Sterling Energy PLC
29 March 2007
COMPLETION OF THE $145 MILLION ACQUISITION OF
WHITTIER ENERGY CORPORATION ('WHITTIER') AND UPDATE
Sterling, the AIM listed (symbol: SEY) independent oil & gas exploration and
production company operating in the Gulf of Mexico and Africa, today announces
that it has completed its $145 million cash acquisition of all of the issued and
to be issued share capital of Whittier, an onshore US Gulf Coast exploration and
production company, which was conditionally announced on 19 January 2007.
Based on end 2006 reserve estimates, this acquisition is expected to:
• double Sterling's proven and probable ('2P') reserves to nearly 25
million barrels of oil equivalent ('boe') and add materially to its contingent
resources;
• contribute to an increase in entitlement production to a current level
of approximately 6,500 boe/day, compared with an average of 3,100 boe/day in
the first quarter of 2007;
• significantly increase cash flow from operations, thereby permitting a
large increase in exploration and production expenditures.
This enlarged USA portfolio will comprise the majority of Sterling's production
and reserves, will extend its operations in an area contiguous with its
shallow-water Gulf of Mexico interests and strengthen the management and
technical team. With a programme of over 40 low-risk wells already planned for
the next twelve months on the Whittier assets, together with Sterling's current
drilling schedule, further significant USA exploration and development
opportunities will be pursued.
Following the closing and payment of related costs, Sterling expects to have
current cash balances of approximately $30 million, undrawn bank facilities of
$13 million and bank debt of approximately $141 million.
Harry Wilson, Chief Executive of Sterling Energy Plc, said:
'The acquisition of Whittier materially strengthens Sterling's position in the
sector and creates new opportunities for us to grow. Adding significant, lower
risk, onshore US production and development assets to our existing offshore Gulf
of Mexico assets, Whittier both de-risks and significantly increases the scale
of our cash generation. This will allow us to build on our existing portfolio
of exploration projects and provide us with greater flexibility to pursue new
opportunities on a bigger scale.'
Sterling is currently operating the high risk/high potential onshore Thunder
Stud well and expects to reach target depth in early May. It also expects to
commence drilling on the 25 well Austin Chalk infill programme next week. This
had been delayed due to lack of rig availability but one has now been secured on
a one year contract with an option for a further year.
Average Chinguetti field production to date in 2007 is approximately 18,600
barrels of oil/day ('bopd') and is currently around 24,000 bopd, with the C-18
well having very recently been completed and brought on production. This well is
part of the Phase 2 field development, with detailed seismic expected to be shot
by mid-year and a further four wells are then expected, to be drilled,
commencing in the latter part of 2007.
As previously reported by Sterling in January 2007, independent consulting
engineers estimated ultimate Chinguetti field 2P recoverable reserves at the end
of 2006 at 51 million barrels ('bbls') and valued Sterling's Mauritanian assets,
including risked gross field contingent resources of up to 18 million bbls, at
$87-121 million. This compared to relevant mid-2006 net book values of $170
million. Since then, the operator has issued a revised field 2P recoverable
estimate of 62 million bbls plus contingent field resources of 48 million bbls.
An offshore well in Guinea Bissau, drilled at no cost to Sterling, has been
plugged this week. Sterling has an option to participate for 5% in the second
higher potential well due to spud shortly. A largely carried well (20.5%
interest, paying 2.5%) is also due to spud in Gabon around mid-year.
Sterling intends to issue its annual results for the year ended 31 December 2006
towards the end of April/early May, adopting International Financial Reporting
and reporting in its functional currency, US dollars.
Enquiries
Sterling Energy Plc (01582 462 121) Web site: www.sterlingenergyplc.com
Harry Wilson
Graeme Thomson
Citigate Dewe Rogerson (020 7638 9571)
Media enquiries: Martin Jackson / George Cazenove
Analyst enquiries: Nina Soon
An investor presentation regarding the Acquisition is available on Sterling's
website: www.sterlingenergyplc.com .
This information is provided by RNS
The company news service from the London Stock Exchange
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