TIDMSEY
RNS Number : 6485J
Sterling Energy PLC
15 April 2020
15 April 2020
STERLING ENERGY PLC
ANNUAL RESULTS FOR THE YEARED 31 DECEMBER 2019
Sterling Energy plc is today issuing its results for the year
ended 31 December 2019.
OVERVIEW
Sterling Energy plc ('Sterling' or the 'Company'), together with
its subsidiary undertakings (the 'Group'), is an upstream oil and
gas company listed on the AIM market of the London Stock Exchange.
The Company is an experienced operator of international exploration
and production licences, with a primary geographic focus on
emerging markets including, Africa and the Middle East, although
the Board would consider other regions for material opportunities.
The Group has a high potential exploration asset in Somaliland and
an active strategy to deliver shareholder value through
disciplined, exploration and production projects; leveraging the
Company's experience, with an emphasis on securing near term cash
flow generative opportunities.
2019 SUMMARY
Operations
-- Government of the Republic of Somaliland granted a continued
extension to the current period of the Odewayne production sharing
agreement ('PSA').
-- Throughout 2019: Odewayne block, Somaliland - Sterling
continued to support the Operator in progressing the technical
understanding of the block.
Corporate
-- Continued merger and acquisition ('M&A') mandate for
transformational growth (asset and corporate options).
-- Screened over fifty separate opportunities globally over 2019
and engaged with five of these to the point of indicative
offer.
Financial
-- Cash resources net to the Group at 31 December 2019 of $44.9 million (2018: $46.3 million).
-- The Group remains debt free and fully funded for all commitments.
-- Adjusted EBITDAX(1) : loss for the Group of $917k (2018: $1.5 million loss).
-- Ongoing focus on capital discipline, cash general and
administrative overheads ('G&A') expenses reduced by 15% to
$2.6 million (2018: $3.0 million).
-- Proactive focus on treasury management, with interest
received totaling $1.1 million (2018: $1.0 million).
(1) defined within the definitions and glossary of terms.
For further information contact:
Sterling Energy plc +44 (0) 20 7405 4133
David Marshall, Chief Executive Officer
Michael Kroupeev, Chairman
Peel Hunt LLP +44 (0) 20 7418 8900
Richard Crichton
David McKeown
www.sterlingenergyplc.com Ticker Symbol: SEY
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
CHAIRMAN'S STATEMENT
A number of key factors affected oil price expectations in 2019
including global demand, performance of the Chinese economy, the
wider macro-economic environment, maritime regulations, revision of
trade deals, production cuts as well as Iranian sanctions.
Following the year end, and into 2020, Coronavirus concerns became
a new and extremely significant factor of uncertainty and further
affected underlying net asset value and risk appetite, with Brent
crude plunging by over 30% in one day. Some of the E&P deals
that looked promising throughout the year at $60/bbl have proven
not to have sustainable value as midterm investments and are
currently languishing along with international indexes.
During 2019 our team intensified screening and pre-selection of
E&P opportunities that meet corporate standards and the class
of assets targeted by the Group. Some of the key criteria were
reviewed and updated by the Board to improve focus and concentrate
on added value and secure cases in what has been and continues to
be a volatile market.
The Somaliland acreage remains an attractive opportunity in the
long term, subject to good progress by the Operator Genel Energy
which carries our costs inclusive of the drilling of the first well
and has a strong cash balance to weather the downturn and fund its
operations. Results of the reprocessed 2D seismic data are now
ready for interpretation and we are hopeful this will show
potential for material accumulations of hydrocarbons. During the
year, the operator successfully applied for the extension of the
Third Exploration Period, which was subsequently granted by the
state authority. Once interpretation work is complete the Operator
may elect to proceed to the Fourth Exploration Period which will
focus on additional seismic and the drilling of an exploration
well.
Financial
2019 costs were further reduced by the means of the improved
overhead management and the net cash resources at the end of the
year remain solid. 2020 financial obligations are minimal and fully
funded.
Board and management
In 2019 the Board and the management team led by David Marshall
as the Chief Executive Officer and Director of the Company remained
stable and focused on the corporate strategy and its objectives.
The overall expertise and the background of the team allowed the
group to effectively screen opportunities in all major basins
around the world and to short list the most promising ones for the
Board to review.
Outlook for 2020
The Covid-19 virus has had a significant impact, affecting
economies and populations globally. The spread of Covid-19 has been
unlike any previous virus, taking governments and populations by
surprise. It is widely expected that the world economy will be
severely impacted by the Covid-19 despite measures by governments
to protect it. Sterling is currently in a very strong position,
preserving its capabilities, strengths and cash position to absorb
any shock to the UK and wider economy and anticipates distressed
M&A opportunities to arise as a result of this situation.
Sterling has not experienced any significant disruption to its
operations and continues to be fully functional, however Government
lockdowns across the globe will undoubtably have an effect on our
counterparties and progress on potential investments. The Company
continues to monitor the situation in Somaliland.
The Company continues to be fully set to evaluate M&A
opportunities that continue to arise in 2020 and remains committed
to executing an accretive acquisition once the right opportunity is
identified. We expect that despite the current global uncertainties
and the risk factors which are currently impacting the fossil fuel
industry as a whole, our past background and professional
excellence will allow us to target a deal for the benefit of all
our shareholders.
The backing of our stakeholders, and their continued support is
much appreciated and we now have in place all the tools we require
to be able to conduct a successful transaction over the course of
the year.
Michael Kroupeev - Chairman
CEO'S STATEMENT
2019 & 2020 Market Landscape
Oil price in 2019 started strongly with Brent reaching $67 per
barrel in the first Quarter, dropping back to $60 per barrel at end
2019, the price cushioned by increased USA oil productions despite
OPEC interventions and geopolitical disruption.
A relatively stable oil price during 2019 should have encouraged
M&A activity, but the large proportion of assets available were
higher risk exploration prospects with operators reluctant to sell
oil production and development opportunities. Production assets
that were available tended to have marginal economics at flat $60
per barrel.
The dramatic change in oil price following the Covid-19 impact
on demand, along with the collapse of the Opec+ Alliance, has
further weakened highly leveraged oil companies, who will see the
benefit of partnering with a cash rich entity. This steep decline,
as a result of world events, has particularly impacted financial
markets and will allow us to benefit from the database of companies
we have evaluated in 2019 whilst presenting new opportunities to
acquire assets at advantageous terms.
The Company is well financed and is positioned to take advantage
of acquisition opportunities during these volatile market
conditions.
Operations
During 2019 work on the Odewayne block in Somaliland focused on
the reprocessing of the entire 2D seismic dataset acquired in 2017
to pre-stack time migration ('PSTM'). This product was delivered to
the Company in Q1 2020. Sterling will review this newly reprocessed
2D seismic data set in 1H 2020 and will update its technical
assessment and outlook on block prospectivity accordingly.
We will continue to support the Operator and look forward to the
results from the reprocessing. The costs associated with current
period (Third Period) and the Fourth Period are fully carried by
Genel Energy Somaliland Limited ('Genel Energy'), hence the minimal
capital investment shown within the accounts.
Corporate
During 2019 Sterling reviewed over fifty opportunities, of which
5 bids were placed and a number are still under consideration. The
oil price environment in 2019 saw high expectations of value from
sellers which in turn made concluding a deal with reasonable terms
challenging.
Our strong cash position of $44.9 million, with no debt or other
liabilities, can be used to leverage a production foothold and
include low risk exploration commitment. In 2020 Sterling's ability
to fund exploration and development is key to our forward strategy.
Our focus for 2020 is onshore low-cost operators, who will benefit
from our cash position to develop and explore their existing
portfolio.
The Company has continued to reduce G&A and focus on robust
treasury management, in line with the Board mandate for cash
preservation to maximise our ability to deploy capital into
existing and new assets. In 2019 G&A expenditure reduced by 15%
in comparison to 2018 whilst increasing interest received.
Sterling has a detailed understanding of the current M&A
market and intends to take advantage of the current volatile
marketplace. As such, we look to the remainder of 2020 with
confidence in the belief that the current turmoil will present a
number of exciting opportunities for Sterling.
David Marshall - Chief Executive Officer
OPERATIONS REVIEW
Since late 2015, the Company implemented a strategic mandate of
exiting non-core exploration portfolio assets, and reducing
outstanding liabilities, to provide a simpler and rejuvenated
platform for M&A led growth. The Group's remaining African
exploration focused Odewayne block provides fully carried exposure
to a frontier basin that has the potential to deliver material
hydrocarbon reserves.
SOMALILAND
Somaliland offers one of the last opportunities to target an
undrilled onshore rift basin in Africa. The Odewayne block, with
access to Berbera deepwater port less than a 100km to the north, is
ideally located to commercialise any discovered hydrocarbons. A 2D
geophysical survey acquired in 2017 and reprocessed in 2019, along
with potential field data and legacy geological field studies, are
the focus of the company's 2020 work programme to determine if a
Mesozoic sedimentary basin is present in the block.
Odewayne (W.I. 34%) Exploration block
Overview
This large and unexplored frontier acreage position comprises an
area of 22,840km(2) , the equivalent of ca. 100 UK North Sea
blocks. Exploration activity prior to the 2017 regional 2D seismic
acquisition program has been limited to the acquisition of airborne
gravity and magnetic data and surface fieldwork studies, with no
wells drilled on block.
The Odewayne production sharing agreement was awarded in 2005.
It is in the Third Period, with a minimum work obligation of 500km
of 2D seismic. The Third Period has been further extended, through
the 8th deed of amendment, and its minimum work obligation was met
in 2017 when the Somaliland Government (Ministry of Energy and
Minerals) contracted BGP (Geophysical contractor) to undertake a
1,000km (full fold, 1,076km surface) 10km by 10km 2D seismic
campaign. The minimum work obligation during the optional Fourth
Period of the PSA, which has also been extended by 2 years, is for
1,000km of 2D seismic and one exploration well.
The Company's wholly owned subsidiary, Sterling Energy (East
Africa) Limited ('SE(EA)L'), holds a 34% working interest in the
PSA. SE(EA)L originally acquired a 10% position from Petrosoma
Limited ('Petrosoma') in November 2013 and an additional 30% from
Jacka Resources Somaliland Limited ('Jacka') in two transactions
during 2014.
In April 2017, the Company agreed to revised farm-out terms to
reduce the staged contingent consideration payments due to
Petrosoma and reduce SE(EA)L's interest in the Odewayne asset by
6%. The farm-out agreement was amended such that the parties
cancelled the $8.0 million contingent consideration in return for:
(i) a payment by SE(EA)L to Petrosoma of $3.5 million; and (ii) a
transfer from SE(EA)L to Petrosoma of a 6% interest in the PSA.
Post Government of Somaliland approval, SE(EA)L holds a 34%
interest in the Odewayne Block, fully carried by Genel Energy for
its share of the costs of all exploration activities during the
Third and Fourth Periods of the PSA.
In early 2018, following encouraging results from an integrated
geoscience review in late 2017 of the basic post-stack processed 2D
dataset provided by the Operator Genel Energy, Sterling undertook a
highly focused and rigorous processing effort, independent of the
Operator. The first phase deliverables were a full PSTM dataset,
consisting of 3 lines of ca. 235km and were received in May 2018.
These reprocessed lines showed significant improvements in
subsurface imaging and were shared with the joint venture ('JV')
partners in order to assist the decisions on forward work
programs.
In parallel to Sterling's efforts, the Operator undertook a
number of studies to support the interpretation of the 2D seismic
dataset. This included the integration of the 2D seismic data with
the potential fields data in the form of a 2D gravity modeling
study, alongside an updated review of the regional geology of the
Odewayne basin. These studies led to the development of a number of
geological models that were used to interpret the seismic data
which in the Company's view help support the likely presence of a
sedimentary basin. Following this work, the JV partners agreed that
reprocessing of the seismic data was needed to further improve the
understanding of the prospectivity of the Odewayne Basin.
Outlook
Following the various tests performed by both Sterling and the
Operator, in 2019 the Operator undertook the reprocessing of the
whole 2D seismic data set to pre-stack time migrated data. An
interpretation dataset was made available by the Operator in
November 2019 and final products were delivered in January
2020.
Sterling will review this newly reprocessed 2D seismic data set
in Q2 2020 and will update its technical assessment and outlook on
block prospectivity accordingly. Alongside the seismic
reprocessing, a surface seep study focused on areas highlighted by
the seismic as most likely to be situated above migration pathways
from potential hydrocarbon kitchens. It is anticipated that the
above work will aid the JV partnership in developing an appropriate
forward work program to further evaluate the prospectivity of the
licence.
FINANCIAL REVIEW
Selected financial data 2019 2018
Adjusted EBITDAX $million (0.9) (1.5)
Loss after tax $million (1.6) (2.0)
Year end cash net to the
Group $million 44.9 46.3
Year end share price Pence 8.7 10.4
Non-IFRS measures
The Group uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures include capital
investment, debt and adjusted EBITDAX.
Income Statement
Group G&A decreased by 15% during the year to $2.6 million
(2018: $3.0 million). The continued reduction in the Group's
administrative overhead is in keeping with the Board driven KPI for
cash preservation.
In 2019, a portion of the Group's staff costs and associated
overheads have been expensed as pre-licence expenditure ($1.3
million), or capitalised/recharged ($23k) where they are directly
assigned to capital projects or recharged. This totalled $1.4
million in the year (2018: $1.4 million).
Interest received during the year was $1.1 million (2018: $1.0
million). Net finance income (finance income less finance expenses)
totalled $1.0 million in the year (2018: $1.0 million).
The loss for the year was $1.6 million (2018: loss $2.0
million):
$ million
Loss for year 2018 (2.0)
Decrease in revenue (0.5)
Decrease in cost of sales 0.5
Decrease in G&A and pre-licence costs 0.4
Loss for year 2019 (1.6)
==================
Group adjusted EBITDAX loss totalled $917k (2018: $1.5 million
loss):
2019 2018
$000 $000
Loss after tax (1,600) (1,956)
Interest and finance costs (952) (1,024)
Depletion and depreciation 191 10
Pre-licence costs 1,444 1,453
Total EBITDAX (Adjusted) (917) (1,517)
======== ========
The basic loss per share was 0.7 cents per share (2018: loss 0.9
cents per share). No dividend is proposed to be paid for the year
ended 31 December 2019 (2018: $nil).
Statement of financial position
At the end of 2019, non-current assets totalled $22.1 million
(2018: $21.1 million) relating in principal to the Odewayne block
($21.1 million).
At the end of 2019, net assets/total equity stood at $65.8
million (2018: $67.3 million).
IFRS 16 (Leases) was adopted on 1 January 2019 and required the
Company to account for all leases under a single balance sheet
model, recognising both the rights to the asset and the liability
arising under the lease.
Net current assets reduced to $44.5 million (2018: $46.2
million). At the end of 2019 cash and cash equivalents totalled
$44.9 million (2018: $46.3 million), this reduction is for the most
part due to G&A overheads.
Cash flow
Total net decrease in cash and cash equivalents in the year was
$1.5 million (2018: $35.1 million, primarily due to the termination
of the Chinguetti Funding Agreement), a full reconciliation of
which is provided in the Consolidated Statement of Cash Flows.
During the year there were minimal cash investments on the
Odewayne Block in Somaliland due to the Group's interest being
fully carried by Genel Energy for its share of the costs during the
Third and Fourth Periods of the PSA.
Accounting Standards
The Group has reported its 2019 and 2018 full year accounts
under International Financial Reporting Standards ('IFRS'), as
adopted by the European Union.
Cautionary statement
This financial report contains certain forward-looking
statements that are subject to the usual risk factors and
uncertainties associated with the oil and gas exploration and
production business. Whilst the Directors believe the expectation
reflected herein to be reasonable in light of the information
available up to the time of their approval of this report, the
actual outcome may be materially different owing to factors either
beyond the Group's control or otherwise within the Group's control
but, for example, owing to a change of plan or strategy.
