At an EGM held on Friday, Richard Stabbins, Chairman of Sterling Energy, an AIM listed independent oil & gas exploration and production company with interests in the Gulf of Mexico, Africa and the Middle East, issued the following statement:
“Following the successful completion of the C-20 well, Chinguetti field production in Mauritania has increased to over 17,000 bopd - field production in the first half averaged 10,000 bopd. That completes the Phase 2 development work and with no major capex expected in 2009 we look forward to a period of positive cash flow from the project.
“In the USA, we expect the final repairs from the September hurricane to be completed soon enabling us to return to normal production of around 27 mmcfged. Our sale process continues, with a conditional agreement in place, which is subject to funding. Given the current uncertainty within the financial markets, there can be no certainty that the sale will be completed. Your board is cognisant of this risk and is considering alternative methods to realise value should they be needed.
“The seismic programme on our block in Kurdistan has been increased to 310 km and is on target to complete in November. Initial results are highly encouraging on this very large but previously undrilled surface anticline. Discovery of further surface oil seeps increases our belief that this is a moderate risk, high reward exploration project. If I may remind shareholders, we recently farmed down our interest in Kurdistan to Addax giving Sterling a significant free carry, including the first well which is expected to spud mid-2009.
“Following shareholders’ approval of the placing, Sterling’s financial position has been further strengthened, whereas on completion of the USA sale, it would be transformed.”
At the EGM, shareholders approved a special resolution relating to the proposed £13.5 million placing (before expenses) announced on 30 September 2008. Sterling’s current cash balances are approximately $48 million, including these net placing proceeds of $22.4 million and before the $20.3 million bank debt repayment to be made at the end of October. Accordingly, it will meet the bank debt requirements as of that date.
Application has been made to the London Stock Exchange for the placing shares to be admitted to trading on AIM. It is expected that admission to trading on AIM and dealings in the placing shares will commence on 20 October 2008.
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