Interim Results
Sterling Energy PLC
23 September 2005
23 SEPTEMBER 2005
STERLING ENERGY PLC
2005 INTERIM RESULTS
WELL POSITIONED AHEAD OF AN EXCITING PERIOD
IN STERLING'S DEVELOPMENT
Sterling Energy, the AIM listed (symbol: SEY) independent oil & gas exploration
and production company, today announces its 2005 Interim Results together with
an update on progress and outlook.
Highlights
• Unaudited first half net profit of £2.4 million up 83% from the same
period in 2004.
• Average daily production increased by 20% to 10.2 mmcfged (H1 2004: 8.5
mmcfged).
• Average realised price achieved up 11% at $6.38/mcfge (H1 2004: $5.76/
mcfge).
• US gas forward sales of only $5 million locked in at $6.67/mcfge to March
2006 leaving large upside to recent higher prices for the bulk of the
production - market spot prices have recently exceeded $12/mcf.
• 2.1 million bbls related to the Chinguetti field with a floor price of
c$38/bbl and the excess over c$50/bbl accruing to Sterling.
• Proven and probable reserves of approximately 21 million boe at mid-year,
up 115% over the corresponding date.
• First production from the important Chinguetti development, offshore
Mauritania, expected on time in February 2006.
• Major farmout of offshore Madagascar interests to ExxonMobil leaving
Sterling with a 30% interest carried through seismic and up to four well
programme.
• Possible development of heavy oil discoveries in Dome Flore enhanced by
completed farmout, leaving Sterling with a 30% interest.
• Consolidation of Sterling's interests in the Philippines into Forum Energy
plc which was listed on AIM in August 2005.
• West Africa and Gulf of Mexico exploration drilling programmes of up to 10
wells over the next year underway.
Harry Wilson, Chief Executive of Sterling Energy Plc, said:
'The next six months will witness the beginning of a step change in the pace of
Sterling's development. We have an exploration drilling programme already
underway, the start of production at Chinguetti in February next year will
markedly increase cashflow and, given the strong commodity prices, new
opportunities are arising. It's going to be a busy and exciting period.'
For further information contact:
Harry Wilson, Chief Executive, Sterling Energy plc: +44 1582 462 121
Graeme Thomson, Finance Director, Sterling Energy plc: +44 1582 462 121
Martin Jackson, Citigate Dewe Rogerson: +44 207 282 2888
Rob Collins, Evolution Securities: +44 207 071 4311
www.sterlingenergyplc.com Ticker Symbol: SEY
STERLING ENERGY PLC
2005 INTERIM RESULTS
Chairman's Statement
I am again pleased to report the continuing development of your company during
the first half of 2005.
The unaudited figures to mid 2005 show an increase over the corresponding period
of 83% in net profit, an increase of 20% in daily production and 115% in proven
and probable reserves over the corresponding period end.
Financial progress has continued to be good, with a gross profit of £4.0 million
for the six months to 30 June 2005, up approximately 21% over the corresponding
period in 2004. Gas prices strengthened and our realised prices averaged $6.38/
mcfge, up 11% in the period. Net profit was £2.4 million (H1 2004: £1.3
million).
The development of the Chinguetti field continues on schedule with oil
production expected in February 2006. Production from this field will transform
Sterling's cash flow and enable it to continue to expand its exploration
activity and continue to build-up its appraisal and production activities in its
core areas.
Our African exploration activities have progressed with the highlights being:
- The farmout of the Madagascar acreage to ExxonMobil. Sterling is
carried for a 30% interest through a significant seismic programme and
up to four wells.
- The farmout of our Dome Flore licence with a retained 30% interest, will
optimise the evaluation of the 800-1,000 million bbl of in-place heavy oil
discoveries on the licence.
We were disappointed with the results of the first two exploration wells
offshore Mauritania and one offshore Gabon, which were non-commercial. Our
policy of reducing risk there by farmouts meant that Sterling only paid c$0.3
million in total on these wells.