Accordingly, no reliance may be placed on the forward-looking
statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31st December 31st December
2019 2018
$000 $000
Revenue - 534
Cost of sales - (515)
Gross profit - 19
Other administrative expenses (1,108) (1,546)
Pre-licence costs (1,444) (1,453)
---------------------------------------------- -------------- --------------
Total administrative expenses (2,552) (2,999)
Loss from operations (2,552) (2,980)
Finance income 1,068 1,044
Finance expense (116) (20)
Loss before tax (1,600) (1,956)
Tax - -
Loss for the year attributable to
the owners of the parent (1,600) (1,956)
-------------- --------------
Other comprehensive expense - items
to be reclassified to the income statement
in
subsequent periods
Currency translation adjustments (3) (12)
Total other comprehensive expense
for the year (3) (12)
-------------- --------------
Total comprehensive expense for the
year attributable to the owners of
the parent (1,603) (1,968)
============== ==============
Basic and diluted loss per share (US
cents) (0.7) (0.9)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31st December 31st December
Note 2019 2018
$000 $000
Non-current assets
Intangible exploration and evaluation
assets 4 21,119 21,093
Property, plant and equipment 975 8
22,094 21,101
-------------- --------------
Current assets
Trade and other receivables 250 390
Cash and cash equivalents 44,851 46,312
45,101 46,702
-------------- --------------
Total assets 67,195 67,803
============== ==============
Equity
Share capital 28,143 28,143
Currency translation reserve (204) (201)
Retained earnings 37,844 39,387
Total equity 65,783 67,329
-------------- --------------
Current liabilities
Trade and other payables 439 474
Lease liability 208 -
647 474
-------------- --------------
Non-current liabilities
Lease liability 735 -
Long-term provision 30 -
765 -
-------------- --------------
Total liabilities 1,412 474
-------------- --------------
Total equity and liabilities 67,195 67,803
============== ==============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Currency
Share translation Retained
earnings
capital reserve (1) Total
$000 $000 $000 $000
At 1 January 2018 28,143 (189) 41,343 69,297
-------- ------------ --------- --------
Loss for the year - - (1,956) (1,956)
Currency translation adjustments - (12) - (12)
--------
Total comprehensive expense
for the year attributable
to the owners of the parent - (12) (1,956) (1,968)
At 31 December 2018 28,143 (201) 39,387 67,329
-------- ------------ --------- --------
Changes in accounting policy
- IFRS 16 - - 57 57
At 1 January 2019 28,143 (201) 39,444 67,386
-------- ------------ --------- --------
Loss for the year - - (1,600) (1,600)
Currency translation adjustments - (3) - (3)
--------
Total comprehensive expense
for the year attributable
to the owners of the parent - (3) (1,600) (1,603)
At 31 December 2019 28,143 (204) 37,844 65,783
======== ============ ========= ========
(1) The share option reserve has been included within the
retained earnings reserve and is a non-distributable reserve.
CONSOLIDATED STATEMENT OF CASH FLOWS
Note 2019 2018
$000 $000
Operating activities:
Loss before tax (1,600) (1,956)
Depreciation, depletion & amortisation 191 10
Finance income and gains (1,068) (1,044)
Finance expense and losses 55 12
Decommissioning costs paid - (32,500)
-------- ---------
Operating cash flow prior to working capital
movements (2,422) (35,478)
Decrease in inventories - 363
Decrease in trade and other receivables 140 478
Decrease in trade and other payables (35) (41)
Increase in provision 30 -
Net cash flow used in operating activities (2,287) (34,678)
Investing activities
Interest received 1,068 1,044
Purchase of property, plant and equipment - (4)
Exploration and evaluation costs 4 (26) (1,391)
Net cash used in investing activities 1,042 (351)
Financing activities
Principal paid on lease liability (201) -
Interest paid on lease liability (54) -
Net cash used in financing activities (255) -
Net decrease in cash and cash equivalents (1,500) (35,029)
Cash and cash equivalents at beginning
of year 46,312 81,365
Effect of foreign exchange rate changes 39 (24)
Cash and cash equivalents at end of year 44,851 46,312
======== =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The results announcement is for the year ended 31 December
2019.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 December 2019
or 2018, but is derived from those accounts. Statutory accounts for
2018 have been delivered to the Registrar of Companies and those
for 2019 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts; their
reports were unqualified, did not draw attention to any matters by
way of emphasis without qualifying their report and did not contain
statements under s498(2) or (3) Companies Act 2006.
While the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient
information to comply with IFRSs.
The Annual Report and Accounts and the notice for the Company's
Annual General meeting, which is to be confirmed, will be posted to
Shareholders in due course.
2. Going concern
The Group business activities, together with the factors likely
to affect its future development, performance and position are set
out in the Operations review. The financial position of the Group
and Company, its cash flows and liquidity position are described in
the Financial Review.
The Group has sufficient cash resources for its working capital
needs and its committed capital expenditure programme at least for
the next 12 months. As a consequence, the Directors believe that
both the Group and Company are well placed to manage their business
risks successfully despite the uncertain economic outlook.
