Stratic Energy announced its results for 2009. All amounts below are US dollars, unless otherwise stated.
- Successful disposal program has realized proceeds of over $110 million, mainly used to reduce indebtedness
- Sale of Italian business completed in April 2010 – cash consideration of €33.0 million ($44.1 million) received; further contingent consideration due of up to €6.6 million ($8.8 million) depending on timing of Longanesi field production commencement, with back cost reimbursement of an estimated $2.3 million expected later in 2010
- Sale of UK Breagh asset completed in August 2009 – net cash proceeds of $64.5 million received
- Agreement in principle reached for the sale of the Company’s Turkish business - negotiation of a sale and purchase agreement underway
Operations and West Don Development
- Production of 1,169 boepd (2008: 332 boepd) with increase due to commencement of West Don production in late April 2009
- Proved and probable reserves reduced from 14.4 mmboe to 8.3 mmboe, mainly reflecting the Italian disposal of 6.2 mmboe
- West Don gross oil production averaged 5,171 bopd (Stratic net 892 bopd) for the year from two wells (second well since August)
- Water injection well brought on stream in early September, which has successfully re-pressured the West Don reservoir
- Northern Producer floating production facility on West Don successfully connected by pipeline in March 2010 to Brent oil export system, substantially reducing exposure to weather downtime
- Third production well to access further reserves in the southern part of the West Don field under evaluation for possible drilling later in 2010
Exploration/Appraisal and Pre-Development Assets
- Crawford field development plan – new development concept utilizing multi-lateral wells to reduce risk and improve recovery; sanction of project expected in second half 2010
- Bowmore well suspended without testing in August as a ‘tight hole’ for commercial reasons; further well on the license – Bugle North – currently operating
- Al Tayr 101 exploration well (Stratic operator) spudded in Syria in October and drilled to a depth of 3,150 m, encountering gas shows but failed to flow on test. Well plugged and abandoned in early 2010
- In Turkey, West Ayazli exploration well spudded in October and discovered gas which tested at 10 mmscf/d. Well completed and contributing to production from the main Ayazli field
- Oil and gas sales revenues in the UK and Turkey of $26.8 million (2008: $7.8 million) with increase due to West Don
- Net loss of $ 103.1 million (2008: 40.3 million). Net loss from continuing operations of $40.5 million (2008: loss $33.0 million), including recognized gains of $23.2 million mainly relating to the Breagh sale, and write-downs of $41.5 million (2008: $21.4 million) mainly in respect of assets in the Netherlands and Turkey. Net loss from discontinued operations of $62.6 million (2008: $7.3 million)
- Capital expenditure of $57.0 million (2008: $78.9 million), mainly on West Don and the Bowmore well in the UK, and in Turkey
- Cash and cash equivalents (including restricted cash) of $7.4 million at year end (December 31, 2008: $28.2 million); bank debt (excluding letters of credit) and convertible notes totaling $112.5 million at year end (December 31, 2008: $118.9 million), making net debt at year end of $105.1 million (December 31, 2008: $90.7 million)
- Net debt at April 23, 2010 reduced to $73.9 million following receipt of Italy sales proceeds, net of disposal and associated financing costs.
Kevin Watts, Stratic's President and Chief Executive Officer, commented, "I am pleased that we have pulled through a very difficult period, which has seen a radical restructuring of Stratic's business in the light of the prevailing economic environment, to reduce debt levels and commitments to enable the company to pursue alternative growth options in the future. The next steps will involve rebuilding our portfolio with lower cost opportunities while continuing to press for performance improvements on West Don, and to advance the
development of Crawford. Part or full disposals of these assets to balance forward capital expenditure, eliminate bank debt and demonstrate value are also under consideration."