23rd Sep 2005 07:00
Sterling Energy PLC23 September 2005 23 SEPTEMBER 2005 STERLING ENERGY PLC 2005 INTERIM RESULTS WELL POSITIONED AHEAD OF AN EXCITING PERIOD IN STERLING'S DEVELOPMENT Sterling Energy, the AIM listed (symbol: SEY) independent oil & gas explorationand production company, today announces its 2005 Interim Results together withan update on progress and outlook. Highlights • Unaudited first half net profit of £2.4 million up 83% from the same period in 2004. • Average daily production increased by 20% to 10.2 mmcfged (H1 2004: 8.5 mmcfged). • Average realised price achieved up 11% at $6.38/mcfge (H1 2004: $5.76/ mcfge). • US gas forward sales of only $5 million locked in at $6.67/mcfge to March 2006 leaving large upside to recent higher prices for the bulk of the production - market spot prices have recently exceeded $12/mcf. • 2.1 million bbls related to the Chinguetti field with a floor price of c$38/bbl and the excess over c$50/bbl accruing to Sterling. • Proven and probable reserves of approximately 21 million boe at mid-year, up 115% over the corresponding date. • First production from the important Chinguetti development, offshore Mauritania, expected on time in February 2006. • Major farmout of offshore Madagascar interests to ExxonMobil leaving Sterling with a 30% interest carried through seismic and up to four well programme. • Possible development of heavy oil discoveries in Dome Flore enhanced by completed farmout, leaving Sterling with a 30% interest. • Consolidation of Sterling's interests in the Philippines into Forum Energy plc which was listed on AIM in August 2005. • West Africa and Gulf of Mexico exploration drilling programmes of up to 10 wells over the next year underway. Harry Wilson, Chief Executive of Sterling Energy Plc, said: "The next six months will witness the beginning of a step change in the pace ofSterling's development. We have an exploration drilling programme alreadyunderway, the start of production at Chinguetti in February next year willmarkedly increase cashflow and, given the strong commodity prices, newopportunities are arising. It's going to be a busy and exciting period." For further information contact: Harry Wilson, Chief Executive, Sterling Energy plc: +44 1582 462 121Graeme Thomson, Finance Director, Sterling Energy plc: +44 1582 462 121Martin Jackson, Citigate Dewe Rogerson: +44 207 282 2888Rob Collins, Evolution Securities: +44 207 071 4311 www.sterlingenergyplc.com Ticker Symbol: SEY STERLING ENERGY PLC 2005 INTERIM RESULTS Chairman's Statement I am again pleased to report the continuing development of your company duringthe first half of 2005. The unaudited figures to mid 2005 show an increase over the corresponding periodof 83% in net profit, an increase of 20% in daily production and 115% in provenand probable reserves over the corresponding period end. Financial progress has continued to be good, with a gross profit of £4.0 millionfor the six months to 30 June 2005, up approximately 21% over the correspondingperiod in 2004. Gas prices strengthened and our realised prices averaged $6.38/mcfge, up 11% in the period. Net profit was £2.4 million (H1 2004: £1.3million). The development of the Chinguetti field continues on schedule with oilproduction expected in February 2006. Production from this field will transformSterling's cash flow and enable it to continue to expand its explorationactivity and continue to build-up its appraisal and production activities in itscore areas. Our African exploration activities have progressed with the highlights being: - The farmout of the Madagascar acreage to ExxonMobil. Sterling is carried for a 30% interest through a significant seismic programme and up to four wells. - The farmout of our Dome Flore licence with a retained 30% interest, will optimise the evaluation of the 800-1,000 million bbl of in-place heavy oil discoveries on the licence. We were disappointed with the results of the first two exploration wellsoffshore Mauritania and one offshore Gabon, which were non-commercial. Ourpolicy of reducing risk there by farmouts meant that Sterling only paid c$0.3million in total on these wells. In the USA our exploration and development programme has been held back by lackof availability in equipment and severe weather. This will be particularly soafter the effects of Hurricane Katrina. Sterling was fortunate not to sufferdamage from this storm. Despite the successes so far, the resulting delays meanthat, in common with all of the industry in the Gulf, Sterling has