Sterling Resources Ltd Operational Update
Friday 31 March 2017
Revenue from the Breagh gas field during 2016 totaled $37.0 million, on sales gas production of approximately 7.9 billion cubic feet ("Bcf") at an average realized price of 33.5 pence per therm ($4.58 per thousand cubic feet), and sales of 3,162 tonnes of condensate (23,251 barrels) at an average price of $331 per tonne. Comparatively, during the year ended December 31, 2015 the Company recorded gas sales of 11.4 Bcf at an average realized price of $6.53 per thousand cubic feet and 5,238 tonnes of condensate at an average price of $396 per tonne.
Strong production performance continued from Breagh throughout 2016 with high facilities uptimes. Full year average gross sales gas production achieved forecast at 71.3 million standard cubic feet per day (“MMscf/d”) net 21.4 MMscf/d to the Company. Gross condensate sales for 2016 averaged 212 barrels per day (“bbls/d”), net 63.5 bbls/d to Sterling. All outstanding works at the Teesside Gas Processing Plant have been completed and the Breagh partnership entered into an Amended and Restated Gas Processing and Operations Agreement. In addition, the Company successfully entered into a new Gas Sales Agreement with British Gas Trading Limited, a subsidiary of Centrica plc.
The anticipated infill drilling campaign of two new wells (A09 and A10) in the Breagh field and the re‐ entry and hydraulic stimulation of one existing well to improve performance is expected to commence in June 2017. Planning for onshore compression is in progress at the time of this press release with start‐up planned for the end of the first quarter of 2019. Full year gross sales gas production for 2017, as per RPS Energy, the Company’s reserves evaluator is expected to average 72.9 MMscf/d, 21.9 MMscf/d net to the Company due to the natural decline in production from the existing wells plus the benefits from the production from the new drilling in the fourth quarter of 2017.
In the Netherlands, the Company is currently evaluating development options which include a subsea tieback to a potential Wintershall oil hub in the area, following the completion of seismic procession and interpretation work at the end of 2016 and during the first quarter of 2017. A licence extension has been granted to January 2021.