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. This assessment has been made by the Directors who remain
confident the group has sufficient cash resources at the date of
signing the annual report to meet its liabilities as they fall due
for a period of at least 12 months from the date of signing these
financial statements, and notwithstanding the impact that COVID-19
has had internationally. The Directors believe that the Group is in
a strong position to absorb any potential impact on the Group
arising from COVID-19, and thus, they continue to adopt the going
concern basis of accounting in preparation of the financial
statements.
3. Operating segments
Africa operations in 2019 focused on exploration and appraisal
activities in Somaliland. The UK corporate office is a technical
and administrative cost centre focused on new ventures. The
operating results of each segment are regularly reviewed by the
Board of Directors in order to make decisions about the allocation
of resources and to assess their performance.
The following table's present revenue, profit and certain asset
and liability information regarding the Group's operating segments
for the year ended 31 December 2019 and for the year ended 31
December 2018.
Corporate Africa Total
2019 2018 2019 2018 2019 2018
$000 $000 $000 $000 $000 $000
Statement of
comprehensive
income
Revenue - - - 534 - 534
Cost of sales - - - (515) - (515)
----------------- -------------------- ----------------- ------- ------------------- --------
Gross profit - - - 19 - 19
Other
administrative
expenses (1,108) (1,546) - - (1,108) (1,546)
Pre-licence costs (1,444) (1,453) - - (1,444) (1,453)
----------------- -------------------- ----------------- ------- ------------------- --------
(Loss)/profit
from operations (2,552) (2,999) - 19 (2,552) (2,980)
Finance income 1,068 1,044 - - 1,068 1,044
Finance expense (116) (20) - - (116) (20)
----------------- -------------------- ----------------- ------- ------------------- --------
Segment
(loss)/profit
before
tax (1,600) (1,975) - 19 (1,600) (1,956)
----------------- -------------------- ----------------- ------- ------------------- --------
Segment assets
and liabilities
Non-current
assets (1) 975 8 21,119 21,093 22,094 21,101
Segment assets
(2) 45,101 46,702 - - 45,101 46,702
Segment
liabilities (3) (1,396) (460) (16) (14) (1,412) (474)
(1) Segment non-current assets of $21.1 million in Somaliland
(2018: $21.1 million).
(2) Corporate segment assets include $44.9 million cash and
cash equivalents (2018: $46.3 million).
Carrying amounts of segment assets exclude investments in subsidiaries.
(3) Carrying amounts of segment liabilities exclude intra-group
financing.
4. Intangible Exploration and Evaluation assets
Group
$000
Net book value at 1 January 2018 21,041
Additions during the year 52
Net book value at 31 December
2018 21,093
-------
Additions during the year 26
Net book value at 31 December
2019 21,119
-------
Group intangible assets at the year end 2019:
Odewayne PSA, Somaliland: SE(EA)L 34%, Genel Energy 50%,
Petrosoma 16%
Classified as a joint arrangement in accordance with IFRS
11.
5. Subsequent events
Save for the events surrounding Covid-19 which have been
discussed within the Chairman's and CEOs statements , no
significant subsequent events requiring disclosure or adjustment
have occurred.
The measurement of expected credit losses in accordance with
IFRS 9 (Financial Instruments), are not impacted by subsequent
global developments related to Covid-19 and are therefore
non-adjusting.
DEFINITIONS AND GLOSSARY OF TERMS
$ US dollars
Companies Act or Companies Act the Companies Act 2006, as amended
2006
1P proven reserves (both proved developed reserves + proved
undeveloped reserves).
2D two dimensional
2P 1P (proven reserves) + probable reserves, hence "proved AND
probable."
3D three dimensional
3P the sum of 2P (proven reserves + probable reserves) +
possible reserves, all 3Ps "proven AND probable AND possible."
