24th Jul 2006 07:02
Sterling Energy PLC24 July 2006 24 JULY 2006 STERLING ENERGY PLC ("Sterling" or the "Company") TRADING UPDATE Sterling Energy today published the following Trading Update. The Company's performance in the first six months of 2006 has been materiallybetter than the comparable period in 2005. Average daily Group production rose from the corresponding period by in excessof 150% to more than 25 million cubic feet of gas equivalent per day ("mmcfged") Realised Gulf of Mexico prices were up over 12% to US$7.25/mcfge and averageproduction was over 7.8 mmcfged in the period (year 2005: 9.7 mmcfged). USproduction levels have recently risen to over 10.1 mmcfged, 35% up on the firstquarter, with new wells fully onstream and with greater equipment availability.The Company recently spudded an onshore well, Trehan1, in S Louisiana, the firstof four exploration wells planned in the US in the second half which togethercould materially impact reserves and production. The start-up of the Chinguetti Field in late February 2006 also contributedstrongly to cashflow, with US$32 million received from three first half cargosales and royalties. The next lifting is expected in early August 2006. TheField operator continues to address the technical and operating issues in thisfirst field to be developed offshore Mauritania. Lower than expected productionwas offset in the period by higher than expected oil prices. Current gross fieldproduction rates are 35-40,000 barrels of oil per day ("bpd"). Sterling expectsthat these issues will be progressively addressed and resolved over the courseof 2006/early 2007, including with infill wells. Whilst the expectation offuture production rates are lower than initially projected by the operator, thecurrent studies and operations will help to clarify the optimum futureproduction levels and will enable estimates of Chinguetti and other Mauritanianreserves to be updated later in the year. Currently, US$96 million of the US$130million letter of credit provided under the Funding Agreement has been drawn. A declaration of commerciality is expected by year-end on the Tiof field, inwhich Sterling has a sliding scale royalty interest over 6% and for which itpays no development costs. An initial gross 50,000 bpd production level in 2009is envisaged, with 40-60 million bbls being developed in the initial phase.There would then be scope to extend the development through satellite tie-backs.The Tevet, Labeidna and Banda oil discoveries are also being looked at fortie-back to Chinguetti, which would be at no cost to Sterling. Tevet is being "fast tracked", with Sterling having a royalty interest over 6%. Drilling is also expected to commence shortly on the 150 million bbl Colinprospect, in which Sterling has a royalty interest over 3%. Further carriedexploration wells are expected over the next year. Elsewhere, a largely carried exploration programme of up to 3 wells, offshoreGabon and Equatorial Guinea, is expected over the next year. In addition,interpretation of the recently acquired 4,000 km of 2-d seismic offshoreMadagascar has commenced and initial results give cause for optimism. Workcontinues on the Kurdistan project. With the increased cash-flow, other high-impact projects are being activelysought in order to expand Sterling's upside potential. The interim results for the six months to 30 June 2006 will be announced on 22September 2006. Enquiries Sterling Energy (01582 462 121) Web site: www.sterlingenergyplc.comHarry WilsonGraeme Thomson Citigate Dewe Rogerson (020 7638 9571)Media enquiries: Martin JacksonAnalyst enquiries: Nina Soon This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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