In the USA our exploration and development programme has been held back by lack
of availability in equipment and severe weather. This will be particularly so
after the effects of Hurricane Katrina. Sterling was fortunate not to suffer
damage from this storm. Despite the successes so far, the resulting delays mean
that, in common with all of the industry in the Gulf, Sterling has had to reduce
its targets for the year-end. However, we have deliberately limited our forward
sales and are able to reap the recent higher prices for the bulk of our
production. In the first two months of the second half our average prices have
been $7.4/mcf and recent market spot prices have exceeded $12/mcf, due partly to
the effects of the hurricanes.
Outlook
With the start-up of Chinguetti production in February 2006, a sustained and
largely carried exploration programme in Africa of 6-10 wells over the next
year, progress in the US and strong oil and gas prices, Sterling is well
positioned for an exciting period in its development.
This progress all relies on our staff and management and I extend my
congratulations to them for their commitment and effort, the further benefits
from which will accrue over the months and years ahead.
Richard O'Toole
Chairman
23 September 2005
Operational summary
The period since the start of 2005 has seen accelerating activity for Sterling
in both its production and exploration activities. First production in Africa
remains on target for February 2006, from the offshore Chinguetti field
development. Important farmouts have been secured on the heavy oil discoveries
on Dome Flore and the exploration acreage offshore Madagascar, though the early
results of the largely carried exploration programme elsewhere in Africa have
been disappointing. US production has risen by 20% over the corresponding
period. The planned capital expenditure programme has seen success and
production has increased to offset natural declines. In common with the
industry, the programme has been delayed by lack of availability of services,
mainly through exceptional weather impacts and higher activity levels.
Mauritania
The 140 million bbl Chinguetti field development is now over 88% completed.
Production is expected to rise to a plateau of 75,000 bopd gross. The hull of
the floating production vessel arrived in Singapore in December 2004 and by
March 2005 the principal topsides had been installed. The turret section
integration started at the end of June and 'sail-away' to production location is
scheduled for the end of this month. Meanwhile, on the Chinguetti field the
lower completions of all 6 production wells and 5 water injection wells have
been completed.
In April, Sterling opened an office in Nouakchott, the capital of Mauritania.
Sterling is working closely with Oil Ministry and Groupe Projet Chinguetti
(GPC), the company set up by the Mauritanian Government to help manage its 12%
working interest in Chinguetti. Training and assistance from Sterling is
intended to help in the development of the country's fledgling energy sector.
Sterling has two economic interests in the Chinguetti development. The first is
through the Funding Agreement with the Mauritanian Government, signed in
November 2004; Sterling receives an approximate 8% economic interest in
production in return for funding its share of the past and development costs
associated with the Government's 12% working interest. This has been facilitated
through the provision of a $130 million letter of credit which is being
progressively drawn-down to meet the costs, c$42 million of which has been drawn
to date.
The second interest is through a wider agreement whereby Sterling is paid a
royalty on a sliding scale on every barrel produced under a 6% working interest
in PSC B, including the Chinguetti field. At recent oil prices of $58-61/bbl,
the royalty payment would be around $7.75/bbl before adjustments. Sterling will
receive royalties on production from all other fields developed in PSC B and
under a 3% working interest in PSC A, as well as a cash bonus of $2 million or 1
million respectively for each discovery declared commercial which is greater
than 50 million bbls.
The Tiof discovery in PSC B, which is considerably larger than Chinguetti, is
currently being evaluated following a further successful appraisal well in
February 2005. Appraisal drilling on the Tevet discovery, adjacent to
Chinguetti in PSC B, has also recently commenced. Exploration activity on PSC B
& PSC A resumed in July. The high-risk exploration wells, Sotto in PSC A and
Espadon in PSC B, were abandoned as dry. At least a further three exploration
wells are planned by year-end.
AGC
In the AGC (joint zone between Senegal/Guinea Bissau), Sterling participates in
two licences, the deep water exploration block Croix du Sud (88% interest and
operator) and the Dome Flore block (30% interest). Dome Flore was farmed out in
March 2005 to Markmore, a Malaysian company with interests in bitumen refining.
The Croix du Sud licence has been extended to January 2006 and discussions are
ongoing with a number of companies interested in a drilling programme.
