STERLING RESOURCES LTD

Transcription

1 STERLING RESOURCES LTD Operations Update

2 Forward Looking Statement The information in this presentation contains certain forward-looking statements including expectations of future production and capital expenditures. Information concerning reserves may also be deemed to be forward-looking statements as such estimates involve the implied assessment that the resources described can be profitably produced in the future. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated by the Company. These risks include, but are not limited to: the background risks of the oil and gas industry (e.g., operational risks in exploration, development and production; potential 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), risks in conducting foreign operations (e.g., political instability), and price and exchange fluctuations. Nothing contained herein is intended to constitute an offer to sell or a solicitation of an offer to purchase securities. Any such offer or solicitation may only be made by prospectus or otherwise pursuant to an exemption from prospectus and registration requirements applicable to the Company. 2

3 Sterling s Milestones Drilled and appraised Breagh - Largest undeveloped UK SNS gas field in 10 years Drilled Cladhan oil discovery & successful appraisal confirming commerciality - Strat trap with very significant potential. Resources upgrade Oct 2010 Drilled and appraised Ana and Doina - Romanian third largest gas discovery Drilled Blakeney oil discovery On a gross basis - Discovered 1.6 tcf of GIP & > 200 mmbbls of OIP Sold 15% of Breagh area for $US 94 million - Still retaining 30% working interest Farm out Agreement signed for Doina-Ana area for $US 90 million carry - Still retaining 32.5% working interest (Doina area carried to first gas) Finalizing Breagh development finance - Term sheet for 100mm; $44mm equity raised First gas 2012 from Breagh and 2013 for Doina area - Net production to Sterling approx 100 mmscfd well exploration / appraisal drilling program - Back to previous activity level; 2011 anticipate 11 well program New entries - Paris Basin & Netherlands 3

4 Corporate Profile Canadian junior international oil & gas exploration & exploitation company Listed TSX Venture Exchange SLG Capital structure Common shares 158 million; Fully diluted 170 million No long term debt Management / Years of international oil & gas experience Walt DeBoni, BSc Chem. Eng, MBA Chairman (Calgary) / 30+ Mike Azancot, M.Eng (Petroleum Engineer) President & CEO (Aberdeen/London) / 30+ Stewart Gibson, BSc Geol., MSc P. Eng. Director, Executive Advisor (Aberdeen) / 30+ David Blewden, BA (Hons), MA (Natural Sciences) CFO (Aberdeen/London) / 30+ John Rapach, BSc. Chem. Eng., MSc P. Eng. COO (Aberdeen) / 30+ David Findlater, BSc (Hons) Geol, MSc VP Exploration UK (Aberdeen) / 30+ Patrick Whitley, BSC (Hons) Geol VP Exploration international (Aberdeen) / 30+ Stephen Birrell, BSc Geol. (Hons) VP France and Netherlands (Netherlands) / 25+ Mark Beacom BSc Mech Eng (Hons) VP Romania (Romania) / 25+ George Kesteven, B. Comm, MBA Manager, Corporate and Investor Relations (Calgary) / 20+ Areas of activity UK & Romania onshore & offshore, France & Netherlands 4

5 Focus Areas FOCUS IS KEY Currently 2 focussed regions Onshore / Offshore United Kingdom Onshore / Offshore Romania Regional focussed growth Paris Basin licenses complementing existing country presence Netherlands extension of SNS experience 5

6 North Sea and Sterling The size of the prize North Sea Exploration Opportunity > 1000 Prospects Sterling exploration strategy to date High equity of good potential opportunities Tech excellence applied to attract farmin partner Carry through exploration Complete appraisal evaluation PARTIAL DIVESTMENT for development BREAGH MODEL Profit of $42mm Increasing relevance for small and mid sized players Sterling emerges from 2005 Peer group as successful explorer 18 prospects plus 19 applied for in 26 th Round RETAIN 30% Reserves / production cashflow NPV 10 (2P reserves) $378mm pre tax 6

7 STERLING RESOURCES LTD Northern North Sea - Cladhan

8 Cladhan Geological Overview Planned B Location Planned F Location 210/29a-4 Cluster Strat Trap, Upper Jurassic sands on Terrace Dipping from West to East North, Central and Southern Belts Coalescing Channels Fan system to the East 8

