UpdateCALGARY, Feb. 19, 2014 /CNW/ - Sterling Resources Ltd. (TSX-V: SLG)
("Sterling" or the "Company") is pleased to provide an update on the
Company's Chief Executive Officer ("CEO") and Chair of the board of
directors and on operations in the United Kingdom and Romania.
CEO and Chair of the Board
Mr. Jacob S. Ulrich, previously Chair and Interim CEO, has been
appointed by the board of directors of the Company (the "Board") as
permanent CEO with immediate effect. To ensure the most effective
corporate governance, Mr. Ulrich has stepped down as Chair of the
Company and Mr. James H. Coleman has been appointed as Chair by the
Board.
Prior to joining Sterling's Board in June 2013, Mr. Ulrich was the
senior energy advisor for Och-Ziff Capital Management Group in London
from 2008 to 2011, responsible for developing Och-Ziff's portfolio of
upstream, renewable and infrastructure investments in the European
Union, Africa, the former Soviet Union and the Middle East. Mr. Ulrich
was Managing Director of Centrica Energy Group from 1997 to 2008,
responsible for the development and operations of upstream gas and
power generation assets, procurement for British Gas Retail and British
Gas Business, trading and upstream/midstream business development. Mr.
Ulrich holds a Bachelor of Science in Engineering degree and a Masters
of Business Administration degree.
"I have really enjoyed getting to know the team here at Sterling over
the past six months. Getting Breagh on-stream and starting to move
forward to derisk the Romanian operations has been challenging and I
have been very impressed by the group's capabilities," stated Jake
Ulrich, Sterling's Chief Executive Officer. "With the sale of the
deep-water portion of the Midia Block in Romania completed and Breagh
on-stream, the Company now has a strengthened balance sheet, permitting
us to move forward judiciously with the exploration and development of
our attractive asset base," added Mr. Ulrich.
Mr. James H. Coleman, Q.C. is a senior partner with the law firm of
Norton Rose Canada LLP (previously Macleod Dixon LLP). Mr. Coleman has
been involved in banking, corporate, securities, mining and oil and gas
transactions in Canada, the United States, Europe, Central and South
America, Africa and Asia. He has also been involved in a number of
large divestments and acquisitions, corporate reorganizations and major
financings within the energy sector. As a director of a number of
public companies, including mining and oil and gas companies, Mr.
Coleman has chaired various independent committees of public companies
relating to corporate, governance and securities matters. Mr. Coleman
holds an LL.B. and a Bachelor of Business Administration degree.
"Under the leadership of Jake Ulrich the Company's future looks very
promising and together with our first class management team we are well
positioned to move Sterling forward to the next level," stated Mr.
Coleman, Sterling's Board Chair.
Operational Update - Breagh
Since Breagh production recommenced on December 27, 2013 the field has
been in operation with an uptime exceeding 98 percent excluding a
planned two day platform shut down while the drilling rig departed for
maintenance and certification activities at a nearby Teesside
shipyard. The total field production rate has averaged 106 million
standard cubic feet per day ("MMscf/d") to date during February, with
all six of the currently completed wells in continuous uninterrupted
service. Since production restarted in December, commissioning work at
the Tesside Gas Processing Plant ("TGPP") has recommenced and is
progressing in line with expectations. The primary focus of the
commissioning process is upon the gas chiller system, which will enable
a reduction in pipeline, plant and well-head pressures, resulting in
further improved production rates. All commissioning work is expected
to be completed by May 2014.
The final investigation report into the event which led to the damage at
TGPP during November 2013 is expected by the end of this month.
Several recommendations identified in the interim report have however
already been implemented, including the installation of a modified
pipeline tee junction at the inlet of the plant in December 2013 and
procedural changes for launching pigging spheres from the platform and
receiving them at TGPP. Routine pigging of the pipeline to remove
liquids has now been established.
Near-term plans for field management are to achieve fully optimized
operating conditions across the Breagh facilities. This optimization
process includes management of the carbon dioxide ("CO2") level in the
commingled gas stream so that it is within entry specifications for the
UK National Transmission System ("NTS"), reflecting the fact that gas
from wells A03 and A05 contains slightly higher than expected levels of
CO2. Medium term plans are to complete well A07 using hydraulic
stimulation, bringing the well on-stream in mid-2014, and then to drill
and complete well A08 with production from this well expected to
commence in September 2014. A two week planned shutdown is scheduled
during the second quarter of 2014 as part of normal operations, in
conjunction with an intelligent pigging operation to gather baseline
data on the Breagh gas export pipeline.
The Company now expects an average gross production rate for 2014 of 106
to 112 MMscf/d (32 to 34 MMscf/d net to Sterling), below the previous
guidance of 129 MMscf/d. This revised guidance for 2014 is
attributable to a number of factors including (1) the drilling and
completion of wells A07 and A08 later than previously envisaged, (2) a
slower than forecast ramp up to full rates for each of the individual
wells, and (3) the short-term impact of remaining commissioning
activities. The gross production rate at the end of 2014 is now
forecast to be 118 MMscf/d.
The Company's independent reserves evaluator, RPS Energy, is currently
preparing its report of the Company's reserves and resources as of
December 31, 2013, which the Company expects to be able to file in late
March 2014.
Operational Update - Romania
Proceeds from completion of the Romanian Carve-out Transaction (as
announced on January 29, 2014) have now been received by Sterling. Net
of transaction costs and Romanian tax, the Company has received net
proceeds of approximately US$23 million, which will be used to bolster
the balance sheet by providing an additional cash buffer. The Midia
block has now been split into two parts with the Shallow Waters
Contract Area ("Midia Shallow") being retained by Sterling at its
current equity interest of 65 percent. The Midia Shallow block
includes the Ana and Doina discoveries, the Ioana prospect and several
other prospects. Sterling retains no interest in the smaller,
carved-out portion of the Midia block (Midia Deep).
Licence extensions for the Midia Shallow and Pelican blocks have
recently been agreed with the National Agency for Mineral Resources.
Three extension options to the exploration period currently ending in
May 2014 are available, with extensions to May 2015, May 2018 and May
2020. Commitments are projected to be satisfied in 2014 and for each
of the second and third extension periods the commitments comprise two
wells (in aggregate, over the two blocks).
The Company's 2014 3D seismic acquisition program over key parts of its
Black Sea Midia Shallow and Pelican blocks has now been completed
earlier than originally planned, by using two vessels rather than one.
The program comprised approximately 500km2 of acquisition over the Ana-Doina trend, and 100km2 over each of the Bianca prospect, Ioana prospect and Eugenia
discovery. Processing and interpretation is expected to be complete by
around the middle of 2014.
The earlier completion of the 3D seismic program means that the planned
sell-down process to reduce the Company's equity interests in its Black
Sea blocks can commence around the middle of 2014 with interpreted
results available for all of Sterling's main fields and prospects,
providing important information for potential new partners. Sterling
intends to reduce its equity interests in the Midia Shallow and Pelican
blocks (currently 65 percent), in the Luceafarul block (currently 50
percent) and in the Muridava block (currently 40 percent) to
approximately half of the current levels by introducing a new partner.
It is the intention to sign binding documentation, if the process is
successful, around the end of 2014.