Sterling announced operating and financial results for the year ended December 31, 2009. Unless otherwise noted all figures contained in this release are denominated in Canadian dollars.
Net income for the year ended December 31, 2009 was $66,384,535 ($0.51 per common share basic, $0.50 per share diluted) compared to a loss of $2,313,736 ($0.02 per share basic and diluted) for the year ended December 31, 2008. The increase in net income relates primarily to the gain on the disposition of a 15 percent working interest in the Breagh field and varying interests in the surrounding blocks in the United Kingdom North Sea (UKNS).
Capital expenditures during 2009 totaled $21.1 million compared to $87.0 million during 2008. Major capital expenditures items during 2009 included $11.8 million related to the completion of testing of the Breagh 42/13-5z horizontal well, $5.8 million related to the acquisition and interpretation of high resolution seismic over the Doina trend and the Ioana prospect, and $1.0 million related to engineering studies and a pipeline survey for the proposed route for taking Breagh gas to shore. In addition to these major items, capital was also deployed to complete additional seismic programs on other licenses in the greater Breagh area, as well as to maintain existing licenses in the UKNS.
Net working capital as at December 31, 2009 was $72.7 million compared to $14.0 million as at December 31, 2008. This increase in net working capital year over year is primarily attributable to the proceeds received from the sale of a partial interest in the Breagh assets.
"Against the backdrop of a great deal of market uncertainty during 2009, Sterling persevered with the major focus upon the capture and realization of value through the sale of a one third interest in Breagh," stated Stewart Gibson, Sterling's Chief Executive Officer. "With the financial flexibility afforded by the cash proceeds from Breagh and a high quality inventory of drilling prospects, the Company is well positioned to move forward with its exploration and development activities," added Mr. Gibson.
Company interest Proved plus Probable Reserves were 32.5 MMboe as at December 31, 2009. The Breagh Field (100 percent) Proved plus Probable Reserves increased by 18 percent to 609 Bcf of natural gas, with Company Share Proved plus Probable Reserves offset by a 15 percent working interest sale (33-1/3 percent of equity) to RWE Dea UK SNS Limited resulting in an overall decrease of 20.5 percent.
Best Estimate Contingent Resources for the Company were 39.1 MMboe as at December 31, 2009. The Ana and Doina Field (100 percent) Best Estimate Contingent Resources have increased by 29 percent to 345 Bcf of natural gas, with Company interest offset by the farm-out of a 32.5 percent working interest the Ana and Doina Field (50 percent of equity) to Melrose Resources Plc, resulting in an overall decrease of 36.1 percent.
"Although we see decreases in the Company share of Proved plus Probable Reserves and Best Estimate Contingent Resources, the sale of a partial working interest in Breagh and the offshore Romanian farm-down provide a strong financial position for going forward with the development of the Breagh and the Doina and Ana Field. First production is expected from both developments in 2012," stated John Rapach, Sterling's Vice President, Operations.
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