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AFENTRA PLC — Annual Report 2012
Mar 18, 2013
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RNS Number : 1835A
Sterling Energy PLC
18 March 2013
18 March 2013
STERLING ENERGY PLC
ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
Sterling Energy Plc ("Sterling" or the "Company") is an upstream oil and gas company listed on AIM in London. Sterling is an experienced operator of international licences with a focus on projects in Africa and the Middle East. Sterling has high potential exploration projects in Cameroon and Madagascar, and an interest in production in Mauritania.
2012 SUMMARY
· Reached agreements for the prolongation of exploration licences in Madagascar and now awaiting ratification.
· Completed exploration operations in the Sangaw North block in Kurdistan.
· Received $12.7 million of net cash flow from Chinguetti field operations during 2012 (2011: $11.2 million).
· Cash resources at 31 December 2012 of $120.3 million (2011: $115.8 million).
· Company remains debt free.
CHAIRMAN'S STATEMENT
Sterling remains well funded and is actively pursuing new opportunities to broaden our exploration portfolio. During 2012, we recruited several new sub-surface specialists to work under our Exploration Director who joined in November 2011; refreshment of our sub-surface team has increased the breadth and depth of our geological expertise and experience. The team has screened numerous new ventures, reviewing several in detail and, with the additional expertise of the finance and legal functions, undertaken due diligence on several highly ranked opportunities, the more attractive being presented to the board. However those projects supported by the board either failed to pass the higher levels of due diligence undertaken prior to execution of transaction documents, or were acquired by others who appeared to be able and willing to offer considerably larger consideration to the vendors. Some of the countries we have been actively looking at over the last 12 months have become very popular with entry prices for new ventures reaching new highs. Whilst we continue to focus on Africa and the Middle East, we are now looking at other geographical areas.
Our most recent news is the termination of the Sangaw North Production Sharing Agreement (PSC), bringing to an end our 5-year exploration program in the highly prospective area of Kurdistan. One of the primary advantages of the Sangaw North block was that it contained one very large prospect requiring one exploration well to determine if it was to be a potentially commercial accumulation. The downside we have now experienced is that after the disappointing results announced in 2011, in our judgment there was little potential remaining. Following the acquisition of more 2D seismic in 2012, Sterling with its joint venture partner Addax Petroleum, decided not to drill a further exploration well and to subsequently withdraw from the PSC. Whilst the outcome is disappointing, we believe the initial resource potential of the Sangaw North block, a view shared by Addax when they farmed-in and paid for our drilling costs, justified our own financial exposure in this project. Now we must look for similar 'risk-reward' opportunities, hopefully with a better outcome.
In Cameroon we have worked with Murphy Oil, who is now the operator of the Ntem block, to refine the preferred choice of prospects to a drill-ready status. We remain excited about the prospectivity of the Ntem block and look forward to resuming our exploration of the block with the drill-bit when the resolution of the border dispute has progressed to the satisfaction of both us and our partners.
In Madagascar we have made good progress with OMNIS, the state oil company, to re-phase the outstanding work commitments under the Ampasindava and Ambilobe licence agreements following the suspension of exploration activities after the change of government in March 2009. We believe the various parties involved in the roadmap towards democratic elections have agreed to reschedule the elections to later in 2013, which we expect to enable the resumption of operations in the country.
Financial
The Company had cash resources of $120.3 million at the end of 2012. Our work programme for 2013 is fully funded and we have substantial funds available for new venture activity. We remain pleased that the revenue from Chinguetti field operations in Mauritania continued to provide positive cash flow during 2012 in excess of Sterling's administrative costs.
Outlook for 2013 and beyond
We are optimistic that progress towards a resolution of the border dispute between Cameroon and Equatorial Guinea will be made in 2013 and we are ready to commence the drilling programme to evaluate the large prospects identified from 3D seismic. In Madagascar the roadmap for elections indicates a democratically elected government should be in place during 2013. We believe the Ntem and Ampasindava blocks contain significant potential value waiting to be tested with the drill-bit.
During 2013 our key objective is to add to our portfolio of assets. We will look both within and beyond our legacy areas for the right opportunity but remain focused on acquiring only those ventures which we believe will deliver real growth and value for our shareholders.
I would like to thank our shareholders for their continuing interest in Sterling and all our staff for their hard work during 2012.
Alastair Beardsall
Chairman
CHIEF EXECUTIVE'S REVIEW
Sterling is an oil and gas company currently focused on exploration in Africa and the Middle East. The Company's strategy continues to be to build shareholder value through participation in the exploration drilling of large exploration prospects whilst retaining a material working interest. The Company's existing portfolio consists principally of large working interests in high materiality exploration licences acquired early in the exploration of an area. The Company has then advanced understanding of the exploration play through the acquisition of data and the application of technical studies, and reduced the exploration risk to a level that is commercially viable for the drilling of exploration wells. When appropriate the Company has introduced partners, generally through a farm-down process, to pay some, or all, of Sterling's share of the costs of exploration drilling operations.
Following the completion of exploration activities in Kurdistan, the Company's exploration portfolio consists of highly prospective interests in two areas, Cameroon and Madagascar. With this concentrated portfolio, the drilling of exploration wells is infrequent and the outcome of success or failure in any one well will greatly affect the longer term value of the Company. Success in any one exploration well has the potential for very large returns for shareholders and, by farming-down a proportion of our working interest in exchange for a third party to cover our share of the costs, the down side of our financial exposure is limited.
In Kurdistan, the Company completed the exploration of the Sangaw North PSC area by acquiring and interpreting further 2D seismic data targeting the potential of a secondary prospect along the flank of the main structure, analogous to discoveries made in adjacent acreage to the south east. Sterling, along with our joint venture partner, concluded that the risked potential did not justify the cost exposure of an exploration welland elected to withdraw from the PSC. Although the outcome from our exploration activities in Kurdistan has been disappointing, this venture offered shareholders the potential of a very large addition in value in the success case, with the downside limited by the farming out of a portion of the Company's interest in return for a carry of costs through the drilling of the first exploration well.
