Sterling Resources

Friday, Dec 24 2010 by
20

Sterling is a junior oil and gas exploration and development company, active in the British and Dutch sectors of the North Sea, the Romanian sector of the Black Sea and onshore France.
Sterling is headquartered in Calgary, Canada with operations directed from Aberdeenshire, Scotland and Bucharest, Romania.

Listed TSX Venture Exchange –“SLG”

Capital structure
–Common shares –188.42 million;

–No long term debt

Current shares in Issue after recent placing : 188.42mn * $3.47 = market cap of CAD$653.817mn or £420mn

http://www.sterling-resources.com/

Sterling's Milestones

Drilled and appraised Breagh -Largest undeveloped UK SNS gas field in 10 years

Drilled Cladhanoil discovery & successful appraisal confirming commerciality-Strattrap with verysignificant potential.

 Resources upgrade Oct 2010

Drilled and appraised Ana and Doina-Romanian third largest gas discovery

Drilled Blakeneyoil discovery

On a gross basis -Discovered 1.6 tcfof GIP & > 200 mmbblsof OIP

Sold 15% of Breagh area for $US 94 million -Still retaining 30% working interest

•Farm out Agreement signed for Doina-Ana area for $US 90 million carry -Still retaining 32.5% working interest (Doinaarea carried to first gas)

•Finalizing Breagh development finance -Term sheet for £100mm; $44mm equity raised

•First gas 2012 from Breagh and 2013 for Doinaarea -Net production to Sterling approx 100 mmscfd

•2010 7 well exploration / appraisal drilling program -Back to previous activity level; 2011 anticipate 11 well program

•New entries -Paris Basin & Netherlands

 http://www.sterling-resources.com/docs/2010_Ops_Up.pdf

Cladhan

Sterling 39.9% interest (Operator)

3 Wells drilled
•210/29a –4 Discovery Dec 2008
•210/29a –4z Sidetrack appraisal Sept 2010
•210/29a –4y Sidetrack appraisal Sept 2010
•No OWC found
•Minimum 425ft Oil column to date
•20-25% Porosity
•Over pressured system
•Net to gross upto65%
•35°API
•4z –tested at 5900 BOPD from a portion of the net pay restricted by test string & surface facilitiesOuter

 

Gross hydrocarbon column of 159 feet with 102 feet of net hydrocarbon bearing sandstones

The reservoir quality is excellent with average porosities of 21% and average oil saturations of 86%. There are large sections in the well in which porosities exceed 25% and the net to gross has greatly exceeded expectations",

"These results so far exceed our expectations of the quality and extent of the channel sand in this area of the Cladhan reservoir," stated Mike Azancot, Sterling's President and CEO.

http://www.newswire.ca/en/releases/archive/August2010/30/c5698.html

The well was flowed for a total of nearly 18.7 hours, over which 13 hours were stabilised at an average rate of 5,903 barrels of 34 degree API oil per day on a 28/64 inch fixed choke, with a final wellhead pressure of 1,874 psig.

"These are truly excellent well test results, especially considering we have only perforated half of the net pay in the well. We also had to constrain the flow rate of the well due to limitations on the maximum capacity of the surface separation equipment, and also due to the small diameter of the DST tools and 3 1/2 inch tubing used while testing. Our analysis of the performance of the well indicates that with a larger 4 1/2 inch completion tubing, the well is capable of producing over 15,000 barrels of oil per day," stated John Rapach, Sterling's Chief Operating Officer

 Special Offer: Invest like Buffett, Slater and Greenblatt. Click here for details »

http://www.newswire.ca/en/releases/archive/September2010/13/c9051.html

P50 Contingent Resources have increased from 30 million barrels Oil in Place (OIP) to 89 million barrels OIP.

