Pescod comments on SLG comment david.pescod@canaccord.com October 11, 2012
STERLING RESOURCES (V-SLG) $1.27 +0.02
Apparently we angered a few folks attached to Sterling Resources
with a recent comment, but then management has repeatedly
delivered projects behind schedule and over budget.
But hey, we still are a shareholder, so we can wax hopeful as
well.
Why not print here the work of Dundee analyst Quinn
Sievewright:
Key Idea: “Sterling announced the spud of the Ioana well,
offshore Romania. The gas-prone exploration well is scheduled
to be completed within 30 days and will be followed by
the oil-prone Eugenia exploration well.
Significant upside exists assuming success with Ioana and
Eugenia worth some C$2.23/share and C$5.01/share on an
unrisked basis respectively based on our estimates. Results
from both wells should be available before year-end.
We continue to believe a sale of the company's interest in
Cladhan, potentially yielding up to $111 million, or a farmdown
offshore Romania providing upfront cash, could alleviate
near term market concerns regarding funding and that
Sterling represents a deep value opportunity at current levels.
Ioana Prospect: C$0.09/sh Risked, C$2.23/sh Unrisked: Ioana
is being drilled to a target depth of 1,600 meters with the
Mid Pontian sandstone as the primary target horizon. At 655
bcf (426 bcf net) of gross P50 prospective resource, success
at Ioana would, together with Ana & Doina, provide a substantial
gas-production hub of ca. 1 tcf and potentially add some
C$2.23/share on an unrisked basis (C$0.08/share risked)
based on our estimates.
Eugenia Prospect: C$0.22/sh Risked, C$5.01/sh Unrisked:
After drilling Ioana, the rig will mobilize north to the Eugenia
prospect on the Pelican Block. Eugenia, will be the first exploration
well to be drilled on the shallower, oil-prone Pelican
block.
Estimated to contain 120 mmbbl (78 mmbbl net) of unrisked
prospective resource, Eugenia itself could be a game
changer for the company notwithstanding the 180 mmbbls of
further prospects identified to date across the block. Pre-drill,
we carry only C$0.22/share on a risked basis with success
potentially worth we estimate some C$5.01/share on an unrisked
basis.”
Yes folks, these are huge numbers should they hit, so the
dream is still alive. Should you get a chance to read the Dundee
report...do so.