Sterling Resources announces management, board and operational update
CALGARY, Feb. 19, 2014 /CNW/ - Sterling Resources Ltd. (TSX-V: SLG) ("Sterling" or the "Company") is pleased to provide an update on the Company's Chief Executive Officer ("CEO") and Chair of the board of directors and on operations in the United Kingdom and Romania.
CEO and Chair of the Board
Mr. Jacob S. Ulrich, previously Chair and Interim CEO, has been appointed by the board of directors of the Company (the "Board") as permanent CEO with immediate effect. To ensure the most effective corporate governance, Mr. Ulrich has stepped down as Chair of the Company and Mr. James H. Coleman has been appointed as Chair by the Board.
Prior to joining Sterling's Board in June 2013, Mr. Ulrich was the senior energy advisor for Och-Ziff Capital Management Group in London from 2008 to 2011, responsible for developing Och-Ziff's portfolio of upstream, renewable and infrastructure investments in the European Union, Africa, the former Soviet Union and the Middle East. Mr. Ulrich was Managing Director of Centrica Energy Group from 1997 to 2008, responsible for the development and operations of upstream gas and power generation assets, procurement for British Gas Retail and British Gas Business, trading and upstream/midstream business development. Mr. Ulrich holds a Bachelor of Science in Engineering degree and a Masters of Business Administration degree.
"I have really enjoyed getting to know the team here at Sterling over the past six months. Getting Breagh on-stream and starting to move forward to derisk the Romanian operations has been challenging and I have been very impressed by the group's capabilities," stated Jake Ulrich, Sterling's Chief Executive Officer. "With the sale of the deep-water portion of the Midia Block in Romania completed and Breagh on-stream, the Company now has a strengthened balance sheet, permitting us to move forward judiciously with the exploration and development of our attractive asset base," added Mr. Ulrich.
Mr. James H. Coleman, Q.C. is a senior partner with the law firm of Norton Rose Canada LLP (previously Macleod Dixon LLP). Mr. Coleman has been involved in banking, corporate, securities, mining and oil and gas transactions in Canada, the United States, Europe, Central and South America, Africa and Asia. He has also been involved in a number of large divestments and acquisitions, corporate reorganizations and major financings within the energy sector. As a director of a number of public companies, including mining and oil and gas companies, Mr. Coleman has chaired various independent committees of public companies relating to corporate, governance and securities matters. Mr. Coleman holds an LL.B. and a Bachelor of Business Administration degree.
"Under the leadership of Jake Ulrich the Company's future looks very promising and together with our first class management team we are well positioned to move Sterling forward to the next level," stated Mr. Coleman, Sterling's Board Chair.
Operational Update - Breagh
Since Breagh production recommenced on December 27, 2013 the field has been in operation with an uptime exceeding 98 percent excluding a planned two day platform shut down while the drilling rig departed for maintenance and certification activities at a nearby Teesside shipyard. The total field production rate has averaged 106 million standard cubic feet per day ("MMscf/d") to date during February, with all six of the currently completed wells in continuous uninterrupted service. Since production restarted in December, commissioning work at the Tesside Gas Processing Plant ("TGPP") has recommenced and is progressing in line with expectations. The primary focus of the commissioning process is upon the gas chiller system, which will enable a reduction in pipeline, plant and well-head pressures, resulting in further improved production rates. All commissioning work is expected to be completed by May 2014.
The final investigation report into the event which led to the damage at TGPP during November 2013 is expected by the end of this month. Several recommendations identified in the interim report have however already been implemented, including the installation of a modified pipeline tee junction at the inlet of the plant in December 2013 and procedural changes for launching pigging spheres from the platform and receiving them at TGPP. Routine pigging of the pipeline to remove liquids has now been established.
