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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sterling Energy Plc | LSE:SEY | London | Ordinary Share | GB00B4X3Q493 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 16.50 | 16.10 | 16.90 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSEY
RNS Number : 9409V
Sterling Energy PLC
27 July 2018
27 July 2018
Sterling Energy plc
Results for the six months ending 30 June 2018
Overview
Sterling Energy plc ('Sterling' or the 'Company'), together with its subsidiary undertakings (the 'Group'), an upstream oil and gas company listed on the AIM market of the London Stock Exchange (Ticker Symbol: SEY) today announces its results for the six month period ending 30 June 2018.
The Company is an experienced operator of international exploration and production licences, with a primary geographic focus on Africa and the Middle East. The Group has a high potential exploration asset in Somaliland and an active strategy to deliver shareholder value through disciplined, material exploration and production projects; leveraging the Company's experience, with an emphasis on securing near term cash flow generative opportunities.
Corporate summary
-- January 2018: Chinguetti, Mauritania; cessation of production ('CoP') and negotiated termination of the Funding Agreement.
-- June 2018: David Marshall appointed as CEO.
-- Continued merger and acquisition ('M&A') mandate for growth (at both asset and corporate level).
-- Continued focus on capital discipline.
Operations summary
-- Odewayne block, Somaliland; trial line 2D seismic processing completed, with initial deliverables currently being assessed.
Financial summary
-- Cash net to Group, as at 30 June 2018 of $46.9 million (30 June 2017: $83.5 million), debt free.
-- Group turnover of $534k (1H 2017: $2.2 million) from the Chinguetti field, offshore Mauritania.
-- Loss after tax of $1.1 million (1H 2017: loss $2.2 million). -- Adjusted EBITDAX loss of $932k (1H 2017: loss $1.6 million).
For further information contact:
Sterling Energy plc +44 (0)20 7405 4133
David Marshall, Chief Executive Officer
Michael Kroupeev, Chairman
www.sterlingenergyplc.com
Peel Hunt LLP +44 (0)20 7418 8900
Richard Crichton
James Bavister
Chairman's Statement
As of January 2018, through the termination of its Funding Agreement for the Chinguetti oil field in Mauritania, Sterling now has a cleaner and simpler platform from which to grow the business. We have a sizeable cash position, are free of abandonment liabilities and have no debt. We now have a clear mandate for transformative M&A transactions to leverage our position.
Trial line 2D seismic processing initiated by Sterling over the Odewayne block in Somaliland is showing encouraging signs in this large frontier licence. During the second half of 2018 we will use the data to further develop our understanding of the asset potential ahead of a drilling decision where Sterling will be carried through the cost of any well.
In June David Marshall joined us as Chief Executive Officer. David has 35 years' experience in oil and gas production and development specialising in technical solutions for accessing production from stranded assets. David's extensive knowledge of the production and development sector will drive the group forward towards its goal of executing the purchase of a material cash flow generating asset.
I look forward to updating our shareholders in due course as we seek to maximise our value proposition.
CEO Statement
In January 2018, Sterling completed the successful exit from the Chinguetti project allowing the Company to now focus on its efforts on securing a material M&A transaction. Activity has now doubled on opportunity and asset screening and we are gaining deal traction due to the renewed focus and simplicity of the Group's financial position. Sterling still retains a unique position in the AIM listed E&P sector with a strong cash platform of $46.9 million and no debt or other liabilities.
Market Landscape
In 2017 we saw an oil price in the $50-$60 per barrel range. In 2018 we have seen Russia, Venezuela and OPEC trimming back production, which combined with the reintroduction of sanctions on Iran and Iranian entities in parallel with the USA withdrawing from the Joint Comprehensive Plan of Action, we have seen oil prices pushed over the $70 per barrel level. Majors are stepping back from large scale projects, investing more capital into projects with shorter payback timeframes. There is a clear appetite in the market for buying and selling existing production rather than investing in long-term development projects or exploration.
