CALGARY, Feb. 19, 2013 /CNW/ - Stream Oil & Gas Ltd. (TSX-V: SKO) ("Stream" or the "Company") is pleased to announce that it has signed a gas sales agreement (the "Agreement") to sell gas production from its Delvina field to Thermo Energy Albania Shpk ("Thermo Energy"). Thermo Energy intends to develop and build a 24 megawatt ("MW") thermal power plant in Delvina, Albania, utilize Stream's gas production and sell the generated electricity to KESH (an Albanian power company) and other clients. The Agreement is key to Stream's plans to develop the potential of its substantial gas resource, which is expected to result in future growth in production and reserves.
The Agreement provides for the delivery of sufficient gas to power the 24 MW facility at 100% capacity. The initial start-up unit of 2.2 MW of the plant will require approximately 0.5 MMcf/d of gas from Stream, increasing to 6.5 MMcf/d when the plant is fully operational. Gas delivery is expected to commence in the second quarter of 2013. The Agreement has a term of one year, at which time the parties will meet to negotiate a longer term agreement based on market pricing and corresponding quantities. Stream will receive US$8.90/mcf for its gas in the first year; once the Agreement is extended, the new price will be negotiated based on European indexed natural gas prices.
Stream currently has the capacity to produce approximately 2.5 MMcf/d from its Delvina field from two vertical wells, Delvina 12 and 4. In order to increase productive capacity to 6.5 MMcf/d, detailed preparations for the drilling of the first horizontal well continues with the commencement of field activities expected in 2013. The Delvina field is estimated to hold approximately 184 BCF, with another 431 BCF from the adjacent structures, of gas initially-in-place ("GIIP") according to Stream's 2011 independent resource evaluation report.
"The signing of this agreement is a major step forward in the development of the Delvina field," said Dr. Sotirios Kapotas, President and Chief Executive Officer. "In addition to providing benefit to Stream in terms of revenue and justifying the drilling of the horizontal well, the construction of the plant will assist in creating in-country electricity generation for Albania and its people."
This is the first natural gas fired thermal power plant to be constructed in Albania. The local Ministry of Environment welcomes green power and the stable delivery of electrical power to the country. With a growing demand for power, Albania currently relies on approximately 95% of its electricity from existing hydropower plants with additional power imported to balance the country's power demand and backup production during dry and drought periods. As a result, Albania is extremely dependent on externally generated power and experiences blackouts or loss of power from time to time.
Stream's activities in Delvina are expected to provide significant reserve additions for the Company as reserves and resources are converted to proved and probable reserves. With this conversion Management anticipates growth in production and cash flow resulting in increased shareholder value.
Information in this news release respecting matters such as plans of development or exploration, reserves estimates, production estimates and targets, development costs, work programs and budgets constitute forward-looking information (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations. Such forward-looking information is based on certain assumptions, including the availability of funds for capital expenditures necessary to construct the infrastructure required for future development, a favorable political and economic operating environment, a consistent rate of well re-completions and costs, success rates, production performance and build-up periods for well re-completions that are consistent with or an improvement over historical levels.
The forward-looking statements contained herein are made as of the date of this release solely for the purpose of generally disclosing Stream's results and status of its Delvina project. Investors are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. Such forward-looking information reflect management's current beliefs and are based on assumptions made by and information currently available to the Company, and involves known and unknown risks, uncertainties and other factors which may cause the actual costs and results of the Company and its operations to be materially different from estimated costs or results expressed or implied by such forward-looking statements. Such factors include, among others political and economic risks associated with foreign operations, general risks inherent in petroleum operations, risks associated with equipment procurement and equipment failure, availability of qualified personnel, risks associated with transportation, currency and exchange rate fluctuations and other general risks inherent in oil and gas operations.
Contingent resources disclosed herein represent those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Although the Company has attempted to take into account important factors that could cause actual costs or results to differ materially, there may be other factors that cause costs and timing of the Company's program or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances except as required under applicable securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses production and reserve volumes on a barrel of oil equivalent (Boe) basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet of natural gas to one barrel of oil. Boe may be misleading particularly if used in isolation. A Boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
About Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based emerging oil and gas production, development and exploration company focused on the re-activation and re-development of three oilfields and a gas/condensate field in Albania. The Company's strategy is to use proven technology, incremental and enhanced oil recovery techniques to significantly increase production and reserves.
Neither 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.
SOURCE: Stream Oil & Gas Ltd.
For further information:
Dr. Sotirios Kapotas President & Chief Executive Officer P: (403) 531-2358
James Hodgson, Chief Financial Officer P: (403) 531-2358