Near-term plans for field management are to achieve fully optimized operating conditions across the Breagh facilities. This optimization process includes management of the carbon dioxide ("CO2") level in the commingled gas stream so that it is within entry specifications for the UK National Transmission System ("NTS"), reflecting the fact that gas from wells A03 and A05 contains slightly higher than expected levels of CO2. Medium term plans are to complete well A07 using hydraulic stimulation, bringing the well on-stream in mid-2014, and then to drill and complete well A08 with production from this well expected to commence in September 2014. A two week planned shutdown is scheduled during the second quarter of 2014 as part of normal operations, in conjunction with an intelligent pigging operation to gather baseline data on the Breagh gas export pipeline.
The Company now expects an average gross production rate for 2014 of 106 to 112 MMscf/d (32 to 34 MMscf/d net to Sterling), below the previous guidance of 129 MMscf/d. This revised guidance for 2014 is attributable to a number of factors including (1) the drilling and completion of wells A07 and A08 later than previously envisaged, (2) a slower than forecast ramp up to full rates for each of the individual wells, and (3) the short-term impact of remaining commissioning activities. The gross production rate at the end of 2014 is now forecast to be 118 MMscf/d.
The Company's independent reserves evaluator, RPS Energy, is currently preparing its report of the Company's reserves and resources as of December 31, 2013, which the Company expects to be able to file in late March 2014.
Operational Update - Romania
Proceeds from completion of the Romanian Carve-out Transaction (as announced on January 29, 2014) have now been received by Sterling. Net of transaction costs and Romanian tax, the Company has received net proceeds of approximately US$23 million, which will be used to bolster the balance sheet by providing an additional cash buffer. The Midia block has now been split into two parts with the Shallow Waters Contract Area ("Midia Shallow") being retained by Sterling at its current equity interest of 65 percent. The Midia Shallow block includes the Ana and Doina discoveries, the Ioana prospect and several other prospects. Sterling retains no interest in the smaller, carved-out portion of the Midia block (Midia Deep).
Licence extensions for the Midia Shallow and Pelican blocks have recently been agreed with the National Agency for Mineral Resources. Three extension options to the exploration period currently ending in May 2014 are available, with extensions to May 2015, May 2018 and May 2020. Commitments are projected to be satisfied in 2014 and for each of the second and third extension periods the commitments comprise two wells (in aggregate, over the two blocks).
The Company's 2014 3D seismic acquisition program over key parts of its Black Sea Midia Shallow and Pelican blocks has now been completed earlier than originally planned, by using two vessels rather than one. The program comprised approximately 500km2 of acquisition over the Ana-Doina trend, and 100km2 over each of the Bianca prospect, Ioana prospect and Eugenia discovery. Processing and interpretation is expected to be complete by around the middle of 2014.
The earlier completion of the 3D seismic program means that the planned sell-down process to reduce the Company's equity interests in its Black Sea blocks can commence around the middle of 2014 with interpreted results available for all of Sterling's main fields and prospects, providing important information for potential new partners. Sterling intends to reduce its equity interests in the Midia Shallow and Pelican blocks (currently 65 percent), in the Luceafarul block (currently 50 percent) and in the Muridava block (currently 40 percent) to approximately half of the current levels by introducing a new partner. It is the intention to sign binding documentation, if the process is successful, around the end of 2014.
Sterling Resources is a Canadian-listed international oil and gas company headquartered in Calgary, Alberta with assets in the United Kingdom, Romania, France and the Netherlands. The common shares are listed and posted for trading on the Toronto Stock Exchange Venture (TSX-V) exchange under the symbol "SLG".
Neither the TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.
Filer Profile No. 00002072
All statements included in this news release that address activities, events or developments that Sterling expects, believes or anticipates will or may occur in the future are forward-looking statements. In addition, statements relating to expected production, reserves or resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources described can be profitably produced in the future.
These forward-looking statements involve numerous assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. In addition, these statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other-forward looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: the impact of general economic conditions in the areas in which Sterling operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations. Readers should also carefully consider the matters discussed under the heading "Risk Factors" in the Company's Annual Information Form.
Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. These statements speak only as of the date of the news release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.
Financial outlook information contained in this news release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.
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