In Cameroon, Sterling has conducted detailed interpretation of the reprocessed 3D seismic, completed in 2011, increasing the Company's confidence in the prospects previously identified within the licence area. A stacked series of submarine fans, each having, in the Company's best estimate, gross un-risked prospective recoverable resources of several hundred million barrels of oil, may offer the potential for multiple targets to be intersected by the first exploration well. While the overlapping maritime border claim between Equatorial Guinea and Cameroon has not yet been resolved, we believe that progress continues and that the joint venture partners, Sterling and Murphy Cameroon Ntem Oil Co. Ltd (Operator), are well placed for the drilling of a very high potential exploration well.
In Madagascar, significant progress has been made, in accordance with the 'roadmap' signed by the incumbent Government and their African neighbours in 2011, towards the holding of democratic elections scheduled to take place in 2013. Sterling has material interests in two high potential exploration licences, Ambilobe and Ampasindava, located in the deep water basins offshore north-west Madagascar. The Company has concluded discussions with OMNIS, the state agency managing the petroleum resources of Madagascar, concerning the scheduling of the exploration period in these licences, and expects that exploration activities will resume in both licences in 2013. On resumption, each licence will have the same remaining duration and obligations in the current exploration periods as existed in March 2009 when activities last took place. In Ampasindava, the large Sifaka prospect is now expected to be drilled during 2014 or 2015.
With the completion of exploration activities in Kurdistan, the Company's exploration portfolio has become more concentrated. Sterling's strategy includes the expansion of the existing portfolio through the addition of exploration assets offering material potential value to shareholders. During 2012, the Company strengthened its technical and commercial team, completed a preliminary screening of many exploration opportunities in sub-Saharan Africa, and evaluated a number in more detail. Through this process, the Company identified several attractive opportunities to complement its existing portfolio. However, a combination of more detailed due diligence that identified unacceptable commercial and legal risks, and more aggressive bidding terms by our peers, resulted in no new ventures being secured during the period. The Company continues to identify and evaluate a number
of interesting opportunities, and the expansion of the existing portfolio will be a key area of focus during 2013.
The Company also has an economic interest, approximately equivalent to 8%, in production from the Chinguetti field in Mauritania and a minor royalty interest in the surrounding explorationacreage. Chinguetti is a mature field with no further development planned. Gross oil production during 2012 averaged approximately 6,256 barrels per day. Cash flow from our interests in Chinguetti currently covers the Company's administrative overhead costs and makes a contribution to the cost of operations. Whilst the cash flow from this project is significant, this asset is not material in comparison to the future potential of our other projects.
Sterling's exploration portfolio consists of highly prospective and material exploration projects in two emerging exploration areas, Cameroon and Madagascar. As both are progressing slower than we would like, due to external factors not controlled by Sterling, the planned exploration programme in existing assets during 2013 is relatively modest and consists of the acquisition of a site survey in the
Ampasindava licence, in preparation for subsequent well drilling, and the acquisition of 2D seismic data across nearby leads. However, Sterling is ready to accelerate activities in both of these areas should the opportunity arise.
Sterling has a strong balance sheet with cash resources of $120.3 million at 31 December 2012 and generates cash, from production, in excess of its administrative and overhead costs. The Company is confident that the external factors adversely influencing the existing exploration assets will be resolved in due course, and that it is well placed to build on the existing portfolio in a manner consistent with the Company's strategy, using its existing resources
Angus MacAskill
Chief Executive Officer
OPERATIONS REVIEW
CAMEROON
Ntem (WI 50%)
The Ntem concession area is a deep water block situated in the southern Douala/Rio Muni Basin and lies adjacent to the northern maritime border of the Rio Muni province of Equatorial Guinea. Water depths range from 400m to 2,000m across the block. During the first term of the concession over 2,100km of 2D and 1,500km2 of 3D seismic data were acquired. Additional seismic and gravity data were purchased.
This large block is undrilled and is well placed with respect to both Tertiary and Upper Cretaceous plays, which have both proved successful in West Africa. To the north of the block, Tertiary oil, gas and condensate discoveries made by Noble Energy commenced production in 2011, and Euroil (Bowleven) continue to appraise their nearby discoveries and are progressing these towards development.
During 2012 Sterling interpreted the re-processed 3D seismic data, which provided significantly improved data quality and increased Sterling's confidence in the material exploration prospects previously identified in the block. The Company is in the process of working up a full prospect inventory for the block and considers that a stacked series of submarine fans, offering the potential for multiple targets being intersected by one exploration well, are ready to drill. Current work confirms the significant potential of these prospects, with each having gross un-risked prospective recoverable resources of several hundred million barrels.
In November 2011 Sterling completed a farm-out agreement with Murphy Cameroon Ntem Oil Co. Ltd (Murphy Oil), a wholly owned subsidiary of Murphy Oil Corporation under which Murphy Oil was assigned a 50% working interest in, and operatorship of, the Ntem concession. Sterling retains a 50% non-operated working interest. As consideration, Murphy Oil paid to Sterling a contribution towards past costs and is committed to fully fund joint operations in relation to the current phase of exploration.
Operations within the Ntem concession area are currently suspended under the force majeure provisions of the licence owing to an overlapping maritime border claim between Cameroon and Equatorial Guinea. The Company believes that both countries are actively working to resolve this issue and that the impact of the outcome will be either neutral or positive to the Company's position. However, it is possible that the resolution could take longer than expected and that the outcome could have a negative effect on the Company's position.
When force majeure is lifted, there will be 15 months remaining in the current exploration period which includes the drilling of one exploration well. Having introduced an experienced deep water operator, the Company is well placed for this operation when it occurs.
MADAGASCAR
Sterling's Ambilobe and Ampasindava blocks are located in the Majunga and Ambilobe deep water basins, respectively, offshore north-west Madagascar. Exploration activity in these blocks continues to be delayed due to the political situation in the country following a change of Government in March 2009. The Government of Madagascar has not been recognised by the African Union or by the United Nations but in September 2011, the political parties in Madagascar agreed a process, prepared by the Southern African Development Community, which involved establishment of a Transitional Government, and with the objective of holding democratic elections, which are expected to take place in 2013.
During 2012, discussions continued with OMNIS, the state regulator, and formal agreement was reached to prolong the current exploration period of both the Ambilobe and Ampasindava production sharing contracts with each licence having the same remaining duration and obligations in the current exploration periods as existed in March 2009; in effect, the exploration periods will have been suspended from March 2009 to when they resume. These agreements now await formal ratification by the Government.
