CALGARY, April 20, 2012 /CNW/ - Sterling Resources Ltd. (TSX-V: SLG) ("Sterling" or "the Company") is pleased to announce the divestment of an interest in Cladhan, a significant improvement in the terms of the Breagh loan facility, and an update on the activity plan for the remainder of 2012.
The Company has signed a sale and purchase agreement with TAQA Bratani Limited ("TAQA") for the sale of a 13.5 percent interest in the North Cladhan area (Blocks 210/29a and 210/30a) for an initial consideration of US$47 million including an allocation to tax allowances. The initial consideration will be satisfied in three installments; US$22.3 million paid upon completion, US$4.3 million paid on achievement of certain milestones expected in 2012 and the balance either as a carry of part of Sterling's development expenditure in respect of Cladhan or, subject to satisfaction of certain conditions linked to project approval, in whole or in part (at Sterling's election) in cash up to a maximum payment of US$20.4 million. If the carry alternative applies, the maximum carry amount, adjusted for tax, would be US$53.6 million. In addition, Sterling could receive a contingent consideration after first production linked to reserves upside up to a maximum additional payment of US$10 million if proven plus probable reserves are certified in the range of 30 million barrels to 45 million barrels for 100 percent of the field. TAQA will assume operatorship on or shortly after approval of a final Field Development Program expected to be submitted by end of the third quarter this year. On completion of this transaction, which is subject to necessary third party approvals, the new equity positions will be Sterling Resources (UK) Ltd 26.4 percent, TAQA 40.1 percent and Wintershall (UK North Sea) Limited 33.5 percent.
Sterling announces that TAQA will earn a 12.5 percent interest in Blocks 210/29c and 210/30b through a farm-in agreement as a result of which TAQA will fund Sterling's remaining equity interest in the recently drilled well 210/29c-5 on the South Cladhan prospect. On completion of the farm-in agreement, which is subject to regulatory approvals, the new equity positions in South Cladhan will be as follows: Sterling Resources (UK) Ltd 12.5 percent, TAQA 12.5 percent, Wintershall (UK North Sea) Limited 25 percent, Valiant Exploration Ltd 30 percent and Agora Oil and Gas UK Ltd 20 percent.
Financing and Planned Activities
Sterling is also pleased to announce that it has reached agreement with the group of banks providing the reserve based loan for Phase 1 of the Breagh development for a reduction in the minimum group cash level required over the 12 month look-ahead period from £35 million to £20 million. The difference, £15 million (US$24 million) is therefore available for general corporate purposes.
Commenting on these announcements, Mike Azancot, Sterling's President and CEO said, "As a result of the arrangements announced today, Sterling will have funds to conduct an active exploration program in the remainder of 2012 including drilling two exploration wells (on the Ioana and Eugenia prospects offshore Romania) and acquiring seismic on the Midia and Muridava Blocks offshore Romania, as well as acquiring seismic offshore UK and the Netherlands."
"The Cladhan transactions demonstrate the repeatability of our primary strategy, which is to explore and appraise, then partially divest at an opportune time and acceptable price to promote funding of future activities. We believe that the Cladhan partnerships are strengthened with the involvement of TAQA and we look forward to working closely with them in the full development of the Cladhan area. I am pleased that our banking partners have agreed to reduce the level of our liquidity buffer as the Breagh project progresses. We will now work with them to facilitate the inclusion of the Cladhan development in the existing loan facility and freeing up some Breagh cash flow to fund other activities in 2013. With a strengthened balance sheet we look forward to an exciting year in 2012 across our portfolio on key exploration and development operations," stated Mr. Azancot.
Sterling Resources Ltd. 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 shares are listed and posted for trading on the TSX Venture Exchange under the symbol "SLG".
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Filer Profile No. 00002072
All statements included in this press 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 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 press 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 press 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 press release should not be used for purpose other than for which it is disclosed herein.
For further information:
visit www.sterling-resources.com or contact:
Mike Azancot, President and Chief Executive Officer, Phone: 44-20-3008-8488, Mobile: 44-7740-432883, [email protected]
David Blewden, Chief Financial Officer, Phone: 44-20-3008-8488, Mobile: 44-7771-740804, [email protected]
George Kesteven, Manager, Corporate and Investor Relations, Phone: (403) 215-9265, Mobile: (403) 519-3912, [email protected]