Sterling Energy PLC - Interim Management Statement
INTERIM MANAGEMENT STATEMENT
• Production, net to the Company (including royalty barrels) from the Chinguetti field, averaged 351 barrels of oil per day ('bopd') (Q3 2015: 303 bopd).
• Adjusted Earnings before Interest, Tax, Depreciation and Amortisation and Exploration Expense ('EBITDAX') loss for the Group of
• Loss after tax of
• Cash (zero debt) as at
• Somaliland 2D seismic campaign expected to commence Q2 2017.
• Efforts to recruit Non Executive Directors following resignations on 13 October.
• Continued mandate to execute M&A driven transformational growth (both corporate and at the asset level).
• Ongoing focus on capital discipline, through G&A cost reductions.
Subsequent to the end of the third quarter, on
The Board currently consists of the CEO,
On the Chinguetti oil field, we continue to work assiduously with Société Mauritanienne Des Hydrocarbures et de Patrimoine Minier ('SMHPM') and relevant stakeholders to ensure that the Abandonment and Decommissioning ('A&D') project is safe, robust in implementation and leverages the full benefits of the current cost deflated landscape. Chinguetti is due to cease production in 2017, with decommissioning operations due to commence shortly thereafter. The A&D plan currently lies with the
As mentioned in the Half Year statement on
Given the aforementioned context and our robust cash position, the overwhelming focus of the Company has been to continue to originate, conduct full due diligence and ultimately implement transformative growth driven M&A projects.
During the last quarter, the Company has been actively involved and at advanced stages in a number of potential transactions, this is despite depressed deal volumes across the industry. The Company remains confident that it can identify and source the right projects to drive growth and shareholder value.
In terms of cost savings initiatives, the Company has been working proactively, to reduce the Group's administrative expenses in reaction to external market conditions. These efforts have, over the last year, reduced the Group's wages and salary expenses by ca.40%. Furthermore, we will have a ca.30% reduction in office (floor space) expenses from Q1 2017. As a result, 2017 administrative expenses are estimated to be ca.28% lower than in 2015 (based on current work programme and budget assumptions).
Looking forward, we intend to appoint a Non Executive Chairman and new Non Executive Directors as soon as practical and will continue our focus on limiting liability exposure on Chinguetti, delivering on our current portfolio and pursuing transformative growth projects for the Company and it's shareholders.
Chinguetti oil field
The Company has economic interests in the Chinguetti field through a funding agreement with SMHPM,
Chinguetti field production, net barrels of oil ('bbls') to the Group (including royalty bbls), in the period totalled 32,284 bbls (Q3 2015: 27,904 bbls), an average of 351 barrels of oil per day ('bopd'), compared to 303 bopd for the equivalent period in Q3 2015. The increase in net production is primarily due to an increase in cost oil barrels attributed under the Funding Agreement (due to a reduction in operating expenditures), notwithstanding the consistent Chinguetti field decline curve.
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 34,167 bbls net (Q3 2015: one lifting totalling 30,789 bbls net).
The Chinguetti JV (Petronas, Tullow Oil, SMHPM, Premier, Kufpec) is evaluating how best to cease production from the Chinguetti field, which is expected in 2017, and commence its abandonment and decommissioning. Discussions continue to be held with the
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
Following entry into the C-10 block in mid-2015, Sterling and its JV partners have been maturing and ranking the technical description of the play, prospect and lead portfolio on the merged, reprocessed and depth-migrated 3D seismic dataset. The JV is currently assessing how best to work towards selecting a prospect for drilling to meet the minimum work obligation.
Odewayne (WI 40%) Exploration block
This large, unexplored frontier onshore acreage position comprises an area of 22,840km2. Exploration to date has been limited to the acquisition of airborne gravity and magnetic data, with no seismic coverage and no wells drilled on block. Extensive geological field data provide strong encouragement for the presence of a deep sedimentary basin and has highlighted the presence of oil seeps at the surface indicating a working hydrocarbon system is present.
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 by two years (to
The Company's wholly owned subsidiary,
SE(EA)L is fully carried by Genel Energy for its share of the costs of all exploration activities during the Third Period and Fourth Period of the PSA but it retains a contingent liability to Petrosoma for
Regional 2D seismic acquisition to cover the Odewayne block (and satisfying the minimum work obligation for the Third Phase) is planned as part of a larger government supported multiclient program with the Odewayne component currently scheduled to commence in H1 2017.
Ntem (WI 100% & operator) Exploration block
As previously announced, the Company has issued a notice of surrender in relation to the Ntem Concession, offshore
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
JV Partner held funds
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(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
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This information is provided by RNS
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