Stratic Energy Corporation - Third Quarter 2009 Results

CALGARY and LONDON , Nov. 30 /CNW/ - Stratic Energy Corporation (TSX Venture: 'SE', AIM 'SE.') ("Stratic" or the "Company") has today filed its Interim Financial Statements and accompanying Management's Discussion and Analysis for the quarter and nine months ended September 30, 2009 . This filing can be accessed at www.sedar.com and on the Company's website www.straticenergy.com. All amounts below are US dollars, unless otherwise stated.

    
    Highlights:

    Disposal Program

    -   Sale of Breagh asset completed - gross proceeds of $65 million
        received and mainly used to pay down bank and other debt

    -   Sale of Italian business to Enel Trade SpA announced - cash
        consideration of 34.3 million ($50.9 million) due on completion which
        is expected late in the first quarter of 2010; further contingent
        consideration of up to 6.6 million ($9.8 million) depending on timing
        of Longanesi field production commencement

    West Don Development

    -   West Don gross oil production averaged 6,743 bopd (Stratic net
        1,163 bopd) for the third quarter from two wells (second well since
        August)

    -   Water injection well brought on stream in early September - injection
        averaging approximately 5,000 bwpd - higher injection rates expected

    -   Field expected to produce approximately 1.75 mmbbls gross by end 2009

    -   Pipeline tie-back to nearby Thistle platform on schedule for
        completion in the first quarter 2010

    -   Third production well to access further reserves in the southern part
        of the field under evaluation with a view to drilling in summer 2010

    -   Updated reserves report by independent engineers Ryder Scott:

           -  reduces gross ultimate proved and probable reserves by 9% to
              18.4 mmbbls (Stratic net 3.17 mmbbls)
           -  increases gross remaining proved and probable reserves at end
              2009 by 16% to 16.5 mmbbls (Stratic net 2.84 mmbbls) mainly due
              to lower than expected production in 2009
           -  revised peak gross production of approximately 11,000 bopd now
              in 2011, declining thereafter at a lower rate than originally
              forecast

    Exploration/Appraisal and Pre-Development Assets

    -   Crawford field development plan - alternative development concept
        utilizing jack-up drilling unit with production facilities on deck
        being considered; sanction of project deferred until 2010, pending
        completion of ongoing pre-development study work

    -   Bowmore - well suspended in August as a 'tight hole' for commercial
        reasons; further well on the licence planned in 2010

    -   Al Tayr 101 exploration well (Stratic operator) spudded in Syria in
        October and currently operating satisfactorily at 1900 metres, with
        TD at 3000 metres expected early in the New Year

    -   West Ayazli exploration well in Turkey spudded in October and
        currently operating at TD. Novel low cost completion planned to
        facilitate early production of Kusuri gas bearing sands

    Financial

    -   Oil and gas sales revenues in the UK and Turkey of $9.1 million in Q3
        (2008: $2.2 million) with increase due to West Don

    -   Net income for quarter of $13.1 million (2008: loss $13.0 million),
        including recognized gain on Breagh sale of $22.5 million

    -   Capital expenditure for the quarter of $12.9 million (2008:
        $19.9 million), mainly on West Don and the Bowmore well

    -   Cash and cash equivalents (including restricted cash) of
        $11.3 million at period end (December 31, 2008: $28.2 million); bank
        debt (excluding letters of credit) and convertible notes totaling
        $110.4 million at period end (December 31, 2008: $118.9 million)

    -   Discussions ongoing with Stratic's bank syndicate for the deferral of
        scheduled debt repayments due at year end and the provision of
        additional temporary liquidity, to be repaid from the proceeds of
        sale of the Italian business; similar structure envisaged to that
        agreed with the banks earlier in 2009 regarding the Breagh sale
    

Kevin Watts , Stratic's President and Chief Executive Officer, commented: "With the sale of our Italian business we will have met or exceeded all of the restructuring targets we set for the company exactly twelve months ago. Once the sale completes we will have raised more than $115 million from asset disposals, and we will have significantly improved our balance sheet and financial flexibility. We can then look forward to implementing a growth strategy for the business which is less capital intensive and more appropriate for the current credit market conditions. Furthermore, the recent performance improvements on West Don, which are underpinned in remaining reserves and value terms by the recent independent Ryder Scott report, are expected to continue once offshore loading is discontinued, and allow us to look forward to the future with increased confidence."

About Stratic: Stratic Energy Corporation is a Canadian-incorporated international oil and gas business, whose strategy has been to exploit existing discoveries overlooked by the majors through the appraisal and development of reserves to build a business with a growing production profile. As a result of the worldwide credit crisis, which has particularly affected the Company in view of the capital intensive nature of its strategy, Stratic has been involved in a major restructuring program over the last twelve months to reduce debt levels and create financial flexibility. In future the business will be focused on the North Sea for its cash flow generating ability (West Don) and near term development investment opportunity (Crawford), whereas its exploration effort will be increased and concentrated on lower cost areas and potential company changing opportunities. Stratic's shares are listed on the TSX Venture Exchange in Toronto and on AIM, London and its principal operating office is in London , UK.

Forward-looking statements

This news release contains certain forward looking statements, which involve assumptions with respect to future plans, production levels and results, and capital expenditures. The reader is cautioned that all such forward looking statements involve substantial risks and uncertainties and the assumptions used in their preparation may not prove to be correct. Stratic's actual results could differ materially from those expressed in, or implied by, these forward looking statements and accordingly, the forward looking statements are qualified by reference to these cautionary statements. The forward looking statements contained herein are made as at the date of this news release. Stratic undertakes no obligation to update or publicly revise forward looking statements or information unless so required by applicable securities laws.

TSX-V and AIM notifications

    
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of the contents of this
    release.
    

Stratic's Chief Operating Officer, Dr Mark Bilsland BSc (geology), PhD (petroleum petrophysics), and member of the SPE, is the qualified person who has reviewed and approved the technical information in this announcement for the purposes of the AIM Rules for Companies (incorporating the Guidance Note for Mining, Oil and Gas Companies).

For further information: John van der Welle, Chief Financial Officer, [phone]; Mark Bilsland, Chief Operating Officer, [phone]; Patrick d'Ancona, M:Communications, [phone]; Canadian Investor Relations, Roger Fullerton, [phone], Email: [email protected], Website: www.straticenergy.com