Ampasindava (WI 30%)
The production sharing contract (PSC) for Ampasindava is in the third phase of the exploration period with a minimum work commitment of one exploration well. The large Sifaka prospect is ready to drill and has been independently estimated to contain gross un-risked best estimate prospective recoverable resources of 1.2 billion barrels (RISC Competent Persons Report, March 2008). ExxonMobil (WI 70%, Operator) and Sterling plan to drill this well once political stability is re-established.
Following the farm-in by ExxonMobil in 2005, Sterling's costs are carried up to a fixed amount. The cost to drill the Sifaka prospect is estimated to exceed the remaining carry and the Company has started a farm-out process to introduce an additional partner, and reduce its current working interest, to cover these costs. It is currently unlikely that an exploration well will commence drilling before mid-2014.
Ambilobe (WI 100% & Operator)
The PSC for Ambilobe is in the second phase of the exploration period. All work commitments have been fulfilled by completing geological and geophysical studies and acquiring approximately 1,000km of 2D seismic. A number of large Cretaceous and Tertiary leads have been identified, located in both shallow and deep waters, which will require additional seismic data to develop into potential drillable prospects. The Company has started a farm-out process to introduce a partner to carry the costs of the next stage of exploration which is likely to include the acquisition of additional seismic data to define the leads that have been identified.
KURDISTAN
Sangaw North PSC (Relinquished)
The Sangaw North block lies in the foothills region of the Zagros fold belt, approximately 140km south east of Erbil, the capital of the Kurdistan region of Iraq.
During 2012, Sterling completed its exploration of the Sangaw North block, having signed the Sangaw North Production Sharing Contract ("PSC") in November 2007, targeting high-impact exploration at moderate exploration risk, and in early 2013 the Company withdrew from the PSC.
In July 2008, Sterling entered into a farm-out agreement with Addax Petroleum Sangaw Limited (Addax) under which Addax paid Sterling's past costs, seismic acquisition costs, and costs for drilling the first exploration well on the block, excluding testing. Sterling retained a 53.33% interest in the PSC.
Following the acquisition of 325km of 2D seismic in November 2008, the Sangaw North-1 exploration well commenced drilling in early 2010, targeting major exploration potential in Triassic, Jurassic, and Cretaceous aged formations within a large anticline structure. Five flow tests were conducted with gas being produced, along with formation water, in all five of the flow tests at rates that were not commercial and the well was plugged and abandoned.
Having identified additional exploration potential, the joint venture partners entered the second sub-period of the exploration phase of the PSC in November 2011. The Company completed acquisition of a further 117km of 2D seismic data in mid-2012. Interpretation of the new 2D seismic data indicated that the risked potential of a secondary prospect along the flank of the main structure, analogous to the recent discoveries made in adjacent acreage to the south east of the Sangaw North PSC area, did not justify the cost exposure of an exploration well. A farm-out process was conducted which did not result in any offers of participation, indicating the wider industry concurred with the Company's view.
Under the terms of the PSC, the joint venture partners were required to notify the Kurdistan Regional Government of Iraq (KRG) on or before 31 January 2013 whether the partnership intended to drill a further exploration well on the Sangaw North block. On 29 January 2013, Sterling notified the KRG of the joint venture partnership decision not to drill a second exploration well in the contract area and the PSC automatically terminated on that date. The work commitments under the PSC have been satisfied.
MAURITANIA
Chinguetti (Economic Interest via Funding and Royalty Agreements)
Sterling has economic interests in the Chinguetti field through a funding agreement with Societe Mauritanienne Des Hydrocarbures, Mauritania's national oil company, and a royalty agreement with Premier Oil.
Gross production during 2012 averaged 6,256 bopd (2011: 7,250 bopd) and the average production net to Sterling, from the Company's economic interests, during 2012 was 523 bopd (2011: 629 bopd). Production in the first half of the year was reduced by a shutdown of 17 days due to a hydrate blockage in the gas pipeline connecting Banda to Chinguetti and a further shutdown of 9 days due to a failure in the subsea instrumentation controlling the operations of the gas well in the Banda field. Gross production during the month of December 2012 averaged 6,911 bopd (December 2011: 6,800 bopd).
Sterling estimates that at the end of 2012, Chinguetti held a remaining 6.9 million barrels of gross proved and probable reserves (2P) that could be accessed with the existing wells, with Sterling's net 2P reserves, from with the Company's economic interests, of 0.475 million barrels (2011: 0.664 million barrels).
No in-fill drilling or work-over activity took place on the Chinguetti field during 2012. Planned shutdowns were conducted over a total of 4 days in the second half of 2012 for maintenance of the floating production and storage facility and subsea equipment.
In the event of any commercial development of existing or future discoveries within the PSC-A, PSC-B and C-10 contract areas, Sterling will be entitled to revenue, but will not have any cost obligations, under its royalty interest agreements with Premier Oil.
In November 2012, the Banda field, located in PSC-A and operated by Tullow Oil Plc, was declared commercial and it is planned that the field will supply gas to a new local power station, subject to completion of a Gas Sales Agreement.
Tullow Oil Plc plans to drill an exploration well in the C-10 contract area in the second half of 2013.
Philip Frank
Exploration Director
FINANCIAL REVIEW
SELECTED FINANCIAL DATA
| 2012 | 2011 | ||
| Chinguetti production 1 | bopd | 523 | 629 |
| Year end 2P reserves 1 | 000 boe | 475 | 664 |
| Revenue | $million | 22.5 | 19.1 |
| EBITDA 1 | $million | 11.1 | 11.6 |
| (Loss)/profit after tax | $million | (12.9) | 18.4 |
| Net cash investment in oil & gas assets | $million | 4.4 | 1.7 |
| Year end cash (including partner funds) | $million | 120.3 | 115.8 |
| Year end debt 1 | $million | - | - |
| Year end net cash (including partner funds) | $million | 120.3 | 115.8 |
| Average realised oil price (net of hedges) | $/bbl | 102.6 | 108.5 |
| Total cash operating costs (produced) | $/bbl | 50.8 | 34.0 |
| Year end share price | Pence | 39 | 40 |
| Share price change 1 1 Key performance indicators |
% | (3) | (53) |
HIGHLIGHTS
· Group net loss of $12.9 million in 2012 (2011: Profit $18.4 million);
· Impairment of Sangaw North licence $18.4 million following decision to relinquish;
· Cash balance at year end of $120.3 million (2011: $115.8 million);
· Average 2012 Chinguetti production 523 bopd (2011: 629 bopd);
· Debt free throughout 2012.