P50 Prospective Resources have increased from 65 million barrels OIP to 93 million barrels OIP in the previously assessed terrace area. An additional 74 million barrels OIP of P50 Prospective Resources is attributable to an area off the terrace and in a fan system to the east previously not assessed by RPS Energy.

http://www.newswire.ca/en/releases/archive/October2010/18/c3546.html

The partners in the Cladhan oil discovery announced further good news this week as they said that a second sidetrack of the re-entered discovery well had encountered a substantial oil column but still had not established an oil-water contact. This seems to indicate the field contains significantly more oil in-place than the 90 mmbbl P50 case (contingent and prospective resources) previously used by operator Sterling Resources. Indeed we suspect its 235 mmbbl P10 case is now a more likely outcome and, with further appraisal drilling expected to get underway late this year or early next, we may find out sooner rather than later.

Canacord's note. To quote repo as I think this is a reasonable calculation :

235mm *0.4*0.55 recoverability factor for Magnus lookalike *$10 is $470m.

 Breagh

Sterling -30%, RWE DEA -70% (Operator)
•Large areal extent –140 sq kms
•Lower Carboniferous reservoir
•6 wells drilled (1 Mobil, 1BP, 4 Sterling)
•Successful appraisal through improved drilling techniques and horizontal section
•Tested to max 26MMscf/d (42/13-5z)
•2P Reserves 610 BCF (RPS April 2010)

Romania

Sterling 50%, Atlantic Petroleum (Operator) 50%
• 1,500,000 acres
• Lower Canyon, known hydrocarbons
• Conventional structures (Divari/Plenita)
• Unconventional shale gas potential in Silurian
Shales ~ 600m thick over 400,000 acres
Planned Activity
3 Studies underway to characterise Silurian
shale
Planning for a well late 2011/early 2012 to
test Silurian potential

Analyst views :

They now have no production, but the largest natural gas discovery off UK coast in past 5-10 years. Their interest in it is worth $2.50 a share. They are now fully funded. They also have another asset worth $1 a share. Likes the assets and the management. 2 years until first gas.

Active drilling program starting in Feb/11 in North Sea. Just raised capital and it was very oversubscribed. Very extensive position in France, a hot oil shale play

http://www.stockchase.com/Company-sl--slq-ID-slv-Sterling--Resources.php

The Company has (prior this latest transaction) forecasted production to reach over 35,000 boed in 2013, a figure we believe could be exceeded due to the new holdings. Valuing this production at $50,000 per flowing barrel, provides potential value of $1.7 billion or almost $11.00 per share. Additionally, in 2012, drilling may commence on the Company’s acreage in the Paris Basin, onshore France.

Reserves of 32.5 million barrels (at the end of 2010), essentially all of which was Breagh gas, provided an asset value of $3.31 per share. At the current stock price, no value is being placed on the other discoveries – they come for free, providing extensive growth potential for the investor as these discoveries are developed and placed onstream over the next several years.

http://www.union-securities.com/CMResearchFiles/1_164_Sterling%20Resources%2011%2029%202010.pdf

Canacord Presentation : http://www.wsw.com/webcast/canaccord3/slg.cn/

 

Interesting threads to read on TMF

WShaks intiial write up from Aug 2010 : http://boards.fool.co.uk/sterling-resources-slgv-encore8217s-big-b-12011623.aspx?sort=whole

Repo's Sterling revisited : http://boards.fool.co.uk/sterling-revisted-12026491.aspx?sort=whole

IronPyrites thoughts on Romania : http://boards.fool.co.uk/sterling-and-romania-12037904.aspx?sort=whole#12037904

IronPyrites thoughts on France : http://boards.fool.co.uk/sterling-and-france-12038858.aspx

-------------------------------------------------------------------------------

 

 

Intraday chart. Click to open a chart window

6 Month chart. Click to open a chart window



N.b. Will be updating my research in this header, I'm using this thread to consolidate all the info.


Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


Do you like this Post?
Yes
No
22 thumbs up
2 thumbs down
Share this post with friends




49 Posts on this Thread show/hide all

ohisay 19th May '11 30 of 49
1

In reply to Isaac, post #29

He's a bit behind the times - shares in issue is 190m.

http://www.sterling-resources.com/capitalstructure.html

| Link | Share
Isaac 19th May '11 31 of 49
3

STERLING RESOURCES (SLG) $1.79 +0.01
Ouch! Actually we should say something much stronger
than that but this is a family newsletter. In the last few weeks
and months we’ve experienced a sell-off in the resource sector,
the likes of which we can’t remember. It’s like everyone who
charged to get in over the last two years are trying to get out
within days, and it has set up some amazing disconnects.
Gold has only dropped about 10% but there is a long list of
junior, and some quite decent gold plays that are down 30, 40,
and 50 per cent.
Same thing in the oil sector. Oil stocks didn’t participate
much after oil went up over $100, but now that oil is heading
down, once again the same thing. Some pretty interesting oil
stories down 30, 40, 50 per cent. It’s a disconnect.
Just got back from Calgary, meeting five interesting management
teams with Renegade Petroleum (RPL), Argosy Energy
(GSY), Bellatrix Exploration (BXE), Crocotta Energy (CTA),
Pinecrest Energy (PRY) and you get the same theme. They can
make a lot of money in well-run companies at $85-$90 oil, and
that is a price that most consumers would be happy with too.
But then on to the story of the day…one of our favorite
speculations has seen just about anything that can go wrong…
go wrong. This is like much of the exploration business,
things can go wrong, stalled, be delayed, but let’s review the
story.
For us with the Breagh project in the North Sea going into
production over the next year, as production actually happened,
we assume this to have a rather significant asset value.
Add on to that the Cladhan play which has now had four successful
wells, which means they do have probably/likely a commercial
deposit, the question is how big? Drilling over the last
while was going to tell us how big…and with such a huge
structure, people had high hopes.
One play that was getting a heck of a lot of talk and speculative
stories was the Paris Basin. It’s enormous, and who had one
of the biggest land holdings there…Sterling Resources.
Meanwhile, once again, Romania. Some people use the
analogy of the Danube Basin being similar to the Mississippi.
All that sedimentary material brought down the Mississippi had
resulted in tens of thousands of wells being drilled in the Gulf
of Mexico. Maybe the Danube had the same thing and on the
Ukrainian side of the border there has been production for a
long time. Most interesting was that the offshore Romanian
structure had many, many zones to test and increases the
So what has happened in the last while?
(1) The market has turned dramatically. Like we said,
no one cares for good news right now, and cash is king.
(2) Joseph Schachter has been dumping on BNN on
Sterling’s Breagh project, and while Joseph like many
analysts these days has had a lot of trouble with his own
recommendations, today’s annual meeting had better
answer some of the questions he brings up.
(3) The Brits announced tax changes, raising taxes.
That won’t affect Sterling for many, many years because
of large tax pools, but it sure puts a damper on the area.
We assume some of the same groups that increased Alberta
royalties and saw capital flee the province are advising
the Brits.
(4) In France, improbably a study has suggested using
the experience of Quebec, that fracing is a problem.
Excuse me? The experience of Quebec with no oil and
gas industry? Will a basin with the potential size of the
Paris Basin never be explored? I doubt it.
(5) Romania. All of a sudden plans to drill the offshore
Romanian project have been put in kafuffle over
permitting issues. It’s affecting companies as small as
Sterling and as big as Exxon Mobil, but sooner or later
this issue has to be resolved.
(6) Cladhan drilling has come up with four successful
wells so far. News announced two weeks ago, was a well
that could have made a huge difference to the potential
size of the Cladhan play, but did not work out. It was a
high risk well and for those that were dreaming big, this
was the well that was important.
Yesterday, the drilling results were announced for
another well better in the Cladhan play and it came up
wet. Very disappointing. It was expected not to be a
gimmee, but had better odds!

