Sterling Completes $145M Acquisition of Whittier
Sterling Energy PLC, has completed its $145 million cash acquisition of all of the issued and to be issued share capital of Whittier, an onshore US Gulf Coast exploration and production company, which was conditionally announced on 19 January 2007.
Based on end 2006 reserve estimates, this acquisition is expected to:
--double Sterling's proven and probable ("2P") reserves to nearly 25 million barrels of oil equivalent ("boe") and add materially to its contingent resources; --contribute to an increase in entitlement production to a current level of approximately 6,500 boe/day, compared with an average of 3,100 boe/day in the first quarter of 2007; --significantly increase cash flow from operations, thereby permitting a large increase in exploration and production expenditures.
This enlarged USA portfolio will comprise the majority of Sterling's production and reserves, will extend its operations in an area contiguous with its shallow-water Gulf of Mexico interests and strengthen the management and technical team. With a program of over 40 low-risk wells already planned for the next twelve months on the Whittier assets, together with Sterling's current drilling schedule, further significant USA exploration and development opportunities will be pursued.
Following the closing and payment of related costs, Sterling expects to have current cash balances of approximately $30 million, undrawn bank facilities of $13 million and bank debt of approximately $141 million.
Harry Wilson, Chief Executive of Sterling Energy Plc, said:
"The acquisition of Whittier materially strengthens Sterling's position in the sector and creates new opportunities for us to grow. Adding significant, lower risk, onshore US production and development assets to our existing offshore Gulf of Mexico assets, Whittier both de-risks and significantly increases the scale of our cash generation. This will allow us to build on our existing portfolio of exploration projects and provide us with greater flexibility to pursue new opportunities on a bigger scale."
Sterling is currently operating the high risk/high potential onshore Thunder Stud well and expects to reach target depth in early May. It also expects to commence drilling on the 25 well Austin Chalk infill program next week. This had been delayed due to lack of rig availability but one has now been secured on a one year contract with an option for a further year.
Average Chinguetti field production to date in 2007 is approximately 18,600 barrels of oil/day ("bopd") and is currently around 24,000 bopd, with the C-18 well having very recently been completed and brought on production. This well is part of the Phase 2 field development, with detailed seismic expected to be shot by mid-year and a further four wells are then expected, to be drilled, commencing in the latter part of 2007.
As previously reported by Sterling in January 2007, independent consulting engineers estimated ultimate Chinguetti field 2P recoverable reserves at the end of 2006 at 51 million barrels ("bbls") and valued Sterling's Mauritanian assets, including risked gross field contingent resources of up to 18 million bbls, at $87-121 million. This compared to relevant mid-2006 net book values of $170 million. Since then, the operator has issued a revised field 2P recoverable estimate of 62 million bbls plus contingent field resources of 48 million bbls.
An offshore well in Guinea Bissau, drilled at no cost to Sterling, has been plugged this week. Sterling has an option to participate for 5% in the second higher potential well due to spud shortly. A largely carried well (20.5% interest, paying 2.5%) is also due to spud in Gabon around mid-year.
Sterling intends to issue its annual results for the year ended 31 December 2006 towards the end of April/early May, adopting International Financial Reporting and reporting in its functional currency, US dollars.
- Sterling Completes $145M Acquisition of Whittier (Mar 29)
- Whittier Stockholders Okay Sterling Merger (Mar 27)
- Sterling Energy to Acquire Whittier Energy for $188 Million (Jan 19)
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