REVENUE AND COST OF SALES
2012 production averaged 523 bopd, including Royalty barrels, a decrease of 17% from the 629 bopd averaged in 2011. A large proportion of the decrease was due to isolated operational factors comprising a 17 day stoppage following a hydrate blockage and a 9 day stoppage following a failure of subsea instrumentation.
Currently, all of the Group's production is from the Chinguetti field and the Group's production was 536 bopd for the month of December 2012.
| 2012 | 2011 | |
| Liftings (bbls) 1 | 219,177 | 176,345 |
| Revenue ($million) | 22.5 | 19.1 |
| Revenue / bbl ($) | 102.6 | 108.5 |
| Lifting cost ($million) | (12.0) | (6.1) |
| Lifting cost / bbl ($) | (54.9) | (34.7) |
| 1 Net Sterling production during the year totalled 191,583 |
Gross volumes lifted and sold during the year were up by 28% to 2.6 million barrels (2011: 2.0 million barrels), due mainly to timing differences on liftings of oil stored in facilities at the Chinguetti field (2012: 3 liftings, 2011: 2 liftings).
The lifting cost per barrel has increased in 2012 by $20.2 to $54.9 (2011: $34.7). $9.8 of this increase relates to the increased per unit depletion of the Chinguetti asset (2011: $nil) following the $8.2 million impairment reversal in 2011 with the balance of the increase due to additional maintenance costs and
the payment of accumulated environmental contributions since the commencement of production in 2006.
LOSS FOR YEAR
The 2012 loss totalled $12.9 million (2011: profit $18.4 million).
| $ (million) | |
| Profit for year 2011 | 18.4 |
| Increase in revenue | 3.3 |
| Increase in per unit depletion | (2.2) |
| Increase in operating costs | (3.8) |
| Decrease in G&A | 0.9 |
| Impairment of Sangaw North | (18.4) |
| Impairment reversal of Chinguetti (2011) | (8.2) |
| Other impairment reversals | 0.3 |
| Increase in pre-licence expenditure | (1.1) |
| Decrease in finance income & expense | (2.3) |
| Loss for year 2012 | (12.9) |
In December 2012, the Group fully impaired its Sangaw North exploration asset following a decision to formally relinquish the licence. The impairment of Sangaw North totalled $18.4 million (total Group impairment expense $18.1 million which include reversals of $324k with respect to former assets in Gabon). The Group's direct operating costs increased by $3.8 million and depletion increased by $2.2 million following the reversal of prior year impairment losses in 2011.
Group administrative overhead decreased during the year to $2.8 million (2011: $3.7 million). Included within this charge is $1.0 million (2011: $1.9 million) relating to share-based payment charges.
A portion of the Group's staff costs and associated overheads are recharged to joint venture partners ($512k), expensed as pre-licence expenditure ($1.9 million), or capitalised ($1.9 million) where they are directly attributable to on-going capital projects. In 2012 this portion amounted to $4.3 million (2011: $5.1 million).
A summary of these movements are provided below:
| 2012 | 2011 | |
| $ (million) | $ (million) | |
| Group administrative overhead (page 10) | (2.8) | (3.7) |
| Costs capitalised | (1.9) | (1.6) |
| Costs recharged to JV partners | (0.5) | (2.5) |
| Pre-licence expenditure | (1.9) | (1.1) |
| (4.3) | (5.1) | |
| Share based payment expense | 1.0 | 1.9 |
| Other non-cash expenditure | - | 0.2 |
| Group cash G&A expense | (6.1) | (6.9) |
EBITDA AND NET LOSS
Group EBITDA (as defined within the Definitions and Glossary of Terms on page 19) totalled $11.1 million (2011: $11.6 million).
Net loss after tax totalled $12.9 million (2011: profit $18.4 million). The basic loss per share was $0.06 per share (2011: profit $0.08 per share).
Interest received and finance expenses were a net expense of $165k (2011: net income $2.2 million) reflecting foreign exchange gains of $533k (2011: loss $61k) on GBP cash balances held at 31 December 2012 which are reported in US Dollars, non-cash finance expenses of $1.0 million (2011: income $1.9 million) relate to the unwinding of the Chinguetti decommissioning provision, interest received totalled $350k (2011: $365k) and other finance expenses totalling $38k.
No dividend is proposed to be paid for the year ended 31 December 2012 (2011: $nil).
CASH FLOW
Net Group cash inflow generated from operating activities was $7.8 million (2011: $5.6 million).
Net cash investments in oil and gas assets totalled $4.4 million (2011: $1.7 million) and are summarised below:
| 2012 | 2011 | |
| $ (million) | $ (million) | |
| Kurdistan | 3.1 | 4.5 |
| Madagascar | 1.0 | 0.7 |
| Cameroon | 0.5 | (3.5) |
| Gabon | (0.2) | - |
| 4.4 | 1.7 | |
The net cash investments in oil and gas assets in Kurdistan during 2012 were subsequently fully impaired by the end of the period.
STATEMENT OF FINANCIAL POSITION
At the year end, cash and cash equivalents totalled $120.3 million (2011: $115.8 million) of which unrestricted funds of $1.7 million (2011: $1.0 million) were held on behalf of partners, leaving a cash balance of $118.7 million (2011: $114.8 million) available for Sterling's own use at 31 December 2012. At the end of 2012, net assets / total equity stood at $104.6 million (2011: $116.1 million), and non-current assets were $16.7 million (2011: $31.3 million). This decrease is as a result of the impairment of the Sangaw North licence. Net current assets increased to $109.2 million (2011: $105.1 million) due to the increased lifting revenues for 2012.
The Group's Chinguetti decommissioning provision increased during the year by $1.0 million to $21.1
million (2011: $20.1million) due to the unwinding of liability to its present value. The provision continues to reflect the Group's best estimate of this liability based on its estimate of the remaining economic field life.