had to reduceits targets for the year-end. However, we have deliberately limited our forwardsales and are able to reap the recent higher prices for the bulk of ourproduction. In the first two months of the second half our average prices havebeen $7.4/mcf and recent market spot prices have exceeded $12/mcf, due partly tothe effects of the hurricanes. Outlook With the start-up of Chinguetti production in February 2006, a sustained andlargely carried exploration programme in Africa of 6-10 wells over the nextyear, progress in the US and strong oil and gas prices, Sterling is wellpositioned for an exciting period in its development. This progress all relies on our staff and management and I extend mycongratulations to them for their commitment and effort, the further benefitsfrom which will accrue over the months and years ahead. Richard O'TooleChairman23 September 2005 Operational summary The period since the start of 2005 has seen accelerating activity for Sterlingin both its production and exploration activities. First production in Africaremains on target for February 2006, from the offshore Chinguetti fielddevelopment. Important farmouts have been secured on the heavy oil discoverieson Dome Flore and the exploration acreage offshore Madagascar, though the earlyresults of the largely carried exploration programme elsewhere in Africa havebeen disappointing. US production has risen by 20% over the correspondingperiod. The planned capital expenditure programme has seen success andproduction has increased to offset natural declines. In common with theindustry, the programme has been delayed by lack of availability of services,mainly through exceptional weather impacts and higher activity levels. Mauritania The 140 million bbl Chinguetti field development is now over 88% completed.Production is expected to rise to a plateau of 75,000 bopd gross. The hull ofthe floating production vessel arrived in Singapore in December 2004 and byMarch 2005 the principal topsides had been installed. The turret sectionintegration started at the end of June and "sail-away" to production location isscheduled for the end of this month. Meanwhile, on the Chinguetti field thelower completions of all 6 production wells and 5 water injection wells havebeen completed. In April, Sterling opened an office in Nouakchott, the capital of Mauritania.Sterling is working closely with Oil Ministry and Groupe Projet Chinguetti(GPC), the company set up by the Mauritanian Government to help manage its 12%working interest in Chinguetti. Training and assistance from Sterling isintended to help in the development of the country's fledgling energy sector. Sterling has two economic interests in the Chinguetti development. The first isthrough the Funding Agreement with the Mauritanian Government, signed inNovember 2004; Sterling receives an approximate 8% economic interest inproduction in return for funding its share of the past and development costsassociated with the Government's 12% working interest. This has been facilitatedthrough the provision of a $130 million letter of credit which is beingprogressively drawn-down to meet the costs, c$42 million of which has been drawnto date. The second interest is through a wider agreement whereby Sterling is paid aroyalty on a sliding scale on every barrel produced under a 6% working interestin PSC B, including the Chinguetti field. At recent oil prices of $58-61/bbl,the royalty payment would be around $7.75/bbl before adjustments. Sterling willreceive royalties on production from all other fields developed in PSC B andunder a 3% working interest in PSC A, as well as a cash bonus of $2 million or 1million respectively for each discovery declared commercial which is greaterthan 50 million bbls. The Tiof discovery in PSC B, which is considerably larger than Chinguetti, iscurrently being evaluated following a further successful appraisal well inFebruary 2005. Appraisal drilling on the Tevet discovery, adjacent toChinguetti in PSC B, has also recently commenced. Exploration activity on PSC B& PSC A resumed in July. The high-risk exploration wells, Sotto in PSC A andEspadon in PSC B, were abandoned as dry. At least a further three explorationwells are planned by year-end. AGC In the AGC (joint zone between Senegal/Guinea Bissau), Sterling participates intwo licences, the deep water exploration block Croix du Sud (88% interest andoperator) and the Dome Flore block (30% interest). Dome Flore was farmed out inMarch 2005 to Markmore, a Malaysian company with interests in