In the Dome Flore permit, Markmore, the operator, is undertaking a study of the
feasibility of economic recovery of the heavy oil deposits of Dome Flore and
Dome Gea, estimated at some 800-1,000 million barrels in place, with particular
emphasis on steam assisted gravity drainage to facilitate the production of the
heavy oil.
Cameroon
In consultation and cooperation with the Cameroonian authorities, Sterling has
placed the Ntem Concession in Force Majeure. This period of suspension will
allow Cameroon and Equatorial Guinea time to agree the maritime boundary between
the two countries which runs along the southern edge of the licence. All of the
work and financial obligations of the Ntem Concession have been suspended;
however Sterling is continuing technical work in preparation for drilling an
exploration well once this territorial issue has been resolved.
Gabon
Sterling currently operates three shallow water permits in southern Gabon; the
Iris Marin and Themis Marin Production Sharing Contracts and recently acquired
an exclusive Technical Evaluation Agreement over the Ibekelia permit.
During August and September 2005 an exploration well was drilled in the Iris
Marin PSC. The Iris Iboga Marin-1 well was drilled to total depth of 2,035m and
intersected an excellent quality reservoir but no significant hydrocarbons were
encountered. Sterling had a 20.57% interest but due to a farmout paid for only
2.57% of the well costs.
Processing of the 3D seismic data acquired in southern Themis Marin during 2004
is ongoing. This survey was acquired and is being processed in conjunction with
the adjacent Gryphon Marin PSC and Etame Marin PSC. Drilling of one well is
anticipated in mid 2006. Under the terms of a farm-out, Sterling will pay 2.57%
for its 20.57% equity in this well.
In September 2005, Sterling and its partners negotiated an exclusive Technical
Evaluation Agreement (TEA) for the Ibekelia permit which is contiguous with the
Iris Marin and Themis Marin permits and is adjacent to the Gamba and Olowi
oilfields. Sterling is the operator with 40% equity.
Madagascar
In the 34,000 sq km Ambilobe and Ampasindava PSCs our exploration studies are
yielding positive results and we are planning to acquire 2D seismic in 2006.
This prospectivity has been recognised by other companies and in July 2005,
ExxonMobil farmed in to both blocks. Under the terms of the farm-in agreement,
Sterling will retain a 30% interest in the licences and will be carried through
an exploration work programme that, subject to certain milestones being
achieved, will include 2D and 3D seismic acquisition and the drilling of up to
two wells per licence.
Perth Office Closure
The Board has decided it will be more advantageous to manage all of the Group's
African activities from its UK head office. Accordingly, the Perth office will
close in January 2006. The relocation of activities and some key personnel from
Perth to the UK will significantly reduce costs and provide for more streamlined
and efficient operations. The Board would like to thank the staff of the Perth
office for their contribution since the acquisition of Fusion in late 2003 and
for their commitment during this handover period.
Forum Energy plc
During the first half, Sterling took a 15% interest in a new company, Forum
Energy plc, which was floated on AIM in August, by exchanging its non-core GSEC
101 subsidiary for Forum shares. Based on the current market price, the implied
value of this holding is approximately £5 million compared with a book cost of
£0.7 million: no profit has been included on this transaction during the period.
USA
In the first half of 2005 the Houston office has focused on developing its Gulf
of Mexico assets through drilling, recompletions and work-overs. These efforts
will continue but drilling rigs, lift boats and other necessary equipment are in
great demand and with lower availability due to the effects of the hurricanes
and rising oil and gas prices, delays are inevitable. Two drilling rigs and a
lift boat were contracted to handle the four development projects carried out in
the period to date and with one project waiting on results. Activity has been
focused on the Mustang Island and Matagorda Island properties of offshore Texas,
and the Eugene Island property offshore Louisiana.
In the Mustang Island area, the 748 #1 well was successfully recompleted to a
shallower zone and was brought on production in May at a sustained gross rate of
1.5 mmcfgd, which has exceeded expectations. Sterling has a 45% NRI in this
property.
The Eugene Island 268 #1 well was successfully recompleted up-hole and brought
onstream in July. It has established a gross rate of 3.5 mmcfgd. Sterling holds
a 45% NRI.
