CALGARY and HOUSTON, April 30,
2018 /CNW/ - Sterling Resources Ltd. ("Sterling"
or the "Company") (TSX-V: SLG) is pleased to provide a
summary of its 2017 year-end financial and operating results and
the results of an independent evaluation of its oil reserves,
prepared by Netherland, Sewell & Associates, Inc. ("NSAI"), a
qualified reserves evaluator, as of December
31, 2017.
Selected financial, operational and reserves information is
outlined below and should be read in conjunction with the Company's
audited consolidated financial statements ("Financial Statements"),
management's discussion and analysis ("MD&A") and annual
information form ("AIF") for the year ended December 31, 2017,
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.
2017 YEAR-END HIGHLIGHTS
- Completed a reverse take-over transaction and amalgamated with
PetroTal Ltd. ("PetroTal")
- Completed the acquisition of Gran Tierra Energy International
(Peru) Holdings B.V., an indirect
wholly-owned subsidiary of Gran Tierra Energy Inc. ("Gran
Tierra")
- Commenced operation of Bretana oil field assets
- 2P Reserves estimated at approximately 39.8 million barrels of
oil
- 3P Reserves estimated at approximately 79.3 million barrels of
oil
- NPV-10 of approximately $282
million for 2P Reserves and $775
million for 3P Reserves
OPERATIONS UPDATE
The Company's objective of developing the Bretana oil field on a
modular basis and putting the field online by year-end 2018 is on
target. Existing facilities have been transported from storage to
the field and new oil production facilities have arrived. Once
installed, the Company will begin commissioning an initial set of
oil production facilities. Formation water treatment facilities,
reinjection facilities and oil production facilities for this first
phase are expected to be ready for commissioning by late 2018 and
fully operational by year-end. Both the existing oil production
wells and water reinjection wells have been intervened to remove
plugs and are ready for operation. The Company is negotiating
future oil prices and pipeline tariffs with Peru's state oil company, PetroPeru, and the
crude oil price formula to calculate royalty payments with
Peru's state agency, Perupetro
S.A.
Manolo Zuniga, Sterling's
President and Chief Executive Officer, stated, "We are pleased to
have completed the reverse take-over and merger of PetroTal and
Sterling. We have assumed operation of the Bretana assets and are
moving forward with plans to put the Bretana oil field
online. Since acquiring the assets in December 2017, we have initiated field
development and facilitated an independent evaluation of the
reserves. We are also preparing to drill Bretana's second oil
producer, and are readying the data room to promote the Osheki
prospect."
NEAR AND MEDIUM-TERM OBJECTIVES
- Maintain cost controls to ensure the Bretana oil field comes
online within the capital budget
- Reactivate oil production and water injection wells
- Commission equipment to facilitate a safe transition to full
production
FINANCIAL HIGHLIGHTS
The following table summarizes key financial highlights
associated with the Company's financial performance.
|
December 31,
2017
|
|
December 31,
2016
|
|
US$000s
|
|
US$000s
|
Revenues
|
-
|
|
-
|
Expenses
|
2,754
|
|
-
|
Net Loss
|
2,754
|
|
-
|
Total
Assets
|
98,766
|
|
-
|
Total
Liabilities
|
16,723
|
|
-
|
Total Shareholders'
Equity
|
82,043
|
|
-
|
The year ended December 31, 2017
was a transformative year for the Company. The transactions that
were completed had a significant impact on the comparability of the
Company's period over period results. See
Sterling's Financial Statements and MD&A for further
details.
2017 YEAR-END RESERVES SUMMARY
(1)(2)(3)(4)(5)
Summary of Oil Reserves as of December 31, 2017.
|
|
|
Heavy
Oil
|
|
Gross
|
Net
|
|
(Mbbl)
|
(Mbbl)
|
Proved
|
|
|
|
Developed
Producing
|
-
|
-
|
|
Developed
Non‑Producing
|
-
|
-
|
|
Undeveloped
|
14,683.6
|
14,683.6
|
Total
Proved
|
14,683.6
|
14,683.6
|
Total
Probable
|
25,075.7
|
25,075.7
|
Total Proved plus
Probable
|
39,759.3
|
39,759.3
|
Total
Possible
|
39,522.7
|
39,522.7
|
Total Proved plus
Probable plus Possible
|
79,282.0
|
79,282.0
|
Summary of Net Present Values of Future Net Revenue as of
December 31, 2017.