CAUTIONARY STATEMENT
This financial report 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 Directors believe the expectation reflected herein to be reasonable in light of the information available up to the time of their approval of this report, the actual outcome may be materially different owing to factors either beyond the Group's control or otherwise within the Group's control but, for example, owing to a change of plan or strategy. Accordingly, no reliance may be placed on the forward-looking statements.
For further information contact:
Sterling Energy plc +44 (0) 20 7405 4133
Alastair Beardsall, Chairman
Angus MacAskill, Chief Executive
Liberum Capital Limited +44 (0) 20 3100 2222
Simon Atkinson / Tim Graham
Peel Hunt LLP +44 20 7418 8900
Andy Crossley / Richard Crichton
www.sterlingenergyplc.com Ticker Symbol: SEY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Note | 31st December 2012 | 31st December 2011 | ||
| $000 | $000 | |||
| Revenue | 22,496 | 19,146 | ||
| Cost of sales | (12,028) | (6,113) | ||
| Gross profit | 10,468 | 13,033 | ||
| Other administrative expenses | (2,795) | (3,728) | ||
| Reversal of impairment of oil and gas assets | 347 | 8,269 | ||
| Impairment of oil and gas assets | - | (33) | ||
| Pre-licence costs | (2,353) | (1,282) | ||
| Total administrative expenses | (4,801) | 3,226 | ||
| Profit from operations | 5,667 | 16,259 | ||
| Finance income | 350 | 3,212 | ||
| Finance expense | (515) | (1,051) | ||
| Profit before tax | 5,502 | 18,420 | ||
| Tax | - | - | ||
| Profit for the year from continuing operations | 5,502 | 18,420 | ||
| Loss for the year from discontinued operations | 4 | (18,422) | - | |
| (Loss)/profit for the year attributable to the owners of the parent | (12,920) | 18,420 | ||
| Other comprehensive (expense)/income | ||||
| Currency translation adjustments | (6) | 31 | ||
| Total other comprehensive (expense)/income for the year | (6) | 31 | ||
| Total comprehensive (expense)/income for the year attributable to the owners of the parent | (12,926) | 18,451 | ||
| Basic profit/(loss) per share (USc) | ||||
| From continuing operations | 5 | 2.51 | 8.40 | |
| From continuing and discontiued operations | 5 | (5.89) | 8.40 | |
| Diluted profit/(loss) per share (USc) | ||||
| From continuing operations | 5 | 2.51 | 8.29 | |
| From continuing and discontiued operations | 5 | (5.89) | 8.29 | |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Note | 31st December 2012 | 31st December 2011 | ||
| $000 | $000 | |||
| Non-current assets | ||||
| Intangible royalty assets | 6 | 2,424 | 3,221 | |
| Intangible exploration and evaluation assets | 7 | 10,245 | 22,455 | |
| Property, plant and equipment | 8 | 4,059 | 5,643 | |
| 16,728 | 31,319 | |||
| Current assets | ||||
| Inventories | 2,993 | 2,872 | ||
| Trade and other receivables | 1,210 | 922 | ||
| Cash and cash equivalents | 120,348 | 115,826 | ||
| 124,551 | 119,620 | |||
| Total assets | 141,279 | 150,939 | ||
| Equity | ||||
| Share capital | 149,014 | 148,589 | ||
| Share premium | 378,863 | 378,859 | ||
| Currency translation reserve | (210) | (204) | ||
| Retained deficit | (423,050) | (411,103) | ||
| Total equity | 104,617 | 116,141 | ||
| Non-current liabilities | ||||
| Long-term provisions | 21,274 | 20,297 | ||
| 21,274 | 20,297 | |||
| Current liabilities | ||||
| Trade and other payables | 15,388 | 14,501 | ||
| 15,388 | 14,501 | |||
| Total liabilities | 36,662 | 34,798 | ||
| Total equity and liabilities | 141,279 | 150,939 | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Currency | |||||||
| Share | Share | translation | Retained | ||||
| capital | premium | reserve | deficit 1 | Total | |||
| $000 | $000 | $000 | $000 | $000 | |||
| At 1 January 2011 | 148,573 | 378,859 | (235) | (431,380) | 95,817 | ||
| Profit for the year | - | - | - | 18,420 | 18,420 | ||
| Currency translation adjustments | - | - | 31 | - | 31 | ||
| Total comprehensive income for the year attributable to the owners of the parent | - | - | 31 | 18,420 | 18,451 | ||
| Issued share capital/premium | 16 | - | - | - | 16 | ||
| Share option charge for the year | - | - | - | 1,857 | 1,857 | ||
| At 31 December 2011 | 148,589 | 378,859 | (204) | (411,103) | 116,141 | ||
| Loss for the year | - | - | - | (12,920) | (12,920) | ||
| Currency translation adjustments | - | - | (6) | - | (6) | ||
| Total comprehensive expense for the year attributable to the owners of the parent | - | - | (6) | (12,920) | (12,926) | ||
| Issued share capital/premium | 425 | 4 | - | - | 429 | ||
| Share option charge for the year | - | - | - | 973 | 973 | ||
| At 31 December 2012 | 149,014 | 378,863 | (210) | (423,050) | 104,617 | ||
1 The share option reserve has been included within the retained deficit reserve.
CONSOLIDATED STATEMENT OF CASH FLOWS
| Note | 2012 | 2011 | ||
| $000 | $000 | |||
| Operating activities | ||||
| Cash generated from operations | 9 | 7,800 | 5,573 | |
| Net cash flow from operating activities | 7,800 | 5,573 | ||
| Investing activities | ||||
| Interest received | 350 | 365 | ||
| Purchase of property, plant and equipment | (100) | (41) | ||
| Exploration and evaluation costs | (4,446) | (1,695) | ||
| Proceeds on disposal of PPE | - | 22 | ||
| Net cash used in investing activities | (4,196) | (1,349) | ||
| Financing activities | ||||
| Net proceeds from issue of ordinary shares | 429 | 16 | ||
| Net cash flow generated from financing activities | 429 | 16 | ||
| Net increase in cash and cash equivalents | 4,033 | 4,240 | ||
| Cash and cash equivalents at beginning of year | 115,826 | 111,679 | ||
| Effect of foreign exchange rate changes | 489 | (93) | ||
| Cash and cash equivalents at end of year | 120,348 | 115,826 | ||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
The preliminary results announcement is for the year ended 31 December 2012.