The Mustang Island area, 749 GU #2 well was drilled for projected remaining
attic reserves. To date the well has shown less than encouraging results with
high water levels despite being 'higher' than projected. The well will be put on
production when services are available, to ascertain whether economic production
can be established. Sterling promoted a 25% WI in this well to a local company
to cover part of its costs and has retained a 56% NRI.
In Matagorda Island, the 520 #16 well was successfully worked over,
re-establishing production from a wellbore in August that has not produced since
late 1995. Initial production has been at a gross daily producing rate in excess
of 1 mmcfgd. Sterling has a 46% NRI in this well.
There were also some operational restrictions in the period, with planned
pipeline shut-ins, repairs, weather and closures for the above operations which
restricted production to an average of 10.2 mmcfged, up 20% on the corresponding
period. In the second half to-date, production has not yet increased above the
level of the first half due to shut-ins for further pipeline maintenance,
weather interruptions, unavailability of equipment to deal quickly with
day-to-day production issues and declines on other wells. Recently, further
third party production throughput in our pipeline system has been secured and is
progressively increasing, providing a growing source of income.
Sterling has farmed-in for a 28% WI in a well to be drilled in October in the
Galveston offshore area close to existing Sterling production. Continuing
shortages of necessary equipment have, as for all operators, hampered the
planned development programme in the second half, though Sterling anticipates
three non-operated new wells over the next six months.
The US office is currently expanding its portfolio of drilling and production
opportunities through internal generation and by participating in outside
generated opportunities.
Financial report for the six months to 30 June 2005
Summary
The six months to 30 June 2005 ('the period') have seen a sustained improvement
in production levels and revenues over corresponding prior period levels, as
well as a further increase in profitability. Profit on ordinary activities
before taxation in the period of £3.3 million was up 65% over the £2.0 million
of the corresponding period in 2004.
Profit & loss
In common with most AIM companies, Sterling has not adopted IFRS in the period,
and has prepared these unaudited statements on a basis consistent with prior
periods.
In the period, turnover increased to £6.7 million, up 26% on the level in the
first half of 2004. This reflected an average production level up 20% on the
first half of 2004 ('H1 04') and consistent with that in the second half of
2004. Over 80% of production for the period was gas. Realised prices continued
to firm, with an average of $6.38/mcfge in the period, 11% up on the year 2004.
Sterling has continued to hedge part of its near-term production and at mid-year
had sold a total of $5 million of US production forward to March 2006 at an
average price of $6.67/mcf. Cost of sales in the period averaged $2.8/mcfge
($2.5/mcfge in 2004) reflecting inflation in service and maintenance costs, as
well as higher projected future capital costs which increased depletion charges.
Gross profit in the period was £4.0 million, up 21% when compared with the £3.3
million in H1 04.
Administrative costs rose to a total of £1.3 million (H1 2004:£1.1 million),
largely as the Group's staff has been expanded to accommodate a dedicated team
for Mauritania and a further growth of the new ventures and exploration teams.
As noted above, the Perth office is to be closed in January 2006 and a one-off
cost of approximately £1.1 million will be taken in the second half.
Profit on ordinary activities before taxation in the period was £3.3 million
compared with £2.0 million in H1 04, up 65%. This reflects the higher net
interest income of £0.6 million, arising principally on cash deposits backing
the letter of credit for Mauritania (H1 2004: net expense £0.2 million).
The taxation charge of £0.9 million principally relates to the US production
operations, with a tax rate charged of approximately 34%. Partly due to the
level of capital expenditures incurred on drilling, workovers and similar we do
not estimate any significant current tax to be payable in the period but have
provided for the resultant deferred tax in full.
Net profit for the period was £2.4 million, up 83% over H1 2004 and 80% of the
total for the year 2004. Fully diluted earnings per share rose 13% over H1 2004
to 0.17p.
Balance sheet
At the end of the period equity shareholder funds had increased to approximately
£160 million (end H1 2004: £60 million). This increase principally reflects the
c£97 million share placing in November 2004, as well as unrealised exchange
gains and reported net profits.
Tangible fixed assets increased to 74% of the total fixed assets compared with
44% in H1 2004.