9 Cladhan Results So Far 3 Wells drilled 4 4z Northern Channels 4y A4 F Inner Fan Outer Fan 210/29a 4 Discovery Dec /29a 4z Sidetrack appraisal Sept /29a 4y Sidetrack appraisal Sept 2010 No OWC found Minimum 425ft Oil column to date B 20-25% Porosity Over pressured system C Net to gross upto 65% 35 API 4z tested at 5900 BOPD from a portion of the net pay restricted by test string & surface facilities December 2009 Category P90 P50 P10 Contingent Prospective October 2010 Category P90 P50 P10 North Channel Contingent Channels Prospective Fan Prospective

10 Cladhan Planning 2 nd Phase of appraisal drilling early 2011 Rigs available Site survey conducted Authority approval Jan 2011 Go South to investigate central channel Go East to search for the OWC Go into the Fan system Determine 3 rd phase appraisal for resource and reserve extent and de-risking for development Conceptual development scenarios Multiple neighbouring off take infrastructure Stand alone facilities Possible phased development Company implications Significant oil discovery (balancing our portfolio), now a commercial asset Operational focus for appraisal and development Resource and reserves Production and cash flow 10

11 What is Breagh? 42/13-3 (Sterling 2007) 42/13-2 (Mobil 1997) 42/13-1 (BP 1968) 42/13-5, 5z (Sterling 2008/2009) Sterling - 30%, RWE DEA - 70% (Operator) Large areal extent 140 sq kms Lower Carboniferous reservoir 6 wells drilled (1 Mobil, 1BP, 4 Sterling) Successful appraisal through improved drilling techniques and horizontal section Tested to max 26MMscf/d (42/13-5z) 2P Reserves 610 BCF (RPS April 2010) 42/13-4 (Sterling 2008) 12 km 11

12 Bcf Field Development Well Numbers NW Flank 2 SS wells tied - back to W + 1 Platform Well X X Central Fairway N 4 platform wells from W + 1 Zone 3 well later NE Flank 3 SS wells tied -back to E Z3 producer Z1 Subsea Z1 Platform Upside Case Platform Subsea Redrills Zone Zone Reserves per Well in Carboniferous Reservoirs Western Area 1 platform well from W & 1 SS Well from East X -4 E Flank 6 platform wells from E +1 zone 3 well re -drill Breagh RPS 2P Cavendish Tyne Breagh Sterling BTC Schooner Murdoch Source: United Kingdom Oil & Gas Fields, Geological Society Memoir No. 20 SW Flank Initially undeveloped Development plan designed to capture full upside potential with the ability to add subsea wells 12

13 Breagh Development Indicative Costs & Valuation BREAGH PHASE I Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Milestones Project Sanctions First Gas Pipelines Construction, Commissioning & Testing Facilities Drilling Programme Breagh Alpha Drilling 13

14 Breagh Development Indicative Costs & Valuation Company Share, Breagh Phase 1 & 2 BREAGH CASHFLOW BREAKDOWN 2P RESERVES MMBOE GROSS (31.2 MMBOE NET) TOTAL / BOE CPR March 2010 C$MM STERLING OCT 2010 MM REVENUE OPEX millions OPERATION PROFIT CAPEX PROFIT TAX NET PROFIT Pre tax cashflow Post tax cashflow 14

15 Development of Core Area 1) Extend exploration to Greater Breagh Area 300 Indicative gross annual rate Breagh only 2) Possible Breagh catchment area for 3 rd Party Gas MMscf/d rd party gas catchment area 0 Pipeline capacity sized for Breagh, Crosgan, other exploration prospects, extension of core area & capture of 3 rd party gas 15

16 Central North Sea Core Area Potential Potential for shared facilities? Sterling 25% interest; Wintershall (operator) 75% 21/27b oil discovery well 3Q 2010 drilled to 4455ft Good quality sand, 25% porosity with net 71ft pay Unconsolidated sands so unable to test without completion. MDT samples taken Operator considers mmbls oil STOIIP Multiple prospects Shared infrastructure? 16

17 SNS Heartland Licence Area & Infrastructure Sterling 57.14% (Operator), GB Petroleum 42.86% Grian > 50BCF recoverable. Recent mapping has increased the upside High quality Rotliegend Sandstone Blythe (non Sterling) recently awarded brings activity to the area; increase potential value of prospectivity Grian well planned 1Q

18 St Laurent Grenade Discovery & Exploration Upside plus Paris Basin Application ST LAURENT AUDIGNON PROSPECT ST LAURENT COMPANY SHARE Best Estimate P50 Resources Contingent : 3 MMbbls Grenade Heavy Oil Unrisked Prospective: 143 Bcf Audignon PARIS BASIN Sterling Operated Coulommiers Application Toreador/Hess COULOMMIERS APPLICATION Adjacent to the Toreador / Amerada Hess Acreage Unconventional Oil Shale Play ( Bakken Analogue ) 6 ½ blocks, Sterling(Operator) 50%, Petroventures 50% 3 blocks, Sterling (Operator) 25%, Petroventures 25%, Toreador-Hess 50% 18