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2012 or 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company has today published its Annual Report and Accounts on its website, www.sterlingenergyplc.com, these contain the full financial statements for the year ended 31 December 2012 that comply with the IFRSs. The Annual Report and Accounts will be posted to Shareholders on or about 22 March 2013. The Annual Report and Accounts contains the notice for the Company's Annual General meeting which is to be held at 11.00 a.m on 19 April 2013.
2. GOING CONCERN
The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the operations review. The financial position of the Company, its cash flows and liquidity position are described in the financial review.
The Company has sufficient cash resources for its working capital needs and its committed capital expenditure programme at least for the next 12 months. As a consequence, the Directors believe the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
3. OPERATING SEGMENTS
| Middle East | ||||||||
| Africa | (Discontinued) | Total | ||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||
| $000 | $000 | $000 | $000 | $000 | $000 | |||
| Statement of comprehensive income | ||||||||
| Revenue 1 | 22,496 | 19,146 | - | - | 22,496 | 19,146 | ||
| Cost of sales | (12,028) | (6,113) | - | - | (12,028) | (6,113) | ||
| Gross profit | 10,468 | 13,033 | - | - | 10,468 | 13,033 | ||
| Impairment reversal | 347 | 8,269 | - | - | 347 | 8,269 | ||
| Impairment provision | - | (33) | (18,422) | - | (18,422) | (33) | ||
| Pre-licence costs | (2,353) | (1,282) | - | - | (2,353) | (1,282) | ||
| Segment result | 8,462 | 19,987 | (18,422) | - | (9,960) | 19,987 | ||
| Unallocated corporate expenses | (2,795) | (3,728) | ||||||
| (Loss)/profit from operations | (12,755) | 16,259 | ||||||
| Finance income | 350 | 3,212 | ||||||
| Finance expense | (515) | (1,051) | ||||||
| (Loss)/profit before tax | (12,920) | 18,420 | ||||||
| Tax | - | - | ||||||
| (Loss)/profit attributable to owners of the parent | (12,920) | 18,420 | ||||||
| Profit from continuing operations | 5,502 | 18,420 | ||||||
| Loss from discontinued operations | (18,422) | - | ||||||
| (12,920) | 18,420 | |||||||
| Middle East | ||||||||||||
| Corporate | Africa | (Discontinued) | Total | |||||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | |||||
| Other segment information | ||||||||||||
| Capital additions | ||||||||||||
| Property, plant and equipment | 100 | 41 | - | - | - | - | 100 | 41 | ||||
| Exploration and evaluation | - | - | 1,313 | (2,786) | 4,575 2 | 4,481 | 5,888 | 1,695 | ||||
| Depreciation & amortisation | (59) | (160) | (2,422) | (267) | - | - | (2,481) | (427) | ||||
| Impairment reversal | - | - | 347 | 8,269 | - | - | 347 | 8,269 | ||||
| Impairment provision | - | - | - | (33) | (18,422) | - | (18,422) | (33) | ||||
| Segment Assets and Liabilities | ||||||||||||
| Non-current assets 3 | 83 | 41 | 16,645 | 17,432 | - | 13,846 | 16,728 | 31,319 | ||||
| Segment assets 4 | 119,409 | 115,300 | 3,409 | 3,297 | 1,733 | 1,023 | 124,551 | 119,620 | ||||
| Segment liabilities 5 | (711) | (994) | (33,906) | (33,088) | (2,045) | (716) | (36,662) | (34,798) | ||||
| 1 Revenue from continuing operations includes amounts of $21.2 million (100% external) from one single customer (2011: $17.5 million). | ||||||||||||
| 2 Included within the $4.5 million are accruals totalling $1.4 million and net cash additions of $3.1 million. | ||||||||||||
| 3 Segment non-current assets include $6.5 million in Cameroon (2011: $6.0 million), $nil in Kurdistan (2011: $13.8 million), $6.4 million in Mauritania (2011: $8.8 million) and $3.8 million in Madagascar (2011: $2.6 million). | ||||||||||||
| 4 Carrying amounts of segment assets exclude investments in subsidiaries. | ||||||||||||
| 5 Carrying amounts of segment liabilities exclude intra-group financing. | ||||||||||||
4. DISCONTINUED OPERATIONS
On 29 January 2013, Sterling formally announced withdrawal from the Sangaw North licence in Kurdistan. The decision to relinquish was made in December 2012 following interpretation of the 2D seismic data acquired in the Sangaw North PSC earlier in 2012. This indicated that the remaining potential was insufficient to justify drilling a second exploration well in the contract area.
Sterling acquired and processed 117km of 2D seismic data, supplementing the 2D seismic data previously acquired in the contract area. Interpretation of the new seismic data indicated that the risked potential of a secondary target along the flank of the main structure, analogous to the recent discoveries made in adjacent acreage to the south east of the Sangaw North PSC area, did not justify the cost exposure of an exploration well. Based on this interpretation, the joint venture partnership has decided not to drill a second exploration well in the contract area.
Under the terms of the PSC, Sterling were required to notify the Kurdistan Regional Government of Iraq (KRG) on or before 31 January 2013 whether or not they wished to participate in the drilling of a further exploration well on the Sangaw North block before the end of the current exploration phase which ran to November 2013.
On 30 December 2012, Sterling fully impaired all expenditure capitalised on the Sangaw North block following a decision by the Board to relinquish the licence. Details of the financial impact of the relinquishment are summarised below:
| 2012 | 2011 | ||
| $000 | $000 | ||
| Loss for the year from discontinued operations | (18,422) | - | |
| Cash flows from operating activities (note 9 page 17) | - | - | |
| Cash flows from investing activities (note 3 page 14) | (3,133) | (4,481) | |
| Basic and diluted loss per share from discontinued operations (USc) (note 5 page 15) | (8.38) | - | |
On 29 January 2013, Sterling notified the KRG of the partnership's decision not to drill a second exploration well in the Sangaw North PSC area and the PSC automatically terminated on that date.