AIM AIM, a SME Growth market of the London Stock Exchange
AGM Annual General Meeting
Articles the Articles of Association of the Company
bbl barrel, equivalent to 42 US gallons of fluid
bopd barrel of oil per day
boe barrel of oil equivalent, a measure of the gas component
converted into its equivalence in barrels of oil
Board the Board of Directors of the Company
City Code The City Code on Takeovers and Mergers
Company Sterling Energy plc
CSOP Company Share Option Plan (HMRC approved share option
scheme)
Directors the Directors of the Company
D&P development and production assets
E&E exploration and evaluation assets
E&P exploration and production
EBITDAX (Adjusted) earnings before interest, taxation,
depreciation, depletion and amortisation, impairment, share-based
payments, provisions, and pre-licence expenditure
EITI Extractive Industries Transparency Initiative
EUR the total amount of hydrocarbons expected to be produced
from the hydrocarbon accumulation over the life of the project.
Estimated ultimate recovery is synonymous with recoverable resource
and the terms are used interchangeably.
Farm-in & farm-out a transaction under which one party
(farm-out party) transfers part of its interest to a contract to
another party (farm-in party) in exchange for a consideration which
may comprise the obligation to pay for some of the farm-out party
costs relating to the contract and a cash sum for past costs
incurred by the farm-out party
FCA Financial Conduct Authority of the United Kingdom
G&A general and administrative
G&G geological and geophysical
GBP pounds sterling
Genel Energy Genel Energy Somaliland Limited
Group the Company and its subsidiary undertakings
HMRC Her Majesty's Revenue and Customs
HSSE Health, Safety, Security and Environment
hydrocarbons organic compounds of carbon and hydrogen
IAS International Accounting Standards
IFRS International Financial Reporting Standards
Jacka Jacka Resources Somaliland Limited
JV joint venture
k thousands
km kilometre(s)
km (2) square kilometre(s)
KPIs key performance indicators
lead indication of a potential exploration prospect
London Stock Exchange or LSE London Stock Exchange Plc
M&A merger and acquisition
m metre(s)
mcf thousand cubic feet
OECD Organisation for Economic Cooperation and Development
OPEC Organisation of the Petroleum Exporting Countries
Ordinary Shares ordinary shares of 10 pence each
P90 the value on a probabilistic distribution which is exceeded
by 90% of the outcomes.
P50 the value on a probabilistic distribution which is exceeded
by 50% of the outcomes. The P50 is also the median value of the
distribution.
P10 the value on a probabilistic distribution which is exceeded
by 10% of the outcomes.
Pmean the average of the values in the probabilistic
distribution between defined 'boundary conditions'. Universally
regarded as the best single value to quote or communicate for any
uncertain distribution of outcomes involved in repeated trial
investigations.
Panel or Takeover Panel the Panel on Takeovers and Mergers
Petroleum oil, gas, condensate and natural gas liquids
Petroleum system geologic components and processes necessary to
generate and store hydrocarbons, including a mature source rock,
migration pathway, reservoir rock, trap and seal.
Petrosoma Petrosoma Limited (JV partner in Somaliland)
Pre-Stack Depth Migration process by which seismic events are
geometrically re-located in space and depth to the location the
event occurred in the subsurface
Pre-Stack Time Migration process by which seismic events are
geometrically re-located in seismic travel time to the location the
event occurred in the subsurface
Prospect an area of exploration in which hydrocarbons have been
predicted to exist in economic quantity. A group of prospects of a
similar nature constitutes a play.
PSA production sharing agreement
PSC production sharing contract
QCA Code Corporate Governance Code for Small and Mid-Size Quoted
Companies 2018
Reserves reserves are those quantities of petroleum anticipated
to be commercially recoverable by application of development
projects to known accumulations from a given date forward under
defined conditions. Reserves must satisfy four criteria; they must
be discovered, recoverable, commercial and remaining based on the
development projects applied. Reserves are further categorised in
accordance with the level of certainty associated with the
estimates and may be sub-classified based on project maturity
and/or characterised by development and production status
Reservoir a porous and permeable rock capable of containing
fluids
Seismic data, obtained using a sound source and receiver, that
is processed to provide a representation of a vertical
cross-section through the subsurface layers
Shares 10p ordinary shares
Shareholders ordinary shareholders of 10p each in the Company
Subsidiary a subsidiary undertaking as defined in the 2006
Act
Tcf Trillion cubic feet
United Kingdom or UK the United Kingdom of Great Britain and
Northern Ireland
Waterford Finance and Investment Waterford Limited
Working Interest or WI a Company's equity interest in a project
before reduction for royalties or production share owed to others
under the applicable fiscal terms
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London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAPLLFSAEEFA
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