19 The Opportunity Netherlands 4 oil discoveries in 5 Blocks (1550 km 2 ), 80 km offshore, 45m water depth Reprocessed 3D seismic Regional growth potential Country growth potential The Challenges Complex geology, compartmentalization, requiring subsurface development solutions No local oil infrastructure (offshore loading) Shipping lane proximity Activity Plan Complete license transfer and license extensions High grade drill locations Operations planning Drill 1 well 3Q 2011 Development concept planning 19

20 STERLING RESOURCES LTD Romania

21 Onshore Romania Over view and Opportunities Shale Gas Area Sterling 50%, Atlantic Petroleum (Operator) 50% 1,500,000 acres Lower Canyon, known hydrocarbons Conventional structures (Divari/Plenita) Unconventional shale gas potential in Silurian Shales ~ 600m thick over 400,000 acres Planned Activity 3 Studies underway to characterise Silurian shale Planning for a well late 2011/early 2012 to test Silurian potential 21

22 Why Explore Offshore Romania? Romania Danube Delta USA Mississippi Delta GOM Mississippi Delta 100m - Modern Delta - Sterling Blocks 100m - Modern Delta Exploration Drilling Exploration Drilling About 100 wells in the shallow water Regionally (Bulgaria, Ukraine & Romania) 0 wells in the deep water About 500,000 wells in the shallow water 1000 wells in the deep water 22

23 Romania Offshore 1.1 miilion acres over 2 blocks 45 to 95m water depth (jack ups) XIII Pelican Block Oil prone with Olimpskiyi discovery to the east and Lebada production field to the west Multiple prospects No wells drilled on block so far XV Midia Block Gas prone with Doina Trend currently at 460bcf String of pearls to be explored Multiple additional prospects 23

24 Romania Offshore Eugenia Oil Prospect Oligocene slump, potential upside? Top Eugenia Depth (m) Eugenia Oligocene Slump Unit Eocene Carbonate TD 2300m Eocene primary target (proven oil in Olimpiyski and Lebada) Late Cretaceous Sands Secondary target in late cretaceous (also proven in Lebada) Early Cretaceous exploration upside TD 3300m Early Cretaceous 4 th target in Oligocene 24

25 Sterling s Relative Strength Relative strength Sep to Oct Relative strength of SLG compared to ten peers 25

26 Work Program DEVELOPMENT APPRAISAL CORE AREA EXPLORATION OTHER EXPLORATION UNITED KINGDOM UNITED KINGDOM ROMANIA UK SNS UK NNS UK SNS UK CNS ROMANIA UNITED KINGDOM ROMANIA NETHERLANDS Potential 2011 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 C1, C2 & C3 CLADHAN (2) AIRIDH (1) MACANTA (1) BLAKENEY (1) BREAGH DOINA / ANA EAST BREAGH (1) CLADHAN (2) CLADHAN (2) GRIAN(1) OFFSHORE WELL (1) EUGENIA (1) CRAIOVA WELL (1) CLADHAN DARACH (1) IOANA (1) F QUAD (1) YEARLY ACTIVITY SETS Potential 2011 WELLS SEISMIC 1 (DARACH) 1 (ST LAURENT) DEVELOPMENTS

27 Summary Sterling has demonstrated the value of its strategy: Efficient and prudent exploration and appraisal with the conclusion of the partial divestment prior to development Excellent portfolio of development, appraisal and exploration assets Significant interest in 4 major gas discoveries Significant interest in 2 exciting oil discoveries Multiple high impact prospects and leads and related drilling program Focus countries offer attractive fiscal terms boepd 30,000 35,000 20,000 15,000 10,000 5,000 0 Experienced management with access to all necessary disciplines, now adding staff for growth activities Experienced and strategic development partners (Indicative) Resumption of business to repeat organic growth success with an exploration program tailored to resources A focus on progressing developments and realizing significant cash flow Year End 2009 Company Share New asset additions, a significant upside with modest financial exposure No long term debt Strategy to position the company to fully exploit our existing assets and to optimise the use of future cashflows Proved & Probable Reserves Best Estimate (P50) Contingent Resources Unrisked Best Estimate (P50) Prospective Resources 32.5 MMBOE 188 BCF 7.8 MMBBLS 916 BCF 129 MMBBLS Pre-Cladhan 2010 appraisal 27