CALGARY and HOUSTON, May 16, 2018 /CNW/ - Sterling Resources Ltd. ("Sterling" or the "Company") (TSX-V: SLG) is pleased to provide an update on its operations in Block 95 of the Bretana oil field in Northwest Peru.
Over the past five months, the Company has significantly advanced the 2018 capital program at the Bretana field. On December 18, 2017, the Company acquired a 100 percent working interest in the field and announced that the field would come online in 10 to 12 months for an estimated cost of approximately USD$24.6 million, including capital expenditures relating to oil production facilities and workovers of an existing oil producer well and a water disposal well. The Company now estimates this project will cost approximately USD$18.3 million, which is 25 percent less than originally budgeted. The Company's use of a wireline unit, rather than a workover rig, to remove plugs and remediate the oil producer and water disposal wells cost USD$300,000, significantly less than the budgeted USD$2.0 million. Additional savings resulted from the execution of a turn-key contract to build and install all the production facilities and a corresponding contract for the personnel and costs associated with construction at the Bretana field.
The Company anticipates that the existing oil producing well will initially produce 100 percent oil with no water. The Company will commission the oil production facilities, with first production as early as June 2018, four to six months ahead of the original guidance. The initial commissioning phase will require the well to be choked to a quarter inch, which would allow the Company to produce approximately 1,000 barrels of oil per day ("bbl/d") until the water production and re-injection handling facilities are installed and commissioned in October, after which it is anticipated that the well will be opened to approximately 2,250 bbl/d. The Company intends to sell the initial 1,000 bbl/d production at the Iquitos refinery, which has capacity to purchase the Company's initial production, with the additional 1,250 bbl/d production to be transported via the existing oil pipeline for marketing and sale.
Manolo Zuniga, President and Chief Executive Officer of the Company, commented, "The Company's progress to date is a direct result of having the right team in place to execute our program. Their expertise, along with financial discipline, has set the stage to deliver production ahead of schedule and significantly under budget. Not only is the capital expenditure savings significant, but the initial oil production and sales will bring important cash flow to the Company."
A full review of the progress at the Bretana field can be found in the updated corporate investor presentation which is available on the Company's website at www.sterling-resources.com.
Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. The Company's management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board, focused on safely and cost effectively developing and exploiting the Bretana field. The Bretana field is being developed on a modular basis which allows the Company to install the oil and water handling facilities in phases, allowing for more efficient use of capital during the field development.
FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to: the Company's objectives; the Company's capital program, capital budget, cash flow and proposed drilling, reactivation, water and other activities and the anticipated costs and results of such activities; cost controls and savings; anticipated future production and revenue; future development and growth prospects. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "estimate", "potential", "will", "should", "continue", "may", "objective" and similar expressions. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside, prevailing commodity prices and the actual prices received for Sterling's products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of Sterling's geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company's growth strategy, general economic conditions, availability of required equipment and services and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the Company's annual information form and management's discussion and analysis for the year ended December 31, 2017 which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.
SOURCE Sterling Resources Ltd.
For further information: Greg Smith, Executive Vice President and Chief Financial Officer, Gsmith@Petrotal-Corp.com, T: (713) 609-9026; Manolo Zuniga, President and Chief Executive Officer, Mzuniga@Petrotal-Corp.com, T: (713) 609-9101, http://www.sterling-resources.com/