At the period end net current assets were £55 million (end H1 2004: £10
million). Unrestricted cash has, as expected, fallen to £13.9 million at 30 June
2005 from £20.2 million at the end of 2004, mainly due to hedging premiums/
margin calls. Of this total cash, £10 million was held in US$ in the US
operations at the end of the first half.
Total draws under the $130 million letter of credit for the Chinguetti
development were $41.6 million at the end of June 2005 and are currently $42.2
million. An accrual has been made for the estimated past costs to be drawn as
part of this facility, which is currently being reviewed together with GPC.
The bank loan of $32.5 million outstanding at the end of the period is
classified as long-term as it is not currently repayable until mid 2007,
although it is subject to twice-yearly review. A review is currently in
progress: the 'ring-fence' of the revenues generated in the US remains in place,
though the ability to remit excess funds elsewhere in the Group has increased in
the period.
Cash flow up
The cash flow shows that £4.2 million was generated from the operations and
investment returns in the period (H1 2004: £3.6 million).
Payments related to forward contracts and US margin deposits of £8.9 million are
included in the movement of debtors. Investments in tangible fixed assets made
in the period of £18.9 million reflect principally the activity on the
Chinguetti development as well as on the US assets. Other exploration costs,
including new ventures, absorbed £2.7 million.
Outlook
Sterling is well positioned for continued sustained growth in the second half
and in 2006, building on the record results of the first half.
Sterling Energy plc - Consolidated profit and loss
For the six months to 30 June 2005
Six months to 30 Six months to 30 Year ended
June 2005 June 2004 31 December 2004
£000's £000's £000's
(unaudited) (unaudited) (audited)
Turnover
Existing operations 6,735 2,895 5,138
Acquisitions - 2,443 6,319
__________ __________ __________
6,735 5,338 11,457
__________ __________ __________
Cost of sales
Existing operations (2,734) (1,327) (2,354)
Acquisitions - (720) (2,316)
__________ __________ __________
(2,734) (2,047) (4,670)
__________ __________ __________
Gross profit
Existing operations 4,001 1,568 2,784
Acquisitions - 1,723 4,003
__________ __________ __________
4,001 3,291 6,787
__________ __________ __________
Administrative expenses
Amounts written off intangible fixed assets - (50) (50)
Other:
Existing operations (1,319) (658) (1,346)
Acquisitions - (368) (656)
__________ __________ __________
(1,319) (1,076) (2,052)
__________ __________ __________
Operating profit
Existing operations 2,682 860 1,388
Acquisitions - 1,355 3,347
__________ __________ __________
2,682 2,215 4,735
__________ __________ __________
Interest receivable & similar income 997 85 312
Interest payable & similar charges (412) (316) (883)
__________ __________ __________
Profit on ordinary activities before
taxation 3,267 1,984 4,164
Taxation (Note 6) (896) (690) (1,197)
__________ __________ __________
Profit on ordinary activities after
taxation 2,371 1,294 2,967
Minority interest - 1 2
__________ __________ __________
Profit for the financial period 2,371 1,295 2,969
__________ __________ __________
Earnings per share: (Note 7)
Basic 0.17p 0.16p 0.34p
__________ __________ __________
Diluted 0.17p 0.15p 0.33p
__________ __________ __________
Sterling Energy plc - Consolidated balance sheet
As at 30 June 2005
As at As at As at
30 June 2005 30 June 2004 31 December 2004
£000's £000's £000's
(unaudited) (unaudited) (audited)
Fixed assets
Intangible assets 34,140 40,502 30,629
Tangible assets 98,483 32,468 51,754
__________ __________ __________
132,623 72,970 82,383
__________ __________ __________
Current assets
Debtors 21,438 4,130 2,968
Cash at bank and in hand 65,135 7,910 89,556
__________ __________ __________
86,573 12,040 92,524
Creditors: amounts falling due within
one year (32,049) (2,122) (3,762)
__________ __________ __________
Net current assets 54,524 9,918 88,762
__________ __________ __________
Total assets less current liabilities 187,147 82,888 171,145
__________ __________ __________
Creditors: amounts falling due after
one year (18,131) (15,104) (15,014)
Provisions for liabilities and charges (7,839) (6,620) (6,671)
__________ __________ __________
Net assets 161,177 61,164 149,460
__________ __________ __________
Capital and reserves
Called-up share capital 13,933 8,227 13,933