|
|
|
Before Income
Tax
|
|
Discounted at
Various Rates
|
|
0%
|
5%
|
10%
|
15%
|
20%
|
Description
|
M$
|
M$
|
M$
|
M$
|
M$
|
Proved
|
|
|
|
|
|
|
Producing
|
-
|
-
|
-
|
-
|
-
|
|
Developed
Nonproducing
|
-
|
-
|
-
|
-
|
-
|
|
Undeveloped
|
77,312.5
|
55,845.0
|
38,163.2
|
24,364.0
|
13,848.7
|
Total
Proved
|
77,312.5
|
55,845.0
|
38,163.2
|
24,364.0
|
13,848.7
|
Total
Probable
|
459,676.3
|
328,211.9
|
243,647.0
|
188,396.0
|
150,922.6
|
Total Proved plus
Probable
|
536,988.8
|
384,056.9
|
281,810.2
|
212,760.0
|
164,711.2
|
Total
Possible
|
1,217,838.5
|
743,997.6
|
492,773.1
|
348,619.2
|
260,204.5
|
Total Proved plus
Probable plus Possible
|
1,754,827.3
|
1,128,054.5
|
774,583.4
|
561,379.2
|
424,975.8
|
Notes:
|
(1)
|
The tables summarize
data contained in the independent report prepared by NSAI as at
December 31, 2017 and as a result may contain slightly different
numbers due to rounding. The data has been prepared in accordance
with the standards contained in the Canadian Oil and Gas Evaluation
Handbook and the reserve definitions contained in National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities.
|
(2)
|
The Corporation owns
a 100% working interest and a 100% net revenue interest in these
properties.
|
(3)
|
Based on NSAI's
December 31, 2017 escalated price forecast. See "Forecast Prices
and Costs" in the AIF.
|
(4)
|
Future net revenue is
after deductions for the Corporation's share of royalty burdens,
capital costs, abandonment and reclamation costs and operating
expenses but before consideration of any Peruvian income
taxes.
|
(5)
|
It should not be
assumed that the undiscounted or discounted net present value (NPV)
of future net revenue attributable to the Company's reserves
estimated by NSAI represent the fair market value of those
reserves. All future net revenues are estimated using
forecast prices and cost assumptions. There is no assurance that
the forecast prices and costs assumptions will be attained and
variances could be material. The recovery and reserve estimates of
the Company's reserves provided herein are estimates only and there
is no guarantee that the estimated reserves will be
recovered. Actual reserves may be greater than or less than
the estimates provided herein.
|
See Sterling's March 8, 2018 press release and AIF for further
details.
ABOUT BRETANA FIELD
Oil in the Bretana field was first discovered in the 1970's and
was subsequently re-discovered by 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 well 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. The Company
is working to put the field on long-term test and begin production
as early as Q4 2018.
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 and proposed drilling,
reactivation, water and other activities and the anticipated costs
and results of such activities; cost controls; negotiations with
PetroPeru and Perupetro S.A.; the size of the oil reserves of the
Corporation and anticipated future production and revenue from such
reserves; 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 AIF and MD&A 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.
PRESENTATION OF OIL AND GAS INFORMATION: Reserves are classified
according to the degree of certainty associated with the estimates.
Proved (1P) reserves are those reserves that can be estimated with
a high degree of certainty to be recoverable. It is likely
that the actual remaining quantities recovered will exceed the
estimated proved reserves. Probable (2P) reserves are those
additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual
remaining quantities recovered will be greater or less than the sum
of the estimated proved plus probable reserves. Possible (3P)
reserves are those additional reserves that are less certain to be
recovered than probable reserves. It is unlikely that the actual
remaining quantities recovered will exceed the sum of the estimated
proved plus probable plus possible reserves. The qualitative
certainty levels referred to in the definitions above are
applicable to individual reserve entities (which refers to the
lowest level at which reserves calculations are performed) and to
reported reserves (which refers to the highest level sum of
individual entity estimates for which reserve estimates are
prepared). Reported reserves should target the following
levels of certainty under a specific set of economic conditions: at
least a 90 percent probability that the quantities actually
recovered will equal or exceed the estimated proved (1P) reserves;
at least a 50 percent probability that the quantities actually
recovered will equal or exceed the estimated proved plus probable
(1P+2P) reserves; and at least a 10 percent probability that the
quantities actually recovered will equal or exceed the sum of the
estimated proved plus probable plus possible (1P+2P+3P)
reserves.
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.