We have a clear mandate and focus and can move quickly and decisively for the right opportunity, leveraging our cash balance and technical capabilities to good effect.
We remain very optimistic about finding a suitable acquisition in 2018.
Operations Review
Somaliland
Odewayne (WI 34%) Exploration block
Sterling Energy (East Africa) Limited ('SE(EA)L') currently holds a 34% interest in the Odewayne Block and is fully carried by Genel Energy for its share of the costs of all exploration activities during the Third and Fourth Periods of the Production Sharing Agreement 'PSA'.
This large, unexplored frontier block comprises an onshore area of 22,840km(2) . Extensive legacy geological field data provides strong encouragement for a deep sedimentary basin and has additionally highlighted the presence of oil seeps at surface, suggesting that a working hydrocarbon system exists.
The PSA was awarded in 2005. It is in the Third Period with an outstanding minimum work obligation of 500km of 2D seismic. The Third Period was extended in 2016 by two years to 2 November 2018. The minimum work obligation during the optional Fourth Period of the PSA (also extended by 2 years to May 2020) is for 1,000km of 2D seismic and one exploration well.
In November 2017, Sterling undertook an integrated geological review of the basic post-stack processed 2D dataset provided by the Operator Genel Energy. Following encouraging technical indications, the Company then undertook a highly focused and rigorous processing effort, independent of the Operator, with the primary technical objective of improving the deeper subsurface image. An initial 3 seismic lines of approximately 235km in length have now been processed to a full pre-stack time migrated dataset. This new processing has resulted in a material increase in the subsurface imaging quality, and technical work is underway to integrate this new insight in to our technical understanding of the block. The option to process the remaining 765km (13 lines) of data remains in place and the decision to progress to this second phase is currently under review while the initial deliverables are being assessed. This workflow will allow for an informed technical and commercial perspective on the block in 2H 2018.
M&A strategy
Sterling has actively transitioned the portfolio out of long cycle exploration assets requiring third party funding and continues to actively search for near to mid-term value creation and transformative growth / monetisation options in both Africa and the Middle East (although the board would also consider options further afield for the right project).
A prudent, selective and persistent M&A led effort is directed towards shorter-cycle revenue generating projects that will deliver in a sustained lower oil price landscape, in progressive jurisdictions.
The Company maintains a disciplined approach to all M&A efforts at a corporate and asset level, only pursuing and executing those growth options that the Company believes to have the best opportunity to ultimately deliver value for shareholders.
Qualified person
In accordance with the guidelines of the AIM Note for Mining, Oil and Gas Companies, Mr Anish Airi, Subsurface Manager of Sterling Energy plc, a Chemical Engineer who has been involved in the oil industry for over 20 years, is the qualified person that has reviewed the technical information set out above. Mr Anish Airi has an MEng in Chemical Engineering and is a member of the Society of Petroleum Engineers.
Financial Review
Selected financial data
Hot Features
Premium
1H 2018 1H 2017 FY 2017
Net entitlement from production (bopd) - 320 199
----------------------------------------- -------- --------- ---------------
9,222 / 41,950 / 92,056
Net cargo liftings (bbls) / # liftings 1 1 / 3
----------------------------------------- -------- --------- ---------------
Sales revenues (including royalty)
($m) 0.5 2.2 4.4
----------------------------------------- -------- --------- ---------------
Average realised oil price ($/bbl) 58.3 48.7 48.2
----------------------------------------- -------- --------- ---------------
G&A cash expenditures ($m) 1.5 1.9 3.9
----------------------------------------- -------- --------- ---------------
Adjusted EBITDAX (1) ($m) (0.9) (1.6) (5.9)
----------------------------------------- -------- --------- ---------------
Loss after tax ($m) (1.1) (2.2) (9.0)
----------------------------------------- -------- --------- ---------------
Cash and cash equivalents net to Group
($m) 46.9 83.5 81.4
----------------------------------------- -------- --------- ---------------
Debt ($m) - - -
----------------------------------------- -------- --------- ---------------
Share price (at period end) (GBP pence) 13.3 15 13.8
----------------------------------------- -------- --------- ---------------
(1) Adjusted EBITDAX is calculated as earnings before interest, taxation, depreciation, amortisation, impairment, pre-licence expenditure, provisions and share-based payments.
