May 30, 2018 - 8:00 AM EDT
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Sterling Resources Ltd. Reports 2018 First Quarter Financial Results and Operations Update

Canada NewsWire

CALGARY and HOUSTON, May 30, 2018 /CNW/ - Sterling Resources Ltd. ("Sterling" or the "Company") (TSX-V: SLG) is pleased to provide a summary of its 2018 first quarter financial and operating results as of March 31, 2018.

Selected financial, operational and reserves information is outlined below and should be read in conjunction with the Company's unaudited consolidated financial statements ("Financial Statements"), and management's discussion and analysis ("MD&A") for the quarter ended March 31, 2018, which are available on SEDAR at www.sedar.com and the Company's website at www.sterling-resources.com. All figures referred to in this press release are denominated in U.S. dollars.

2018 FIRST QUARTER HIGHLIGHTS

  • Made significant progress on first phase of oil facilities installation and is ahead of schedule
  • First production through commissioning of oil production equipment expected in June 2018
  • Costs on overall first phase coming in approximately 25 percent less than budgeted

OPERATIONS UPDATE

The Company previously announced that over the past five months, the Company has significantly advanced the 2018 capital program at the Bretana oil field.  On December 18, 2017, the Company acquired a 100 percent working interest in the field and announced that the field would come online in 10 to 12 months for an estimated cost of approximately USD$24.6 million, including capital expenditures relating to oil production facilities and workovers of an existing oil producer well and a water disposal well. The Company now estimates this project will cost approximately USD$18.3 million, which is 25 percent less than originally budgeted. The Company's use of a wireline unit, rather than a workover rig, to remove plugs and remediate the oil producer and water disposal wells cost USD$300,000, significantly less than the budgeted USD$2.0 million. Additional savings resulted from the execution of a turn-key contract to build and install all the production facilities and a corresponding contract for the personnel and costs associated with construction at the Bretana field. 

The Company anticipates that the existing oil producing well will initially produce 100 percent oil with no water. The Company will commission the oil production facilities, with first production as early as June 2018, four to six months ahead of the original guidance.  The initial commissioning phase will require the well to be choked to a quarter inch, which would allow the Company to produce approximately 1,000 barrels of oil per day ("bbl/d") until the water production and re-injection handling facilities are installed and commissioned in October, after which it is anticipated that the well will be opened to approximately 2,250 bbl/d.  The Company intends to sell the initial 1,000 bbl/d production at the Iquitos refinery, which has capacity to purchase the Company's initial production, with the additional 1,250 bbl/d production to be transported via the existing oil pipeline for marketing and sale.

Manolo Zuniga, Sterling's President and Chief Executive Officer, stated, "We continue to see opportunities to save time and capital as we prepare for the Long-Term Test of the discovery well in Bretana.  This is a key milestone achieved significantly ahead of schedule and under budget.  We are currently about 90 percent through installation of oil production facilities which will allow us to open the well to begin the commissioning process.  This will provide both data and cash flow over the next four months, which coincides with when we plan to have the first phase of the water handling equipment installed and ready for commissioning.  At that time, once we have the facilities tested, we can open the well and produce at higher rates."

FINANCIAL HIGHLIGHTS

The following table summarizes key financial highlights associated with the Company's financial performance.


March 31, 2018
US$000s


March 31, 2017
US$000s

Revenues

-


-

Expenses

1,544


-

Net Loss

1,544


-

Total Assets

97,363


-

Total Liabilities

16,864


-

Total Shareholders' Equity

80,499


-

 

ABOUT BRETANA FIELD

Oil in the Bretana field was first discovered in the 1970's and was subsequently re-discovered by Gran Tierra Energy Inc. ("Gran Tierra"). Several wells have been drilled to delineate the field and recent seismic has de-risked the structure. The rediscovery well drilled by Gran Tierra in 2014 tested 18.5 degree API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The Company acquired the assets in Peru on December 18, 2017 from Gran Tierra.

ABOUT STERLING

Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru.  The Company's management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretana oil field.

READER ADVISORIES

FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to: the Company's objectives; the Company's capital program, capital budget, cash flow and proposed drilling, reactivation, water and other activities and the anticipated costs and results of such activities; cost controls and savings; anticipated future production and revenue; future development and growth prospects.  All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "estimate", "potential", "will", "should", "continue", "may", "objective" and similar expressions.  The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside,  prevailing commodity prices and the actual prices received for Sterling's products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of Sterling's geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company's growth strategy, general economic conditions, availability of required equipment and services and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the Company's annual information form and management's discussion and analysis for the year ended December 31, 2017 which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

SOURCE Sterling Resources Ltd.

View original content: http://www.newswire.ca/en/releases/archive/May2018/30/c6257.html

Greg Smith, Executive Vice President and Chief Financial Officer, [email protected], T: (713) 609-9026; Manolo Zuniga, President and Chief Executive Officer, [email protected], T : (713) 609-9101, http://www.sterling-resources.com/Copyright CNW Group 2018


Source: Canada Newswire (May 30, 2018 - 8:00 AM EDT)

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