extensive block wide evaluation has determined that a commercially viable hub scale drill-ready opportunity is not present. The next and final exploration period carries a commitment of two wells, which the Operator and JV partners consider not fully supported by the existing risked prospect inventory. As such, the Operator Tullow has, as of
The primary focus of the Company over the last 18 months has been to continue to originate, conduct full due diligence and ultimately execute transformative growth driven M&A projects in North Africa and the Middle East. The Company remains confident that it can identify and source the right asset led or corporate solution to drive growth and shareholder value in the near term.
The Company continues to reduce the Group's administrative expenses in reaction to external market conditions and the business drivers. These efforts have, year on year, further reduced the Group's wages and salary expenses by ca.31%. As a result of continued focus on cost saving initiatives, Q3 2017 year to date total administrative expenses (excluding recharges) are forecast to be ca.26% lower than the corresponding period in 2016.
Looking forward, we continue in our efforts on limiting liability exposure on the Chinguetti A&D project, delivering on our remaining asset, optimising our overheads and most importantly pursuing and ultimately executing on transformative growth projects for the Company and its shareholders.
Chinguetti oil field (ca. 9.5% of cumulative production through the Funding Agreement and a 6% Royalty Agreement derived from Premier's WI).
The Company has economic interests in the Chinguetti field through a funding agreement with SMHPM, Mauritania's national oil company, and a royalty agreement with Premier Oil.
Chinguetti field production, net barrels of oil ('bbls') to the Group (including royalty bbls) in the period totalled 17,311 bbls (Q3 2016: 32,284 bbls), an average of 188 bopd, compared to 351 bopd for the equivalent period in Q3 2016.
The lower production in Q3 2017 was as a result of operational difficulties, which continued into Q4 2017. All Chinguetti field wells bar
Production from the Chinguetti field is stored on location in the Berge Helene floating, production storage and offloading vessel ('FPSO'). One cargo lifting was undertaken during the period totalling 38,216 bbls net (Q3 2016: one lifting totalling 34,167 bbls net). The realised oil price in the period was
The Operator Petronas is working constructively with the Government of Mauritania, joint venture partners and relevant stakeholders on A&D approval and then executing a safe, cost-effective and technically robust decommissioning and abandonment program from
PSC C-10 (WI 13.5%) Exploration block
Block C-10 covers an area of approximately 8,025km² and lies in water depths of 50 to 2,400m within the Nouakchott sub-basin, offshore Mauritania, and wholly surrounds the Chinguetti field. The C-10 production sharing contract ('PSC') is held by the Company's wholly owned subsidiary
Following entry into the C-10 block in mid-2015, Sterling and its JV partners have been actively maturing and ranking the technical description of the play, prospect and lead portfolio on both the regional 2D and block specific 3D seismic datasets. Despite this rigorous and broad ranging evaluation, it was determined that no commercially viable hub-scale prospects were mature for drilling.
Tullow Oil as Operator on behalf of the JV partners, has on
Given the JV has not fulfilled the minimum work obligations, the gross liability owing to the Mauritanian government will be
Odewayne (WI 34%) Exploration block
This large, unexplored frontier acreage position comprises an area of 22,840km2. Exploration activity to date has been limited to the acquisition of airborne gravity and magnetic data, with no seismic coverage and no wells drilled on the block. Extensive geological field data provides strong encouragement for a deep sedimentary basin and has highlighted the presence of oil seeps at surface, suggesting that a working hydrocarbon system exists.
The Odewayne production sharing agreement ('PSA') was awarded in 2005 and is in the Third Period with an outstanding minimum work obligation of 500km of 2D seismic. The Third Period was recently extended in 2016 by two years to
In 2016 the
The Odewayne part of the Government sponsored 2D seismic program commenced in early
In the period, the Group reports the following results:
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Loss after tax
Net to Group - cash and cash equivalents at period end
(1) Revenue in the period is derived from income relating to interests in the Chinguetti field.
(2) Adjusted EBITDAX are (losses)/earnings before interest (plus other finance income and expense), tax, depreciation, depletion, amortisation, provisions and write-offs of oil & gas assets. Adjusted EBITDAX also excludes pre-licence award exploration costs and share based payments; the latter being a non-cash expense charged to the income statement under IFRS 2.
(3) Loss after tax in the period of
(4) Cash balances at the end of the period totalled
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
For further information contact:
Eskil Jersing, Chief Executive Officer
Michael Kroupeev, Chairman
Ticker Symbol: SEY
This information is provided by RNS
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