Revenues and cost of sales
During the period, there was one final lifting from the Chinguetti field of 9,222 bbls (net to the Company) (1H 2017: 41,950 bbls, from one lifting) resulting in Group turnover of $534k (1H 2017 $2.2 million).
Total cost of sales totalled $515k (1H 2017: $2.7 million).
Loss from operations
The loss from operations for 1H 2018 was $1.6 million (1H 2017: loss $2.5 million).
During the period, net administrative expenditure decreased by 22% to $1.6 million (1H 2017: $2.0 million) and includes pre-licence costs of $623k (1H 2017: $1.0 million). The Group continues to focus on such expenditures and forecasts G&A of ca. $2.9 million in 2018, a ca. 27% decrease from the 2017 full year results.
Adjusted EBITDAX and loss after tax
Adjusted EBITDAX totalled a loss of $932k (1H 2017: loss $1.6 million).
The loss after tax totalled $1.1 million (1H 2017: loss $2.2 million). Basic loss per share was 0.50 USc per share (1H 2017: 0.99 USc loss per share).
Finance income of $477k represents interest received on cash held by the Group (1H 2017: $596k, included interest received $522k and foreign exchange gains $74k). The Group continues to focus on treasury management to maximise interest received. Finance costs totalled $28k (1H 2017: $264k).
No dividend is proposed to be paid for the six months to 30 June 2018 (30 June 2017: nil).
Cash flow
During the period $32.5 million was paid under the Deed of termination in relation to the Funding Agreement.
Net cash outflow from operating activities (pre-working capital movements) totalled $34.1 million (1H 2017: outflow $2.7 million). After working capital, net cash outflow from operating activities totalled $34.9 million (1H 2017: outflow $1.5 million).
Statement of financial position
At 30 June 2018, Sterling held $46.9 million cash and cash equivalents available for its own use (30 June 2017: $83.5 million).
Group net assets at 30 June 2018 were $68.2 million (30 June 2017: $76.1 million). Non-current assets totalled $21.1 million (30 June 2017: $22.5 million) with net current assets reducing to $47.1 million (30 June 2017: $78.1million).
Going Concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the CEO Statement and in the Operations Review. The financial position of the Group is described in the Financial Review.
The Company has sufficient cash resources for its working capital needs and its committed capital expenditure programme for at least the next 12 months. As a consequence, the Directors believe the Company is well placed to manage its business risks. The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the results for the six months ended 30 June 2018.
Disclaimer
This document contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst the Group believes the expectation reflected herein to be reasonable in light of the information available to it at this time, the actual outcome may be materially different owing to factors either beyond the Group's control or otherwise within the Group's control but where, for example, the Group decides on a change of plan or strategy. Accordingly, no reliance may be placed on the figures contained in such forward-looking statements.