http://www.iii.co.uk/investment/detail/?display=discussion&code=cotn%3AEO-.L&it=le&action=detail&id=8280595&prevpost=8280526&nextpost=8280607

| Link | Share | 1 reply
repobear 20th May '11 32 of 49
4

In reply to Isaac, post #31

Hi,

You guys may want to listen to what was a pretty positive presentation here from Sterling Resources. It kicks off from about 13.30 into the recording

http://www.newswire.ca/en/webcast/slideViewer/index.cgi?eventID=3380080&media=win

I was not at all impressed with the Q&A session as you can see from this post on TMF

Hi,

I have been in email contact with George Kesteven the IR guy at Sterling Resources and have suggested to him that the Q&A session was somewhat unsatisfactory and it would be helpful if any questions that you guys had regarding SLG and yesterday's presentation be answered and this Q&A session be conducted through TMF.

So if there are any questions from holders of Encore Oil about Cladhan or from SLG holders about yesterday's presentation please put them up on this thread.

http://boards.fool.co.uk/hi-i-have-been-in-email-contact-with-george-12263168.aspx

repo

| Link | Share | 1 reply
Murakami 20th May '11 33 of 49
9

In reply to repobear, post #32

We'd also be happy to do a Q&A interview with them, if that would help clarify outstanding questions. I've just mentioned this to Sterlng - if they're keen, we'd be happy to work off a suggested question list from this or other threads, and arrange it as either a textual interview or a podcast. If this sounds useful, please message me or Ben Hobson via the site to discuss further. Best, M

| Link | Share | 1 reply
repobear 20th May '11 34 of 49

In reply to Murakami, post #33

Hi Murakami,

Thanks for the offer. A podcast would be preferable for me and the more it could be kept to a live format the better. I liked what you did with Soco and something like that would be perfectly acceptable to me and would give the Q& A session a suitable neutral tone.

I would encourage you and the people here to listen to the AGM podcast and take a look at the slides which will be in a more easily readable form once, they're posted up on the Sterling website. I'd be happy to help pull together a shortlist of suitable questions, if that helps.

I can't imagine that Sterling wouldn't be interested given that they plan a London listing at some stage and maybe as early as late this year.

repo

| Link | Share
Isaac 21st May '11 35 of 49
3

Insiders know a steal when they see one....most bought stock on Friday by far.....

 
Top 10 Stocks By Net Buys Value
SymbolCompany NameInsider Buys Value $Insider Sells Value $Net Buys Value $
SLG Sterling Resources Ltd. 500,626.00 0.00 500,626.00

 

http://www.investorvillage.com/smbd.asp?mb=13265&mn=1741&pt=msg&mid=10518625

| Link | Share
djpreston 25th May '11 37 of 49
1

Given the recent problems in Romania, I thought it interesting to see an announcement from little known East East Petroleum (C$70m mkt cap) about its signing of an MOU on its four blocks with a unit of Gazprom.

Basic Terms of the deal:

The joint exploration programs planned will include the collection and processing of approximately 900 km of 2D and 600 sq km of 3D seismic data with a minimum of 12 wells to be drilled on the four blocks in Romania.  The terms of the agreement are: NIS will fully fund all environmental work, 2D and 3D seismic acquisition and processing, and the drilling of 12 wells, to earn an 85% participation interest.  NIS will also refund 100% of EWP’s sunk costs which total C$525,000 and EWP will retain a 15% carried interest to commercial production on all four blocks.

Thats quite a commitment by NIS (Gazprom).

Heres what EW have to say about Romania and its blocks there.  A useful little summary.

What is interesting is that, whilst these are onshore as opposed to SLG's offshore assets, Gazprom obviously think that there is no impediment to their work plan......

Fund Management: European Wealth
| Link | Share
loglorry 25th May '11 38 of 49

DJ AIUI the problems (e.g. permits that are impossible to get) are for offshore drilling - right? There seems to be plenty of activity onshore Romania at the moment. Are you saying Gazprom also expect to drill offshore without impediment?