At the date of termination, Sterling had fully satisfied the work commitment required by the Sangaw North PSC. Following the closure of Sangaw North operations, Sterling will have no remaining interests in Kurdistan.
5. EARNINGS PER SHARE
The calculation of basic loss per share is based on the Group consolidated loss for the financial year of $12.9 million (2011: profit $18.4 million) and on 219,530,061 (2011: 219,382,869) ordinary shares, being the weighted average number of ordinary shares in issue. For the year ended 31 December 2012, the basic loss per share were 5.89 US¢ per share (2011: profit 8.40 US¢ per share).
For the year ended 31 December 2012, the fully diluted loss per share was 5.89 US¢ per share (2011: profit 8.29 US¢ per share). This is computed based on 219,530,061 (2011: 222,292,291) ordinary shares, being the total used for the computation of the basic earnings per share as adjusted in assuming the exercise of none of the 11,409,488 options outstanding as at the year end.
For the year ended 31 December 2012, the basic and fully diluted loss per share from discontinued operations was 8.38 US¢ per share (2011: nil US¢ per share). The loss from discontinued operations during the year was $18.4 million (2011: $nil). The profit from continuing operations was $5.5 million (2011: $18.4 million).
6. INTANGIBLE ROYALTY ASSETS
| Group | ||||||||
| $000 | ||||||||
| Net book value at 31 December 2010 and 1 January 2011 | 824 | |||||||
| Impairment reversal | 2,663 | |||||||
| Amortisation charge for the year | (266) | |||||||
| Net book value at 31 December 2011 | 3,221 | |||||||
| Amortisation charge for the year | (797) | |||||||
| Net book value at 31 December 2012 | 2,424 | |||||||
Group net book value at 31 December 2012 comprises the value of rights to future royalties in respect of the Group's agreements covering licences PSC A and PSC B and PSC C-10 in Mauritania. The value of these royalty interests is dependent upon future oil and gas prices and the development and production of the underlying oil and gas reserves.
An impairment assessment and any subsequent charge are calculated on an individual royalty interest basis. Future recoverable amounts are estimated by management based on the present value of future cash flows expected to be derived from the production of commercial reserves in these licences and are compared against the carrying value of these assets.
In 2011 impairment losses recognised in prior periods totalling $2.7 million have been reversed on the Chinguetti asset.
7. INTANGIBLE EXPLORATION AND EVALUATION (E&E) ASSETS
| Group | ||||||||
| Note | $000 | |||||||
| Net book value at 31 December 2010 and 1 January 2011 | 20,793 | |||||||
| Additions during the year | 6,474 | |||||||
| Reimbursement of back costs on farm-out | (4,779) | |||||||
| Impairment charge for the year | (33) | |||||||
| Net book value at 31 December 2011 | 22,455 | |||||||
| Additions during the year | 5,888 | |||||||
| Impairment charge for the year | 4 | (18,422) | ||||||
| Impairment reversal for the year | 324 | |||||||
| Net book value at 31 December 2012 | 10,245 | |||||||
The amount for intangible exploration and evaluation assets represents investments in respect of exploration licences. Impairment tests on E&E assets are conducted on an individual cost pool basis when facts and circumstances suggest that the carrying amount in the pool may exceed its recoverable amount. The impairment reversal recorded above relates to assets held in the Africa pool of $324k (2011: impairment $33k) where the estimated recoverable amount of the property, plant and equipment and E&E in the pool was in excess of the carrying amount.
8. PROPERTY, PLANT AND EQUIPMENT
| Computer | ||||||||
| Oil and Gas assets | and office equipment | Total | ||||||
| Group | $000 | $000 | $000 | |||||
| Cost | ||||||||
| At 31 December 2010 and 1 January 2011 | 185,829 | 2,949 | 188,778 | |||||
| Additions during the year | - | 41 | 41 | |||||
| Disposals in the year | - | (26) | (26) | |||||
| Adjustments during the year | (4) | - | (4) | |||||
| At 31 December 2011 | 185,825 | 2,964 | 188,789 | |||||
| Additions during the year | - | 100 | 100 | |||||
| Adjustments during the year | (23) | - | (23) | |||||
| At 31 December 2012 | 185,802 | 3,064 | 188,866 | |||||
| Accumulated depreciation and impairment | ||||||||
| At 31 December 2010 and 1 January 2011 | (185,829) | (2,774) | (188,603) | |||||
| Charge for the year | - | (161) | (161) | |||||
| Disposals in the year | - | 12 | 12 | |||||
| Impairment reversal for the year | 5,606 | - | 5,606 | |||||
| At 31 December 2011 | (180,223) | (2,923) | (183,146) | |||||
| Charge for the year | (1,625) | (59) | (1,684) | |||||
| Impairment reversal for the year | 23 | - | 23 | |||||
| At 31 December 2012 | (181,825) | (2,982) | (184,807) | |||||
| Net book value at 31 December 2012 | 3,977 | 82 | 4,059 | |||||
| Net book value at 31 December 2011 | 5,602 | 41 | 5,643 | |||||
| Net book value at 31 December 2010 | - | 175 | 175 |
9. CASH FLOWS FROM OPERATING ACTIVITIES
| 2012 | 2011 | ||||||||||
| Group | $000 | $000 | |||||||||
| Operating activities: | |||||||||||
| Profit before tax from continuing operations | 5,502 | 18,420 | |||||||||
| Loss before tax from discontinued operations | (18,422) | - | |||||||||
| Finance income and gains | (350) | (3,212) | |||||||||
| Finance expense and losses | 503 | 1,041 | |||||||||
| Depletion and amortisation | 2,481 | 427 | |||||||||
| Impairment reversal | (347) | (8,269) | |||||||||
| Impairment expense | 18,422 | 33 | |||||||||
| Gain on disposal of property, plant and equipment | - | (8) | |||||||||
| Share-based payment charge | 973 | 1,857 | |||||||||
| Operating cash flow prior to working capital movements | 8,762 | 10,289 | |||||||||
| Increase in inventories | (121) | (1,971) | |||||||||
| (Increase)/decrease in trade and other receivables | (287) | 16,773 | |||||||||
| Decrease in trade and other payables | (554) | (19,518) | |||||||||
| 7,800 | 5,573 | ||||||||||
| Cash generated from continuing operations | 7,800 | 5,573 | |||||||||
| Cash generated/(outflow) from discontinued operations | - | - | |||||||||
| 7,800 | 5,573 | ||||||||||
DEFINITIONS AND GLOSSARY OF TERMS
$ US dollars
2006 Act The Companies Act 2006, as amended
2007 LTIP the 2007 Long Term Incentive Plan
1P Proven reserves or in-place quantities depending on the context
2D two dimensional
2P the sum of Proven and Probable reserves or in-place quantities depending on the context
3D three dimensional
3P the sum of Proven, Probable and Possible reserves or in-place quantities depending on the context
AIM Alternative Investment Market of the London Stock Exchange
All Staff LTIP the All Staff Long-Term Incentive Plan adopted in 2009
AGM Annual General Meeting
API gravity an American Petroleum Institute scale for crude oil density
Articles the Articles of Association of the Company
bbl barrel, equivalent to 42 US gallons of fluid
bbl/d barrel per day
bopd barrel of oil per day
boe barrel of oil equivalent, a measure of the gas component converted into its equivalence in barrels of oil
boepd barrel of oil equivalent per day
bcf billion cubic feet of gas
Board the Board of Directors of the Company
C Celsius
Capex capital expenditure
CGR condensate gas ratio
Combined Code or Code the Combined Code on Corporate Governance. Now superseded by the UK Corporate Governance Code (see below).