bitumen refining. The Croix du Sud licence has been extended to January 2006 and discussions areongoing with a number of companies interested in a drilling programme. In the Dome Flore permit, Markmore, the operator, is undertaking a study of thefeasibility of economic recovery of the heavy oil deposits of Dome Flore andDome Gea, estimated at some 800-1,000 million barrels in place, with particularemphasis on steam assisted gravity drainage to facilitate the production of theheavy oil. Cameroon In consultation and cooperation with the Cameroonian authorities, Sterling hasplaced the Ntem Concession in Force Majeure. This period of suspension willallow Cameroon and Equatorial Guinea time to agree the maritime boundary betweenthe two countries which runs along the southern edge of the licence. All of thework and financial obligations of the Ntem Concession have been suspended;however Sterling is continuing technical work in preparation for drilling anexploration well once this territorial issue has been resolved. Gabon Sterling currently operates three shallow water permits in southern Gabon; theIris Marin and Themis Marin Production Sharing Contracts and recently acquiredan exclusive Technical Evaluation Agreement over the Ibekelia permit. During August and September 2005 an exploration well was drilled in the IrisMarin PSC. The Iris Iboga Marin-1 well was drilled to total depth of 2,035m andintersected an excellent quality reservoir but no significant hydrocarbons wereencountered. Sterling had a 20.57% interest but due to a farmout paid for only2.57% of the well costs. Processing of the 3D seismic data acquired in southern Themis Marin during 2004is ongoing. This survey was acquired and is being processed in conjunction withthe adjacent Gryphon Marin PSC and Etame Marin PSC. Drilling of one well isanticipated in mid 2006. Under the terms of a farm-out, Sterling will pay 2.57%for its 20.57% equity in this well. In September 2005, Sterling and its partners negotiated an exclusive TechnicalEvaluation Agreement (TEA) for the Ibekelia permit which is contiguous with theIris Marin and Themis Marin permits and is adjacent to the Gamba and Olowioilfields. Sterling is the operator with 40% equity. Madagascar In the 34,000 sq km Ambilobe and Ampasindava PSCs our exploration studies areyielding positive results and we are planning to acquire 2D seismic in 2006.This prospectivity has been recognised by other companies and in July 2005,ExxonMobil farmed in to both blocks. Under the terms of the farm-in agreement,Sterling will retain a 30% interest in the licences and will be carried throughan exploration work programme that, subject to certain milestones beingachieved, will include 2D and 3D seismic acquisition and the drilling of up totwo wells per licence. Perth Office Closure The Board has decided it will be more advantageous to manage all of the Group'sAfrican activities from its UK head office. Accordingly, the Perth office willclose in January 2006. The relocation of activities and some key personnel fromPerth to the UK will significantly reduce costs and provide for more streamlinedand efficient operations. The Board would like to thank the staff of the Perthoffice for their contribution since the acquisition of Fusion in late 2003 andfor their commitment during this handover period. Forum Energy plc During the first half, Sterling took a 15% interest in a new company, ForumEnergy plc, which was floated on AIM in August, by exchanging its non-core GSEC101 subsidiary for Forum shares. Based on the current market price, the impliedvalue of this holding is approximately £5 million compared with a book cost of£0.7 million: no profit has been included on this transaction during the period. USA In the first half of 2005 the Houston office has focused on developing its Gulfof Mexico assets through drilling, recompletions and work-overs. These effortswill continue but drilling rigs, lift boats and other necessary equipment are ingreat demand and with lower availability due to the effects of the hurricanesand rising oil and gas prices, delays are inevitable. Two drilling rigs and alift boat were contracted to handle the four development projects carried out inthe period to date and with one project waiting on results. Activity has beenfocused on the Mustang Island and Matagorda Island properties of offshore Texas,and the Eugene Island property offshore Louisiana. In the Mustang Island area, the 748 #1 well was successfully recompleted to ashallower zone and was brought on