Log

| Link | Share | 1 reply
djpreston 25th May '11 39 of 49

In reply to loglorry, post #38

Not really sure what Im trying to say. Just that I found it interesting that theres still a heck of a lot fo interest in the country and that Gazprom dont see there being any impediment to onshore activities (including unconventional). I wasnt entirely sure if the Construction Permit issue was just related to offshore or if there was a potential impact on activities onshore (especially in unconventional work).

Just musing really - its quiet out there after all.

Fund Management: European Wealth
| Link | Share
loglorry 25th May '11 40 of 49

I'm pretty sure the construction permits in question only apply to offshore drilling. If Gazprom are going ahead with offshore drilling then this is news as it contradicts what SLG said at their AGM in that they said all companies were stalled.

Log

| Link | Share | 1 reply
peterg 25th May '11 41 of 49

In reply to loglorry, post #40

They are clearly onshore blocks - see Darron's link.

I see the AGM presentation says that a well on Craiova is possible for 2011, so I presume that at this stage Sterling are not ruling out onshore explo themselves?

Peter

| Link | Share
madmix 26th Jul '11 42 of 49
4

Now we know why the shares have been drifting downwards of late despite the successful loan facility in place and FDP for Breagh.

http://www.benzinga.com/pressreleases/11/07/m1804771/sterling-resources-ltd-announces-45-million-bought-deal-financing

Bought-deal financing agreement led by RBC Capital Markets to issue 32,143,000 common shares at a price of C$1.40 per common share for gross proceeds of C$45m (plus an over-allotment option of a further 4,821,450 shares).

"...The net proceeds of this Offering are intended to fund certain incremental appraisal and development activities which the Company considers accretive while allowing the Company to maintain sufficient cash to meet the liquidity threshold set under the recently signed GBP 105 million senior secured loan facility..."

and goes on to say :

"Under the terms of the Loan, the Sterling group (consisting of the Company and its subsidiaries from time to time) must maintain a certain minimum aggregate cash balance over the next 12 months on a rolling basis, subject to revision when the Phase 2 development is approved and a step-up to the existing loan agreed. Approximately $30 million is being raised to ensure Sterling can satisfy this liquidity test through to end 2012 while carrying out its previously planned activities..."

Part of the funding will be used for an accelerated appraisal/development well on the Crosgan discovery and a potential production-test on the Netherlands F17 well.

A bit more on Crosgan, and why they wanted to drill it now.  Gas discovery - Southern North Sea blocks 42/10 and 42/15 - Sterling have a 30% stake - P50 Contingent Resources of 32.1 Bcf + unrisked Prospective Resources of 14 Bcf (figures net to Sterling).

"...This well was originally scheduled for 2012 or 2013 but is planned to be accelerated so that a tie-back can be integrated into the Phase 2 development of Breagh as early as possible."

As a shareholder I'm not too happy that they've had to raise funds down at C$1.40, but it would seem a necessary evil in order to ensure that they are well funded until Breagh Phase I is online. I believe there were 185.6m shares in issue before this financing, so the potential 37m extra shares (32.1m underwritten + 4.8m over-allotment) means a dilution of about 20%.

I wouldn't be surprised to see the share price languish for the next few weeks until some of these new shares find their way in to the hands of those with a long term outlook, but on a 6-12 month view, they look excellent value to me at C$1.55. But then I would say that...

| Link | Share | 1 reply
Isaac 4th Aug '11 43 of 49
2

My purchase back in May looks ill timed. Down about 30% since, a sale of Soco will see me top up for Breagh Production next year which will see this back to more sensible levels.

| Link | Share
ohisay 7th Oct '11 44 of 49
3

In reply to madmix, post #42

Some kind chap on Investors village posted this Kevin West Note from 3rd October.

http://rdpcasimir.frontline.ca/PDFs/Reports/2011/October/SLG_Initiation_Coverage_-_20111003.pdf

Good to see some appreciation of the basic Breagh business here as well as his view of Cladhan.
Wonder if the CPR will confirm his view - its well overdue but then Cladhan appears to be a strange beast.

