Update

RNS Number : 5026O

Sterling Energy PLC

09 March 2009

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

9 March 2009

STERLING ENERGY PLC

('Sterling' or the 'Company')

Financial and Corporate Update

Progress on Refinancing

Sterling (symbol: SEY), an AIM listed independent oil & gas exploration and production company with interests in the Gulf of Mexico, Africa and the Middle East, today issued the following update regarding its banking facilities, recent trading and certain other corporate matters.

• The Company is in advanced discussions with its syndicate banks regarding the granting of a waiver until mid August in connection with the schedule of repayments on its loan needed to bring borrowings into line with the expected reduction in the Borrowing Base.

• Natixis, as agent and technical bank, has indicated that, reflecting the major fall in energy prices in the last few months, the Company's Borrowing Base under its syndicated debt facility would currently be approximately US$76 million.

• The reduction would give rise to a debt gap of approximately US$28 million, after taking account of an US$8 million repayment by the Company on 17 February 2009.

• While there can be no certainty of a successful outcome to these discussions, Sterling expects to reach agreement with the Banking Group and is satisfied that such an agreement would provide sufficient headroom for Sterling to continue to service its existing cash flow obligations until at least the next scheduled Borrowing Base re-determination.

• The Group's current cash resources are approximately US$7 million.

• Net production in the USA and Mauritania averaged 4,750 boepd in 2008 and is currently 5,100 boepd. Since the start of 2009 Sterling has participated in 4 wells in the USA, all of which have been successful.

• Seismic acquisition on the Sterling operated Sangaw North block in Kurdistan has been completed and is highly encouraging. Early interpretation of the processed data confirms a larger than expected sub-surface structure with multiple target horizons. Drilling preparation is proceeding for Q4 2009. 

• Due to prevailing market conditions, Sterling has not yet finalised the sale of its USA assets but remains committed to the sale and is in discussions with a number of interested parties for all or part of these assets. 

•  On 4 November 2008, the Board announced that it had received approaches regarding possible offers for Sterling from third parties. Discussions with third parties continue, which may lead to an injection of assets and/or cash into, or an offer for the Company. There can be no certainty that these discussions will lead to either an injection of assets and/or cash into, or an offer for the Company. A further announcement will be made when appropriate.

Graeme Thomson, Sterling CEO, said:

'Completion of this financing agreement will be an important step forward for Sterling. We are working closely with our banks to reach an agreement acceptable to all parties as quickly as possible. 

'Sterling is focused on both improving expected cash flows through action to drive down costs and asset realisations, whilst bringing greater focus into the business through better prospect prioritisation.   Discussions with third parties continue as we seek a longer-term platform from which it can expand. Notwithstanding the marked decline in energy prices over recent months, we remain confident that Sterling has some highly prospective world class assets and we are determined to exploit the potential upside that they offer.'

Enquiries

   Sterling Energy Plc ([phone]) Web site: www.sterlingenergyplc.com 

Graeme Thomson, CEO

Jon Cooper, FD

Evolution Securities ([phone])

Rob Collins 

Chris Sim

N M Rothschild & Sons Limited ([phone])

Neeve Billis

Citigate Dewe Rogerson ([phone])

Martin Jackson

George Cazenove

In accordance with the guidelines of the AIM Market of the London Stock Exchange, Andrew Grosse, B.Sc (Hons) Geology & Geophysics (1980), Exploration & Technical Director of Sterling Energy Plc, who has been involved in the oil industry for over 27 years, is the qualified person that has reviewed the technical information contained in this press release.

Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in 1% or more of any class of 'relevant securities' of STERLING, all 'dealings' in any 'relevant securities' of that company (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which any offer (if made) becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the 'offer period' otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an 'interest' in 'relevant securities' of STERLING, they will be deemed to be a single person for the purpose of Rule 8.3. 

Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' of STERLING by STERLING, or by any of its 'associates', must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at http://www.thetakeoverpanel.org.uk/new/.

'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities. 

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a 'dealing' under Rule 8, you should consult the Panel. 

 

END

 

 

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