production in May at a sustained gross rate of1.5 mmcfgd, which has exceeded expectations. Sterling has a 45% NRI in thisproperty. The Eugene Island 268 #1 well was successfully recompleted up-hole and broughtonstream in July. It has established a gross rate of 3.5 mmcfgd. Sterling holdsa 45% NRI. The Mustang Island area, 749 GU #2 well was drilled for projected remainingattic reserves. To date the well has shown less than encouraging results withhigh water levels despite being "higher" than projected. The well will be put onproduction when services are available, to ascertain whether economic productioncan be established. Sterling promoted a 25% WI in this well to a local companyto cover part of its costs and has retained a 56% NRI. In Matagorda Island, the 520 #16 well was successfully worked over,re-establishing production from a wellbore in August that has not produced sincelate 1995. Initial production has been at a gross daily producing rate in excessof 1 mmcfgd. Sterling has a 46% NRI in this well. There were also some operational restrictions in the period, with plannedpipeline shut-ins, repairs, weather and closures for the above operations whichrestricted production to an average of 10.2 mmcfged, up 20% on the correspondingperiod. In the second half to-date, production has not yet increased above thelevel of the first half due to shut-ins for further pipeline maintenance,weather interruptions, unavailability of equipment to deal quickly withday-to-day production issues and declines on other wells. Recently, furtherthird party production throughput in our pipeline system has been secured and isprogressively increasing, providing a growing source of income. Sterling has farmed-in for a 28% WI in a well to be drilled in October in theGalveston offshore area close to existing Sterling production. Continuingshortages of necessary equipment have, as for all operators, hampered theplanned development programme in the second half, though Sterling anticipatesthree non-operated new wells over the next six months. The US office is currently expanding its portfolio of drilling and productionopportunities through internal generation and by participating in outsidegenerated opportunities. Financial report for the six months to 30 June 2005 Summary The six months to 30 June 2005 ("the period") have seen a sustained improvementin production levels and revenues over corresponding prior period levels, aswell as a further increase in profitability. Profit on ordinary activitiesbefore taxation in the period of £3.3 million was up 65% over the £2.0 millionof the corresponding period in 2004. Profit & loss In common with most AIM companies, Sterling has not adopted IFRS in the period,and has prepared these unaudited statements on a basis consistent with priorperiods. In the period, turnover increased to £6.7 million, up 26% on the level in thefirst half of 2004. This reflected an average production level up 20% on thefirst half of 2004 ("H1 04") and consistent with that in the second half of2004. Over 80% of production for the period was gas. Realised prices continuedto firm, with an average of $6.38/mcfge in the period, 11% up on the year 2004.Sterling has continued to hedge part of its near-term production and at mid-yearhad sold a total of $5 million of US production forward to March 2006 at anaverage price of $6.67/mcf. Cost of sales in the period averaged $2.8/mcfge($2.5/mcfge in 2004) reflecting inflation in service and maintenance costs, aswell as higher projected future capital costs which increased depletion charges. Gross profit in the period was £4.0 million, up 21% when compared with the £3.3million in H1 04. Administrative costs rose to a total of £1.3 million (H1 2004:£1.1 million),largely as the Group's staff has been expanded to accommodate a dedicated teamfor Mauritania and a further growth of the new ventures and exploration teams.As noted above, the Perth office is to be closed in January 2006 and a one-offcost of approximately £1.1 million will be taken in the second half. Profit on ordinary activities before taxation in the period was £3.3 millioncompared with £2.0 million in H1 04, up 65%. This reflects the higher netinterest income of £0.6 million, arising principally on cash deposits backingthe letter of credit for Mauritania (H1 2004: net expense £0.2 million). The taxation charge of £0.9 million principally relates to the US productionoperations, with a tax rate charged of approximately 34%. Partly due to thelevel of capital expenditures incurred on