CALGARY, May 19 /CNW/ - Sterling Resources Ltd. (TSX-V:SLG) ("Sterling"
or the "Company"), an international oil and gas company with exploration and
development assets in the United Kingdom, Romania and France, announces
operating and financial results for the quarter ended March 31st, 2009. Unless
otherwise noted all figures contained in this release are denominated in
The net loss for the quarter ended March 31, 2009 was $1,153,937 ($0.01
per common share - basic and diluted) compared to a loss of $44,104 ($0.00 per
common share - basic and diluted) for the quarter ended March 31, 2008.
Foreign exchange losses, lower interest income earned on smaller average cash
balances, and lower interest rates and capitalization of overhead during the
first quarter of 2009 account for the larger loss when compared to the first
quarter of 2008.
Cash and cash equivalents as at March 31, 2009 were $5,696,656, compared
to $15,769,514 as at December 31, 2008. The net working capital deficiency was
$713,296 as at March 31, 2009 compared to positive net working capital of
$13,967,470 at December 31, 2008. Capital expenditures during the quarter
totalled $13,905,721 compared to $7,540,238 during the first three months of
2008. Significant capital expenditures during the first three months of 2009
included $11.1 million related to the completion and testing of the Breagh
42/13-5 and 5z wells in the Southern North Sea and $2.1 million of costs
related to the acquisition of high resolution seismic over the Doina and Ioana
(formerly Midia SE) prospects in the Romanian Black Sea.
The primary focus during the quarter was upon finalizing the terms of the
farm out of Romanian offshore assets and continuing to move forward with a
potential farm out or sale of a portion of the 45% interest in the Breagh
assets in the UK Southern North Sea. During the quarter Sterling was pleased
to announce the execution of an agreement with Melrose Resources PLC (Melrose)
to farm out half of Sterling's 65% of the Midia and Pelican blocks offshore
Romania in the Black Sea in exchange for Melrose funding the Company's share
of certain expenditures for the development of the Doina and Ana fields in a
range up to US $90 million depending on prevailing gas prices. The closing of
the transaction is subject to regulatory approval, which is expected early in
the third quarter. In a separate transaction from the farm-in, Melrose is to
provide a US $12 million short-term operating loan on commercial terms to the
Company repayable after one year. The Breagh process continues to evolve and
we continue to examine the options to maintain the program towards full
Subsequent to the quarter end the Company successfully closed a financing
agreement of US $11.2 million. Net proceeds of approximately US $10.4 million
will provide a bridge until the receipt of funds from these farm outs. This
funding will also enable continued progress with the ongoing development
activity in both the Doina and Breagh areas and a modest 2009 exploration
"Although some of Sterling's initiatives have been delayed by the weak
capital markets, we will continue to prudently and selectively deploy capital
in activities that will create long-term value for our shareholders," stated
Stewart Gibson, Sterling's Chief Executive Officer. "We continue to maintain a
disciplined approach which will permit us to move forward more aggressively
when access to capital from the Doina and Breagh initiatives becomes available
and the capital markets improve," added Mr. Gibson.
On the regulatory front, Sterling has received confirmation that an
extension regarding blocks awarded in the UK North Sea during the 24th
Offshore Round has been granted until November of this year. The only block
not extended was Block 21/29d, which Sterling has chosen to relinquish. We
have developed good prospects in the 24th Round Licenses and the recent
deadline extension provides us with the opportunity to continue farm out
activity and incorporate the results of currently drilling wells in nearby
blocks, especially in the area known as the Mid North Sea High.
Contained within the recently announced UK Government Budget is the
"Small Field Allowance", a program intended to attract capital and expedite
development of small offshore UK fields. Sterling will continue to assess with
our new partner, Premier Oil, the impact of this budgetary provision upon the
Sheryl field in the UK Central North Sea. During the quarter Sterling assumed
operatorship of the Sheryl field.
During the quarter we announced that a letter of intent had been signed
with Challenger Minerals (North Sea) Limited (CMI) under the terms of which
CMI would farm in to 10% of Sterling's current 39.9% interest in the Cladhan
oil discovery located in Block 210/29a in the UK Northern North Sea. In
exchange for this farm out of 10%, CMI agrees to pay a contribution towards
past well costs and the payment of a carry on the forthcoming sidetrack well
at Cladhan. In addition, Sterling will acquire an interest of 10%, on a
ground-floor basis, by farming into the CMI Crosby well on Block 110/14d
located in the East Irish Sea. A fully termed agreement with CMI is planned
for completion during the second quarter of 2009.
Although modest in relation to the drilling program completed during
2008, Sterling anticipates the completion of an exploration drilling program
encompassing the following four areas during 2009:
- During the second quarter drilling of the well at Crosby in the East
Irish Sea is expected to commence. Sterling will earn a 10% interest
in this well with CMI as operator.
- Three onshore shallow gas wells at Craiova in Romania are expected to
be drilled during the third quarter of 2009. These wells will be
drilled by TransAtlantic Petroleum Corporation who will fund this
program in order to earn a 50% interest in Craiova.
- A sidetrack well at Cladhan in the UK Northern North Sea is planned
for the third quarter.
- Planning is underway to drill a further well in Quad 42 (greater
Breagh area) in the UK Southern North Sea during the third or fourth
quarter of 2009.
We continue the process of addressing any issues raised with respect to
our licenses in Romania, which have been confirmed as legitimate through a
process of independent legal review.
Sterling Resources Ltd. is a Canadian-listed international oil and gas
company headquartered in Calgary, Alberta with assets in the United Kingdom,
Romania and France. The shares are listed and posted for trading on the TSX
Venture Exchange under the symbol "SLG".
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
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
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
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:
For further information: visit www.sterling-resources.com or contact:
Stewart G. Gibson, Chief Executive Officer, Phone: 44-133082-6717, Mobile:
44-7768-042219, firstname.lastname@example.org; Ian Hornby-Smith, Chief
Financial Officer, Phone: (403) 215-9264, Fax: (403) 215-9279,
email@example.com; George Kesteven, Manager, Corporate and Investor
Relations, Phone: (403) 215-9265, Fax: (403) 215-9279,