(Having originally bought at 330c I doubled up at 127c and added another 40% at 97c.)


Dare I say it the worst appears to be behind us ....er looks for large piece of wood.

| Link | Share
Isaac 13th Oct '11 45 of 49
3

Sterling Resources Announces Amendment of the Construction Permit Law in
Romania


http://tmx.quotemedia.com/article.php?newsid=45201046&qm_symbol=SLG

CALGARY, Oct. 13, 2011 /CNW/ - Sterling Resources Ltd. (TSX-V:SLG)("Sterling" or the "Company") is pleased to announce that effective October 11th, 2011 the Romanian government has rescinded the Construction Permit Law, in relation to offshore requirements, an impediment upon which the Company had declared force majeure on April 28th, 2011 on its Midia and Pelican Blocks in the Black Sea. This action is very welcome as it removes a major obstacle for offshore work by any operator in the Romanian Black Sea. However, it does not in itself, address all the issues raised in the Notice of Dispute which the Company filed on June 20th, 2011. Rather than resorting to arbitration, Sterling continues its negotiations with the authorities to secure an early approval to assign equity to intended partners and to receive an extension to license periods for the time lost since the onset of the blockages impeding the progress of exploration and development activities.

"We are delighted that one of the major issues in our dispute in Romania has been solved. We continue to believe that a complete resolution is possible as we continue our dialogue with the relevant authorities who can enable our partnership to resume exploration and development activities on this highly attractive license," stated Mike Azancot, President and CEO of Sterling Resources.

 

Hopefully the start of a gradual grind upwards again......

| Link | Share
Isaac 15th Nov '11 46 of 49

A very decent rise today, especially towards the end.

Charts
Intraday chart. Click to open a chart window

 

I bought this a few months ago, saw it crash and now it is nice to see it coming back, Up 80% in the last 6 weeks.....Don't think Isaac's law applies yet LOL as the stock is undervalued still IMO.

A lot of good discussion on TMF....rise is on the back of TAQA buying Encores Cladhan stake thus allowing SLG stake to be given a realistic value by the market. Hopefully Taqa will also buy Sterlings interest, I would be happy to see Cladhan go....Breagh production in 2012 should hopefully see this rise further in the months ahead..

| Link | Share
Isaac 24th May '12 47 of 49
1

I am VERY GLAD I got out of SLG a few months back, it is SO easy to just stick it out with the rest of the pack and hope things turn around.

How do you do that? You try and back yourself and not someone else's judgement and if you don't feel something is right, you get out.

| Link | Share
Isaac 24th May '12 48 of 49
1

Ouch...Just read this from Was....

http://boards.fool.co.uk/one-has-to-wonder-with-some-large-holders-now-on-12560246.aspx

 

I had a football smashed into my bollocks last night by a (former) friend at three yards. However, I think Sterling Resources' (SLG) quarterly update today may have been even more painful.

If they do raise funds at this level through equity issuance, it's only fair that I take out my trusty baseball bat and apply it to directors' nether regions so they know how the rest of us feel.

| Link | Share
kenobi 25th May '12 49 of 49
1

If they do raise equity at this level might it prove to be a decent level to get in for the longer term ?

| Link | Share

What's your view on this thread? to Comment Now

 
 
You are feeling neutral

Use the £ sign in front of a ticker to turn £VOD into Vodafone PLC

You can track all @StockoChat comments via Twitter



Stock Picking Tutorial Centre


Related Content
Only way is up
Only way is up.
TXO Thu 12:16am

Soco  Telegraph Hatchet Job
Soco - Telegraph Hatchet Job
SOCO International 6th Sep


How many stocks should you own in your portfolio
How many stocks should you own in your portfolio?
portfolio management Mon 12:48pm



Stock Picking Simplified

Stockopedia takes your stock picking to the next level with cutting edge Stock Reports & Screening tools.


Get started
or Take a Tour to find out more.