drilling, workovers and similar we donot estimate any significant current tax to be payable in the period but haveprovided for the resultant deferred tax in full. Net profit for the period was £2.4 million, up 83% over H1 2004 and 80% of thetotal for the year 2004. Fully diluted earnings per share rose 13% over H1 2004to 0.17p. Balance sheet At the end of the period equity shareholder funds had increased to approximately£160 million (end H1 2004: £60 million). This increase principally reflects thec£97 million share placing in November 2004, as well as unrealised exchangegains and reported net profits. Tangible fixed assets increased to 74% of the total fixed assets compared with44% in H1 2004. At the period end net current assets were £55 million (end H1 2004: £10million). Unrestricted cash has, as expected, fallen to £13.9 million at 30 June2005 from £20.2 million at the end of 2004, mainly due to hedging premiums/margin calls. Of this total cash, £10 million was held in US$ in the USoperations at the end of the first half. Total draws under the $130 million letter of credit for the Chinguettidevelopment were $41.6 million at the end of June 2005 and are currently $42.2million. An accrual has been made for the estimated past costs to be drawn aspart of this facility, which is currently being reviewed together with GPC. The bank loan of $32.5 million outstanding at the end of the period isclassified as long-term as it is not currently repayable until mid 2007,although it is subject to twice-yearly review. A review is currently inprogress: the "ring-fence" of the revenues generated in the US remains in place,though the ability to remit excess funds elsewhere in the Group has increased inthe period. Cash flow up The cash flow shows that £4.2 million was generated from the operations andinvestment returns in the period (H1 2004: £3.6 million). Payments related to forward contracts and US margin deposits of £8.9 million areincluded in the movement of debtors. Investments in tangible fixed assets madein the period of £18.9 million reflect principally the activity on theChinguetti development as well as on the US assets. Other exploration costs,including new ventures, absorbed £2.7 million. Outlook Sterling is well positioned for continued sustained growth in the second halfand in 2006, building on the record results of the first half. Sterling Energy plc - Consolidated profit and lossFor the six months to 30 June 2005 Six months to 30 Six months to 30 Year ended June 2005 June 2004 31 December 2004 £000's £000's £000's (unaudited) (unaudited) (audited)TurnoverExisting operations 6,735 2,895 5,138Acquisitions - 2,443 6,319 __________ __________ __________ 6,735 5,338 11,457 __________ __________ __________Cost of salesExisting operations (2,734) (1,327) (2,354)Acquisitions - (720) (2,316) __________ __________ __________ (2,734) (2,047) (4,670) __________ __________ __________Gross profitExisting operations 4,001 1,568 2,784Acquisitions - 1,723 4,003 __________ __________ __________ 4,001 3,291 6,787 __________ __________ __________Administrative expensesAmounts written off intangible fixed assets - (50) (50)Other:Existing operations (1,319) (658) (1,346)Acquisitions - (368) (656) __________ __________ __________ (1,319) (1,076) (2,052) __________ __________ __________Operating profitExisting operations 2,682 860 1,388Acquisitions - 1,355 3,347 __________ __________ __________ 2,682 2,215 4,735 __________ __________ __________Interest receivable & similar income 997 85 312Interest payable & similar charges (412) (316) (883) __________ __________ __________Profit on ordinary activities before taxation 3,267 1,984 4,164 Taxation (Note 6) (896) (690) (1,197) __________ __________ __________Profit on ordinary activities after taxation 2,371 1,294 2,967 Minority interest - 1 2 __________ __________ __________Profit for the financial period 2,371 1,295 2,969 __________ __________ __________Earnings per share: (Note 7) Basic 0.17p 0.16p 0.34p __________ __________ __________ Diluted 0.17p 0.15p 0.33p __________ __________ __________ Sterling Energy plc - Consolidated balance sheetAs at 30 June 2005 As at As at As at 30 June 2005 30 June 2004 31 December 2004 £000's £000's £000's (unaudited) (unaudited) (audited) Fixed assetsIntangible assets 34,140 40,502 30,629Tangible assets 98,483 32,468 51,754 __________ __________ __________ 132,623 72,970 82,383 __________ __________ __________ Current assetsDebtors 21,438 4,130 2,968Cash at bank and in hand 65,135 7,910 89,556 __________ __________ __________ 86,573 12,040 92,524Creditors: amounts falling due within one year (32,049) (2,122) (3,762) __________ __________ __________Net current assets 54,524 9,918 88,762 __________ __________ __________Total assets less current liabilities 187,147 82,888 171,145 __________ __________ __________Creditors: amounts falling due after one year (18,131) (15,104) (15,014)Provisions for liabilities and charges (7,839) (6,620) (6,671) __________ __________ __________Net assets 161,177 61,164 149,460 __________ __________ __________ Capital and reservesCalled-up share capital 13,933 8,227 13,933Share premium account 141,600 54,750 141,600Currency translation reserve 1,075 (2,076) (8,271)Profit and loss account 3,537 (508) 1,166 __________ __________ __________Equity shareholders' funds 160,145 60,393 148,428 __________ __________ __________Equity minority interest 1,032 771 1,032 __________ __________ __________Total capital employed 161,177 61,164 149,460 __________ __________ __________ Sterling Energy plc - Consolidated statement of recognised gains and lossesFor the six months to 30 June 2005 Six months Six months Year ended to 30 June 2005 to 30 June 2004 31 December 2004 £000's £000's £000's (unaudited) (unaudited) (audited)Profit for the financial period 2,371 1,295 2,969Currency translation adjustments 9,346 (194) (6,389) __________ __________ __________Total recognised gains/(losses)relating to the period 11,717 1,101 (3,420) __________ __________ __________ Reconciliation of movements in Group shareholders' fundsFor the six months ended 30 June 2005 Six months Six months Year ended to 30 June 2005 to 30 June 2004 31 December 2004 £000's £000's £000's (unaudited) (unaudited) (audited) Profit for the financial period 2,371 1,295 2,969Other recognised losses for the period 9,346 (194) (6,389)Shares issued (net of expenses) - 4,418 96,974(Decrease) in shares to be issued - (1,716) (1,716) __________ __________ __________Total movement in the period 11,717 3,803 91,838Shareholders' funds at start of period 148,428 56,590 56,590 __________ __________ __________Shareholders' funds at end of period 160,145 60,393 148,428 __________ __________ __________ Consolidated cash flow statement (see note 8)For the six months ended 30 June 2005 Six months to Six months to Year ended 30 June 2005 30 June 2004 31 December 2004 £000's £000's £000's (unaudited) (unaudited) (audited) Net cash inflow/(outflow) from operations (11,794) 887 8,145 Returns on investments and servicing of finance 750 (98) (290) Capital expenditure (21,634) (21,502) (16,109)Acquisitions - - (18,763) __________ __________ __________Cash outflow before financing (32,678) (20,713) (27,017)Financing 25,887 13,987 34,818 __________ __________ __________(Decrease)/increase in cash (6,791) (6,726) 7,801 __________ __________ __________ Sterling Energy plc - Notes to the interim financial informationFor the six months to 30 June 2005 1. There being no distributable reserves, no interim dividend can be paid for the six months to 30 June 2005. 2. This statement does not comprise statutory accounts as defined in Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2004, on which the auditors gave an unqualified report, have been filed with the Registrar of Companies. 3. The interim financial information as at and for the six months ended 30 June 2005 have been neither audited nor reviewed by Sterling Energy plc's auditors. 4. The financial information included in this document has been prepared on a consistent basis and using the same accounting policies as the audited financial statements for the year ended 31 December 2004. 5. The Directors of the Company approved the financial information included in this interim result document on 23 September 2005. 6. The Group tax charge comprises: Six months to Six months to Year ended 30 June 2005 30 June 2004 31 December 2004 £000's £000's £000's (unaudited) (unaudited (audited) Current tax 470 - 226 Deferred tax-origination and reversal of timing differences 426 690 971 __________ __________ __________ 896 690 1,197 __________ __________ __________ The difference between the current taxcharge of £470,000 and the amountcalculated by applying the applicablestandard rate of tax is as follows: Group profit on ordinary activities before tax 3,268 1,984 4,164 Tax on Group profit on ordinary activities at standard US corporationtax rate of 34% (year 2004: 34%) 1,111 675 1,416 Effects of: Expenses not deductible for tax purposes 58 83 87 Income not assessable for