Share premium account 141,600 54,750 141,600
Currency translation reserve 1,075 (2,076) (8,271)
Profit and loss account 3,537 (508) 1,166
__________ __________ __________
Equity shareholders' funds 160,145 60,393 148,428
__________ __________ __________
Equity minority interest 1,032 771 1,032
__________ __________ __________
Total capital employed 161,177 61,164 149,460
__________ __________ __________
Sterling Energy plc - Consolidated statement of recognised gains and losses
For the six months to 30 June 2005
Six months Six months Year ended
to 30 June 2005 to 30 June 2004 31 December 2004
£000's £000's £000's
(unaudited) (unaudited) (audited)
Profit for the financial period 2,371 1,295 2,969
Currency translation adjustments 9,346 (194) (6,389)
__________ __________ __________
Total recognised gains/(losses)
relating to the period 11,717 1,101 (3,420)
__________ __________ __________
Reconciliation of movements in Group shareholders' funds
For the six months ended 30 June 2005
Six months Six months Year ended
to 30 June 2005 to 30 June 2004 31 December 2004
£000's £000's £000's
(unaudited) (unaudited) (audited)
Profit for the financial period 2,371 1,295 2,969
Other recognised losses for the period 9,346 (194) (6,389)
Shares issued (net of expenses) - 4,418 96,974
(Decrease) in shares to be issued - (1,716) (1,716)
__________ __________ __________
Total movement in the period 11,717 3,803 91,838
Shareholders' funds at start of period 148,428 56,590 56,590
__________ __________ __________
Shareholders' funds at end of period 160,145 60,393 148,428
__________ __________ __________
Consolidated cash flow statement (see note 8)
For the six months ended 30 June 2005
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December 2004
£000's £000's £000's
(unaudited) (unaudited) (audited)
Net cash inflow/(outflow) from
operations (11,794) 887 8,145
Returns on investments and servicing
of finance 750 (98) (290)
Capital expenditure (21,634) (21,502) (16,109)
Acquisitions - - (18,763)
__________ __________ __________
Cash outflow before financing (32,678) (20,713) (27,017)
Financing 25,887 13,987 34,818
__________ __________ __________
(Decrease)/increase in cash (6,791) (6,726) 7,801
__________ __________ __________
Sterling Energy plc - Notes to the interim financial information
For the six months to 30 June 2005
1. There being no distributable reserves, no interim dividend can be paid
for the six months to 30 June 2005.
2. This statement does not comprise statutory accounts as defined in
Section 240 of the Companies Act 1985. Statutory accounts for the
year ended 31 December 2004, on which the auditors gave an unqualified
report, have been filed with the Registrar of Companies.
3. The interim financial information as at and for the six months
ended 30 June 2005 have been neither audited nor reviewed by
Sterling Energy plc's auditors.
4. The financial information included in this document has been prepared
on a consistent basis and using the same accounting policies as the
audited financial statements for the year ended 31 December 2004.
5. The Directors of the Company approved the financial information included
in this interim result document on 23 September 2005.
6. The Group tax charge comprises:
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December 2004
£000's £000's £000's
(unaudited) (unaudited (audited)
Current tax 470 - 226
Deferred tax-origination and
reversal of timing differences 426 690 971
__________ __________ __________
896 690 1,197
__________ __________ __________
The difference between the current tax
charge of £470,000 and the amount
calculated by applying the applicable
standard rate of tax is as follows:
Group profit on ordinary activities
before tax 3,268 1,984 4,164
Tax on Group profit on ordinary
activities at standard US corporation
tax rate of 34% (year 2004: 34%) 1,111 675 1,416
Effects of:
Expenses not deductible for tax
purposes 58 83 87
Income not assessable for tax purposes - (217) -
Capital allowances (in excess of)/
exceeded by depreciation (548) (1,594) (136)
Other temporary differences - - (245)
Difference in overseas tax rates (35) - 33
Adjustment for tax losses (see below) (116) 1,053 (929)
__________ __________ __________
Group current tax charge for the period 470 - 226
__________ __________ __________
The Group has generated its results primarily in the US. The tax rate in the
above reconciliation for all periods presented is the standard rate for US
corporation tax.
