Drilling and wireline logging operations are expected to be concluded within one month. Evaluation of the well data yet to be acquired will assist in the determination of intervals where flow testing operations may then be undertaken. Flow testing operations, if undertaken, are expected to take approximately 15 days per flow test.
The first sub-period of the exploration phase of the Production Sharing Contract ("PSC") for the Sangaw North Block has been extended by one year to November 2011, to allow for the completion of operations in the Sangaw North-1 well and the evaluation of the results of this well. The second, and final, sub-period of the exploration phase of the PSC has a duration of 2 years.
Cameroon
The Ntem Block, offshore Cameroon, remains in force majeure. The Company believes progress continues towards a resolution of the border dispute between the governments of Cameroon and Equatorial Guinea, but no specific timetable can be forecast. The Company currently holds 100% of the Ntem licence and expects to farmout a portion of its interest in exchange for being carried for its share of drilling costs.
Madagascar
The incumbent government, formed after the coup in March 2009, has not been recognised by its African neighbours or by many other governments. Sterling and ExxonMobil, our partner and the operator of the Ampasindava Block, will look for an improvement in the political situation before undertaking any significant expenditure.
The current exploration periods for both the Ambilobe and Ampasindava licences were due to come to an end in November 2010. Sterling and ExxonMobil are in discussions with OMNIS, the state oil company of Madagascar, with regard to an extension of both licences. The outcome of these discussions is expected in 2011.
Mauritania
During the first quarter 2011 production from the Chinguetti field net to Sterling totalled 56,597 barrels, an average of 629 barrels of oil per day, compared to 714 bopd for the same period in 2010. Production is stored on location until a suitable volume is accumulated which is then sold and transported away by sea tanker. There were no cargos sold in the first quarter 2011; it is anticipated that sales will be made in second quarter 2011.
There are no approved plans for further development of the Chinguetti field.
Financial Position
In the first quarter of this financial year, Sterling reports the following unaudited results:
| Q1-2011
(Unaudited) |
Q1-2010
(Unaudited) |
FY 2010
(Audited) |
||
| $ '000 | $ '000 | $ '000 | ||
| Revenue | (1) | 346 | 4,759 | 25,314 |
| Adjusted EBITDA | (2) | 569 | 2,097 | 11,339 |
| (Loss)/Profit after tax | (461) | (1,331) | 5,845 | |
| Cash and cash equivalents at period end | (3) | 115,846 | 110,570 | 111,679 |
(1) No oil cargos were sold in the first quarter 2011; revenue is sourced from royalty incomes relating to interests in the Chinguetti field.
(2) EBITDA is earnings before interest (and other finance income and costs), tax, depreciation, depletion, amortisation and write-offs of oil & gas assets. Adjusted EBITDA is calculated before share based payments, charged to the income statement under IFRS 2 and pre-licence costs.
(3) Cash balances at the end of Q1 2011 totalled $115.8 million, including $10.8 million of partner funds, (year end 2010: $111.7 million, including $10.1 million partner funds). The Group continues to remain debt free.
Director Resignation
Jonathan Cooper, Financial Director and Company Secretary, tendered his resignation on 19 April 2011. He is working his six month notice period during which time the Company will seek to appoint a successor.
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