tax purposes - (217) - Capital allowances (in excess of)/ exceeded by depreciation (548) (1,594) (136) Other temporary differences - - (245) Difference in overseas tax rates (35) - 33 Adjustment for tax losses (see below) (116) 1,053 (929) __________ __________ __________Group current tax charge for the period 470 - 226 __________ __________ __________ The Group has generated its results primarily in the US. The tax rate in theabove reconciliation for all periods presented is the standard rate for UScorporation tax. 7. Basic earnings per share is based on the profit on ordinary activities after taxation of £2,371,000 (first half 2004: profit for the period, £1,295,000; year 2004: profit for the year £2,969,000) and the weighted average number of 1,393,325,558 ordinary shares of 1p each in issue during the period (first half 2004: 815,864,161; year 2004: 884,788,687). For the six months to 30 June 2005, the fully diluted earnings per share was 0.17p per share. This is computed based on 1,423,154,346 ordinary shares, being the total used for the computation of the basic earnings per share as adjusted in assuming the exercise of 29,828,788 of the 69,225,000 options outstanding as at the end of June 2005. 8. Notes to the cash flow statement a. Reconciliation of operating profit to net cash flow from operations Six months to Six months to Year ended 30 June 2005 30 June 2004 31 December 2004 £000's £000's £000's (unaudited) (unaudited) (audited) Operating profit 2,682 2,215 4,735 Depletion and depreciation 1,554 1,337 3,057Amounts written off intangible fixed assets - 50 50Increase in debtors (18,471) (3,058) (1,455) Increase in creditors 2,441 343 1,758 __________ __________ __________Net cash inflow/(outflow) from operations (11,794) 887 8,145 __________ __________ __________Returns on investments and servicingof finance Interest received 997 85 309Interest paid and exchange differences (247) (183) (599) __________ __________ __________ 750 (98) (290) __________ __________ __________Capital expenditure Purchase of intangible fixed assets (2,688) (1,219) (3,618) Purchase of tangible fixed assets (18,946) (20,283) (12,491) __________ __________ __________ (21,634) (21,502) (16,109) __________ __________ __________Acquisitions - - (18,763) __________ __________ __________ __________ __________ __________ Financing Issue of ordinary shares, net of expenses - - 92,557 Drawdown under bank loan facility 2,887 13,987 13,191 Movements on restricted accounts 23,000 - (70,930) __________ __________ __________Net cash inflow 25,887 13,987 34,818 __________ __________ __________ b. Analysis and reconciliation of net funds At 1 January Cash flow Exchange & At 30 June 2005 2005 Other Movement £000's £000's £000's £000's Cash at bank and in hand* 20,233 (6,791) 441 13,883Debt due after 1 year (14,233) (2,887) (1,011) (18,131)Debt due within 1 year - - - - __________ __________ __________ __________Net funds/(debt) 6,000 (9,678) (570) (4,248) __________ __________ __________ __________ The cash balance at 30 June 2005 excludes £51,252,000 of restricted cash (end of2004: £69,323,000) 1. Following the end of the period, a Board decision to close the Perth office and transfer management of related assets to the United Kingdom was made known to the staff. Discussions have been held with local staff to either relocate to the United Kingdom or to advise on terms of severance. No provision has been made in the financial statements as at the balance sheet date no legal or constructive obligation then existed. The amount of the provision is currently estimated at approximately £1.1 million and will be included in the full year financial statements. 2. Further copies of this interim statement are available from the Company Secretary, Sterling Energy plc, Mardall House, 7-9 Vaughan Road, Harpenden, Hertfordshire, AL5 4HU, United Kingdom. Telephone +44 (0) 1582 462121, Fax +44 (0) 1582 461221, [email protected] -------------------------------------------------------------------------------- Definitions: bbls: barrels of oilbcf: billion cubic feet of gasbcfge: billions of cubic feet of gas equivalentboe: barrels of oil equivalentbopd: barrels of oil per daymcf: thousand cubic feet of gasmcfged: thousand cubic feet of gas equivalent per daymmbbl: millions of barrelsmmcfgd: million cubic feet of gas per daymmcfged: million cubic feet of gas equivalent per dayNRI: net revenue interesttcf: trillion cubic feet of gasWI: working interest This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SEY.L