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”
–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
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
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
•Over pressured system
•Net to gross upto65%
•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.
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
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.
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.
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)
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
3 Studies underway to characterise Silurian
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
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.
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
N.b. Will be updating my research in this header, I'm using this thread to consolidate all the info.