Sterling Resources Loss up 86%, Despite Romania Proceeds
Canada's Sterling Resources late on April 19 reported a net loss for 2015 of C$206.9mn (US$162.5mn), almost double its 2014 net loss of C$111mn, despite proceeds last year from its Romania divestment.
The Calgary-based firm finalised the sale of its interests in Romanian business to Carlyle International Energy Partners (CIEP) for $42.5mn in August 2015, including stakes in gas-rich licence blocks 13 Pelican, 15 Midia and 25 Luceafural in the Black Sea. Sterling though had to also pay a one-off $10mn to another firm Gemini and issue it with 60.4mn shares. Carlyle reports its 1Q earnings on April 27.
Sterling said the main factor for its 2015 loss was the revaluation of its deferred tax asset, which resulted in a debit of C$126.8mn to net income. It also booked C$39.4mn impairment costs in 2015, of which C$38.1mn on its Cladhan oil field in the UK North Sea.
Sterling will be left with UK and Dutch assets only, as it is now also exiting French exploration.
One bright area was the UK Breagh gas field, which averaged 102.5mn ft3/d (1.06bn m3/yr) and 400 b/d condensate during 2015 – of which 30.8mn ft3/d and 120 b/d net to Sterling – thus exceeding the firm’s short-term forecast, and providing Sterling with 2015 revenue from Breagh of $76.6mn. But less is expected this year.
Ineos acquired a 70% interest in Breagh from Russia-backed fund LetterOne in December 2015. “Ineos sought to defer the planned infill drilling campaign and the onshore compression project” noted Sterling: “The planned infill development drilling campaign from the Breagh Alpha platform has now been delayed, with the likely start date now in 2017.” Breagh is now expected to average 69mn ft3/d (20.7mn ft3/d net to Sterling) due to a natural decline in production from existing wells.
Of its wholly-owned Ossian and Darach prospects 25km north of Breagh, Sterling is seeking a farm-down. The UK Oil & Gas Authority, an upstream regulator, extended this licence's expiry date to end-2018, by when a commitment well must be drilled, in return for Sterling ceding block 42/2a.
A licence extension was also granted until January 2017 on Dutch blocks F17 and F18 which Sterling operates with a 35% interest.
Mark Smedley