7. Basic earnings per share is based on the profit on ordinary activities
after taxation of £2,371,000 (first half 2004: profit for the period,
£1,295,000; year 2004: profit for the year £2,969,000) and the weighted
average number of 1,393,325,558 ordinary shares of 1p each in issue
during the period (first half 2004: 815,864,161; year 2004: 884,788,687).
For the six months to 30 June 2005, the fully diluted earnings per share
was 0.17p per share. This is computed based on 1,423,154,346 ordinary
shares, being the total used for the computation of the basic earnings
per share as adjusted in assuming the exercise of 29,828,788 of the
69,225,000 options outstanding as at the end of June 2005.
8. Notes to the cash flow statement
a. Reconciliation of operating profit to net cash flow from operations
Six months to Six months to Year ended
30 June 2005 30 June 2004 31 December 2004
£000's £000's £000's
(unaudited) (unaudited) (audited)
Operating profit 2,682 2,215 4,735
Depletion and depreciation 1,554 1,337 3,057
Amounts written off intangible fixed assets - 50 50
Increase in debtors (18,471) (3,058) (1,455)
Increase in creditors 2,441 343 1,758
__________ __________ __________
Net cash inflow/(outflow) from
operations (11,794) 887 8,145
__________ __________ __________
Returns on investments and servicing
of finance
Interest received 997 85 309
Interest paid and exchange
differences (247) (183) (599)
__________ __________ __________
750 (98) (290)
__________ __________ __________
Capital expenditure
Purchase of intangible fixed assets (2,688) (1,219) (3,618)
Purchase of tangible fixed assets (18,946) (20,283) (12,491)
__________ __________ __________
(21,634) (21,502) (16,109)
__________ __________ __________
Acquisitions - - (18,763)
__________ __________ __________
__________ __________ __________
Financing
Issue of ordinary shares, net of expenses - - 92,557
Drawdown under bank loan facility 2,887 13,987 13,191
Movements on restricted accounts 23,000 - (70,930)
__________ __________ __________
Net cash inflow 25,887 13,987 34,818
__________ __________ __________
b. Analysis and reconciliation of net funds
At 1 January Cash flow Exchange & At 30 June 2005
2005 Other
Movement
£000's £000's £000's £000's
Cash at bank and in hand* 20,233 (6,791) 441 13,883
Debt due after 1 year (14,233) (2,887) (1,011) (18,131)
Debt due within 1 year - - - -
__________ __________ __________ __________
Net funds/(debt) 6,000 (9,678) (570) (4,248)
__________ __________ __________ __________
The cash balance at 30 June 2005 excludes £51,252,000 of restricted cash (end of
2004: £69,323,000)
1. Following the end of the period, a Board decision to close the Perth
office and transfer management of related assets to the United Kingdom
was made known to the staff. Discussions have been held with local staff
to either relocate to the United Kingdom or to advise on terms of
severance. No provision has been made in the financial statements as at
the balance sheet date no legal or constructive obligation then existed.
The amount of the provision is currently estimated at approximately
£1.1 million and will be included in the full year financial statements.
2. Further copies of this interim statement are available from the Company
Secretary, Sterling Energy plc, Mardall House, 7-9 Vaughan Road,
Harpenden, Hertfordshire, AL5 4HU, United Kingdom. Telephone +44 (0) 1582
462121, Fax +44 (0) 1582 461221, info@sterlingenergyuk.com
--------------------------------------------------------------------------------
Definitions:
bbls: barrels of oil
bcf: billion cubic feet of gas
bcfge: billions of cubic feet of gas equivalent
boe: barrels of oil equivalent
bopd: barrels of oil per day
mcf: thousand cubic feet of gas
mcfged: thousand cubic feet of gas equivalent per day
mmbbl: millions of barrels
mmcfgd: million cubic feet of gas per day
mmcfged: million cubic feet of gas equivalent per day
NRI: net revenue interest
tcf: trillion cubic feet of gas
WI: working interest
This information is provided by RNS
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