Companies Act the Companies Act (as amended 2006).
Company or Sterling Sterling Energy Plc
Contingent Resources those quantities of petroleum estimated, as at a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies, Contingent Resources are a class of discovered recoverable resources.
COS chance of success
Darcy unit of permeability
Deg degrees
Directors the Directors of the Company
DST drill stem test, a method of flow testing a well
E&E exploration and evaluation assets
EBITDA earnings before interest, taxation, depreciation, depletion and amortisation, impairment, share-based payments and pre-licence expenditure
EITI Extractive Industries Transparency Initiative
EMV expected monetary value
EUR economic ultimate recovery
farm-in & farm-out a transaction under which one party (farm-out party) transfers part of its interest to a contract to another party (farm-in party) in exchange for a consideration which may comprise the obligation to pay for some of the farm-out party costs relating to the contract and a cash sum for past costs incurred by the farm-out party
FDP field development plan
FPSO Floating, Production, Storage and Offloading vessel
FSA the Financial Services Authority of the United Kingdom
G&G geological and geophysical
GBP pounds sterling
GIIP gas initially in place
GOC gas oil contact
GOR gas oil ratio
GWC gas water contact
Group the Company and its subsidiary undertakings
HMRC Her Majesty's Revenue and Customs
HSES Health, Safety, Environment and Security
hydrocarbons organic compounds of carbon and hydrogen
km kilometre(s)
km2 square kilometre(s)
KRG Kurdistan Regional Government of Iraq
lead indication of a possible exploration prospect
London Stock Exchange or LSE London Stock Exchange Plc
m metre(s)
mmbbl million barrels
mmstb million barrels of oil at stock tank conditions
mmboe million barrels of oil equivalent
mmcf million cubic feet of gas
mmcfge/d million cubic feet of gas equivalent per day
mmscf/d million cubic feet at standard pressure and temperature per day
mss metres sub-sea
mTVDss metres true vertical depth sub-sea
Murphy Oil Murphy Cameroon Ntem Oil Co. Ltd a wholly owned subsidiary of Murphy Oil Corporation
NED LTIP non-executive Director Long Term Incentive Plan adopted in 2009
NPV net present value of a series of cash-flows
OECD Organisation for Economic Cooperation and Development
Opex operating expenditure
Ordinary Shares Sterling ordinary shares of 40 pence each
OWC oil water contact
P90, P50, P10 90%, 50% and 10% probabilities respectively that the stated quantities will be equalled or exceeded. The P90, P50 and P10 quantities correspond to the Proved (1P), Proved + Probable (2P) and Proved + Probable + Possible (3P) confidence levels respectively
Panel or Takeover Panel The Panel on Takeovers and Mergers
Petroleum oil, gas, condensate and natural gas liquids
Petronas PC Mauritania I PTY LTD
PP&E Property, Plant & Equipment
PRMS Petroleum resource Management System as issued in March 2007 by the Society of Petroleum Engineers et al
Prospect a potential sub-surface accumulation of hydrocarbons which has been identified but not drilled
Prospective Resources or those quantities of petroleum which are estimated, as at a
Prospective Recoverable Resources given date, to be potentially recoverable from undiscovered accumulations
psi(a) pounds per square inch (absolute)
PSC production sharing contract
Reserves reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must satisfy four criteria; they must be discovered, recoverable, commercial and remaining based on the development projects applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by development and production status
Reservoir a porous and permeable rock capable of containing fluids
RF recovery factor
RI royalty interest
RISC RISC (UK) Limited of 53 Chandos Place, Covent Garden, London WC2N 4HS
Scf standard cubic feet of gas (measured at 60 degree Fahrenheit and 14.7 psia)
Seismic data, obtained using a sound source and receiver, that is processed to provide a representation of a vertical cross-section through the subsurface layers
SESP Sterling Energy share price
Shares 40p Ordinary Shares
Shareholders Ordinary shareholders of 40p each in the Company
SMH Societe Mauritanienne Des Hydrocarbures
sq km square kilometre
sq mi square mile
stb stock tank barrel (measured at 60 degrees Fahrenheit and 14.7 psia)
STOIIP Stock tank oil initially in place
Subsidiary a subsidiary undertaking as defined in the 2006 Act
Tcf trillion cubic feet of gas
TEA technical evaluation agreement
TD total depth
TVD true vertical depth
United Kingdom or UK the United Kingdom of Great Britain and Northern Ireland
UK Corporate Governance Code Formerly the Combined Code, sets out standards of good
or Code practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders
United States or US the United States of America
Water-cut that percentage of total fluid production that is water
Working Interest or WI a Company's equity interest in a project before reduction for royalties or production share owed to others under the applicable fiscal terms
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANDSFFPDEFF