26th Mar 2015 11:36
LONDON (Alliance News) - Sterling Energy PLC Thursday said it swung to a loss in 2014 as it fully wrote down the funding and royalty agreements for the Chinguetti oil field in Mauritania due to the drop in oil prices and declining production from the field.
The oil and gas company, which earns revenue through an economic interest in the Chinguetti field while it undertakes exploration projects in Cameroon, Somaliland, Madagascar and elsewhere in Mauritania, reported a net loss of USD12.3 million for 2014 compared with the USD8.3 million profit it made in 2013, as revenue declined to USD16.0 million from USD18.4 million, it booked USD7.9 million in impairments compared with a USD4.4 million reversal a year earlier, and operating costs rose.
Average production net to the company in 2014 fell 18% to 432 barrels of oil a day including royalty barrels, from 527 barrels in 2013, reflecting a planned 10-day shutdown in January. The lifting cost per barrel, meanwhile, increased to USD70.0 from USD53.8 due to the low level of production.
It booked a USD3.4 million provision in recognition of expected future net onerous commitments for 2015 under the Chinguetti funding agreement, while it fully impaired the Chinguetti funding agreement and royalty agreement for USD6.0 million after a commercial analysis of lower current and forecast oil prices and increased production decline rates.
It also booked an impairment of USD1.9 million after the operator on the Ampasindava block in Madagascar identified there was no commercial drillable prospect.
Its net cash resources stood at USD108.1 million at the end of 2014, down from USD120.8 million a year earlier, as it got USD6.9 million of net cashflow from Chinguetti field operations, down from USD11.2 million.
Still, Sterling's focus is on its exploration assets.
"The group has, via a combination of our own funds and carried interests, the resources to see our existing projects advance during 2015. We hold sufficient funds to acquire additional growth options to add to our portfolio; we shall continue to seek new opportunities within and beyond our existing areas of interest and shall only pursue those ventures that we believe will ultimately deliver value for our shareholders," Chairman Alastair Beardsall said.
Sterling Energy shares were up 2.9% at 17.50 pence Thursday morning. The stock has fallen 63% over the past 12 months.
By Steve McGrath; [email protected]; @stevemcgrath1
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