"2005 was another successful year for Sterling. Financial and operating performance improved. Turnover was up by 19% at £13.6 million. Pre-tax profits rose 20% to a record £5.0 million and cash inflow (before one-off closure costs and working capital movements) increased 13% to £8.8 million. We invested a further $65 million in the Chinguetti development and expect to have invested a further $50 million during this year, a substantial investment for Sterling.
With Sterling's first oil sales from the Chinguetti Field in April 2006, there has been a marked increase in cash flow. Our first two cargoes realized a total of over $21 million, before operating costs and taxation. A third cargo has recently been lifted. In addition, we have the cash flow from our royalty interest and from the USA.
The commencement of the Chinguetti Field development on-time, has been a significant success for all the parties involved. It has been pleasing to see the recent amicable resolution to the issues raised by the Mauritanian Government in relation to PSC's A and B. The technical and operational issues that have arisen on the Field since first oil are being addressed by the operator. Based on current information, we remain confident that the project will meet our projected financial returns. The outcome also bodes well for other expected development decisions in 2006 on the Tevet and Tiof discoveries, as well as for our carried interest in the exploration program, which is expected to recommence shortly.
Our drilling activity in the Gulf of Mexico has resulted in an increase in production from an average of 7.8 mmcfged in the first quarter to its recent levels of 9.5-10.0 mmcfged. Sterling has committed to a further four exploration wells in the second half, including 3 onshore. These could materially impact on production and reserves.
We were delighted to become the first British company to sign an MOU with the Kurdistan Regional Government of Iraq. Field studies continue, a local office is being opened and a country manager will be appointed. Recent developments give cause for increasing optimism.
In addition to the US and Mauritanian activity, a largely carried exploration program of up to 3 wells in Africa is expected over the next year, together with interpretation of the 4,000 km of recently acquired 2-D seismic, offshore Madagascar. New projects are being actively sought.
With oil prices remaining around $65/bbl and with the increased cash flow from our investment program, a key objective is an expansion of the upside potential of the asset base. New licenses, exploration, development and production activity will target higher impact opportunities. Whilst we will not overpay for deals or opportunities, your Board continues to assess the many new opportunities for growth.
There has been major progress so far in 2006 and your Board remains confident that this will be a year of further development for Sterling."
All resolutions proposed at the AGM were duly passed and Dr. E Butler has, as previously announced, today stepped down as a director.
Most Popular Articles
From the Career Center
Jobs that may interest you