Glossary
$ US Dollars
2D two dimensional
-----------------------------------------------------
bbl barrel(s) of oil
-----------------------------------------------------
bopd barrels of oil per day
-----------------------------------------------------
Adjusted EBITDAX earnings before interest, taxation, depreciation,
amortisation, impairment, pre-
licence expenditure, provisions and share based
payments
-----------------------------------------------------
km kilometre
-----------------------------------------------------
Post-stack Processing of raw seismic data into a geological
representation of the subsurface
-----------------------------------------------------
Pre-stack time More advance technique of processing of raw seismic
migrated dataset data; used when considering complex geology
-----------------------------------------------------
PSA production sharing agreement
-----------------------------------------------------
Seismic Geophysical investigation method that uses seismic
energy to interpret the geometry of rocks in the
subsurface
-----------------------------------------------------
Subsurface image Geological representation of the subsurface typically
using geophysical investigation methods such as
seismic
-----------------------------------------------------
km(2) square kilometre
-----------------------------------------------------
WI working interest
-----------------------------------------------------
Condensed consolidated income statement for the six months to 30 June 2018
Six months Six months
to to Year ended
30th June 30th June 31st December
2018 2017 2017
$000 $000 $000
(unaudited) (unaudited) (audited)
-------------------------------- -------------------------------- ------------------
Revenue 534 2,217 4,433
Cost of sales (515) (2,704) (7,917)
Gross profit/(loss) 19 (487) (3,484)
Other administrative
expenses (956) (1,047) (2,379)
Impairment of oil and
gas
exploration assets - - (2,834)
Pre-licence costs (623) (977) (1,628)
Chinguetti cessation
credit - - 866
------------------------ -------------------------------- -------------------------------- ------------------
Total administrative
expenses (1,579) (2,024) (5,975)
Loss from operations (1,560) (2,511) (9,459)
Finance income 477 596 1,089
Finance expense (28) (264) (630)
Loss before tax (1,111) (2,179) (9,000)
Tax - - -
Loss for the period
attributable
to the owners of the
parent (1,111) (2,179) (9,000)
-------------------------------- -------------------------------- ------------------
Other comprehensive
expense
- items to be
reclassified
to the income
statement
in subsequent periods
Currency translation
adjustments (3) (2) (20)
Total comprehensive
expense
for the period (3) (2) (20)
-------------------------------- -------------------------------- ------------------
Total comprehensive
expense
for the period
attributable
to the owners of the
parent (1,114) (2,181) (9,020)
================================ ================================ ==================
Basic loss per share
(US
cents) (0.50) (0.99) (4.09)
Diluted loss per share
(US cents) (0.50) (0.99) (4.09)
Condensed consolidated statement of financial position as at 30 June 2018
As at As at As at
30th June 30th June 31st December
Note 2018 2017 2017
$000 $000 $000
(unaudited) (unaudited) (audited)
------------ ------------ --------------
Non-current assets
Intangible exploration
and evaluation assets 3 21,076 22,483 21,041
Property, plant and equipment 11 13 14
21,087 22,496 21,055
------------ ------------ --------------
Current assets
Inventories - 2,501 363
Trade and other receivables 410 707 868
Cash and cash equivalents 46,900 83,493 81,365
47,310 86,701 82,596
------------ ------------ --------------
Total assets 68,397 109,197 103,651
------------ ------------ --------------
Equity
Share capital 28,143 28,143 28,143
Share premium - - -
Currency translation reserve (192) (171) (189)
Retained earnings 40,232 48,161 41,343
Total equity 68,183 76,133 69,297
============ ============ ==============
Non-current liabilities
Long-term provisions - 24,456 -
- 24,456 -
------------ ------------ --------------
Current liabilities
Trade and other payables 214 1,463 5,695
Short-term provisions - 7,145 28,659
214 8,608 34,354
------------ ------------ --------------
Total liabilities 214 33,064 34,354
------------ ------------ --------------
Total equity and liabilities 68,397 109,197 103,651
============ ============ ==============
Condensed consolidated statement of changes in equity for the six months ended 30 June 2018
Currency
Share Share translation Retained
capital premium reserve earnings(*) Total
$000 $000 $000 $000 $000
------------------ --------------- ------------------- ------------ ---------------
At 1 January 2017 149,014 378,863 (169) (449,318) 78,390
----------------------------- ------------------ --------------- ------------------- ------------ ---------------
Total comprehensive expense
for the period attributable
to the owners of the parent - - (2) (2,179) (2,181)
Share option credit for
the period - - - (76) (76)
Transfer between reserves (120,871) (378,863) - 499,734 -
------------------ --------------- ------------
At 30 June 2017 28,143 - (171) 48,161 76,133
----------------------------- ------------------ --------------- ------------------- ------------ ---------------
Total comprehensive expense
for the period attributable
to the owners of the parent - - (18) (6,821) (6,839)
Share option charge for
the period - - - 3 3
At 31 December 2017 28,143 - (189) 41,343 69,297
----------------------------- ------------------ --------------- ------------------- ------------ ---------------
Total comprehensive expense
for the period attributable
to the owners of the parent - - (3) (1,111) (1,114)
At 30 June 2018 28,143 - (192) 40,232 68,183
----------------------------- ------------------ --------------- ------------------- ------------ ---------------
(*) The share option reserve has been included within the retained earnings reserve.
Condensed consolidated statement of cash flows for the six months ended 30 June 2018
Six months Six months
to to Year ended
30th June 30th June 31st December
Note 2018 2017 2017
$000 $000 $000
(unaudited) (unaudited) (audited)
------------ ------------ --------------
Operating activities:
Loss before tax (1,111) (2,179) (9,000)
Finance income and gains (477) (596) (1,089)
Finance expense and losses 2 257 609
Depletion and amortisation 5 5 10
Impairment expense 3 - - 2,834
Chinguetti cessation credit - - (866)
Share-based payment charge - (76) (73)
Decommissioning costs (32,500) (125) (125)
------------ ------------ --------------
Operating cash outflow
prior to working capital
movements (34,081) (2,714) (7,700)
Decrease/(increase) in
inventories 363 (553) 1,585
Decrease in trade and
other receivables 458 5,833 5,672
(Increase)/decrease in
trade and other payables (1,640) 100 4,332
Decrease in provisions - (4,200) (8,041)
Net cash outflow from
operating activities (34,900) (1,534) (4,152)
Investing activities
Interest received 477 522 1,089
Purchase of property,
plant and equipment (3) (1) (7)
Exploration and evaluation
costs 3 (35) (3,637) (3,690)
Net cash generated from/(used
in) investing activities 439 (3,116) (2,608)
Net decrease in cash and
cash equivalents (34,461) (4,650) (6,760)
Cash and cash equivalents
at beginning of period 81,365 88,058 88,058
Effect of foreign exchange
rate changes (4) 85 67
Cash and cash equivalents
at end of period 46,900 83,493 81,365
============ ============ ==============
Notes to the consolidated results for the six months ended 30 June 2018
1. Basis of preparation
The financial information contained in this announcement does not constitute statutory financial statements within the meaning of Section 435 of the Companies Act 2006.
The financial information for the six months ended 30 June 2018 is unaudited. In the opinion of the Directors, the financial information for this period fairly represents the financial position of the Group. Results of operations and cash flows for the period are in compliance with International Financial Reporting Standards as adopted by the EU ('EUIFRS'). The accounting policies, estimates and judgements applied are consistent with those disclosed in the annual financial statements for the year ended 31 December 2017. These financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2017.
All financial information is presented in USD, unless otherwise disclosed.
An unqualified audit opinion was expressed for the year ended 31 December 2017, as delivered to the Registrar.
The Directors of the Company approved the financial information included in the results on 27 July 2018.
2. Results & dividends
The Group has retained earnings at the end of the period of $40.2 million (30 June 2017: $48.2 million retained earnings) to be carried forward. The Directors do not recommend the payment of a dividend (1H 2017: nil).
3. Intangible exploration and evaluation (E&E) assets
Total
$000
(unaudited)
------------
Net book value at 31 December 2016 18,846
------------
Additions during the period 3,637
Net book value at 30 June 2017 22,483
------------
Additions during the period 1,392
Impairment reversal for the period (2,834)
Net book value at 31 December 2017 21,041
------------
Additions during the period 35
Net book value at 30 June 2018 21,076
------------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR DQLFLVDFLBBD
(END) Dow Jones Newswires
July 27, 2018 02:00 ET (06:00 GMT)
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