Annual General & Special Meeting Annual General & Special Meeting of of Shareholders Shareholders 30 May 2014 Friday, May 30, 2014
Agenda Welcome Formal Business Meeting Management Presentation Questions & Answers Refreshments AGM - 30th May 2014 Page 1
Current Board of Directors Jim Coleman, Chair Jake Ulrich, Chief Executive Officer Rob Carter John Collenette Teck Soon Kong Gavin Wilson AGM - 30th May 2014 Page 2
Senior Employees in Attendance Sherry Cremer, Treasurer & Corporate Secretary David Blewden, Chief Financial Officer John Rapach, Chief Operations Officer George Kesteven, Manager, Corporate & Investor Relations AGM -…
Appointment of Secretary and Scrutineers Sherry Cremer, Secretary of the Corporation Jason Welling, Scrutineer (Computershare Trust Company of Canada) AGM - 30th May 2014 Page 4
Notice of Meeting Confirmation of Mailing on April 22, 2014 has been provided by the Scrutineer Quorum and Voting Procedure Scrutineers Report AGM - 30th May 2014 Page 5
Annual Meeting Business Minutes of Preceding Meeting of June 11, 2013 Receipt of Financial Statements and the Report of the Auditors AGM - 30th May 2014 6 Page 6
Fixing the Number of Directors Motion: That the number of Directors to be elected to hold office until the next Annual Meeting of the Corporation or until their successors are elected or appointed, subject to the articles and…
Election of Directors Motion: Nomination of Robert Carter, James Coleman, John Collenette, Teck Soon Kong, Jacob Ulrich and Gavin Wilson as Directors of the Corporation to hold office until the close of the next Annual Meeting of…
Appointment of Auditors Motion: Move that Deloitte LLP, Chartered Accountants be appointed Auditors of the Corporation until the next Annual Meeting of the shareholders and that the Directors be and are hereby authorized to fix…
Approval of Stock Option Plan Motion: Ordinary resolution to approve the adoption of a new rolling stock option plan, subject to TSX-V acceptance, as more particularly described in the Information Circular of the Corporation dated…
Adjournment of Meeting Motion: If there is no further business to be brought before the Meeting, a motion will now be made to terminate the Meeting. AGM - 30th May 2014 Page 11
AGM Investor Update 30 May 2014
Vision and strategy VISION: BECOME A LEADING EUROPE-FOCUSED E&P COMPANY WITH DIVERSIFIED CASH FLOW, DELIVERING SUPERIOR RETURNS TO SHAREHOLDERS Strengthen balance sheet by maximising cash ow Focus on Breagh remedial work and…
Overview of Sterling Resources E&P independent listed on TSX-V (Toronto, 0cker SLG) Market cap of 159m (=CAD 173m; 29 May 2014, closing price CAD 0.56/share) Net debt of 172m (31 Mar 2014) 4 areas of opera0ons: UK, Romania,…
Material Reserves, Contingent & Prospective Resources Signicant exploraHon and appraisal acHvity over next few years aimed at rming up a large part of conHngent/ prospecHve resources (1) 2P = Proved plus Probable Reserves, 2C…
OPERATIONS UPDATE AGM - 30th May 2014 Page 17
2013 / 14 highlights Excellent HSE performance Breagh rst gas produc0on achieved Cladhan Development progressing - on schedule Signicant progress on - Oshore Romanian assets - UK & NL explora0on assets AGM - 30th May…
HSE review HSE 2013/2014 - Zero Lost Time Accidents - Zero Environmental Incidents ISO 14001 accredita0on - 2012 for UK opera0ons, - extended to Romanian opera0ons in 2014. AGM - 30th May 2014 Page 19
Breagh - overview Par'cipants Sterling (30%), RWE Dea (70%, op.) Field 2P Reserves(1) 596 Bcf sales gas, 2.4 MMbbl condensate Net 2P Reserves(1) 179 Bcf, 0.7 MMbbl cond. (30.5 MMboe) Net 2C Resources(1) 13 Bcf (2.2 MMboe) First…
Breagh field recent events summary Restart post incident and First gas - October 2013 early stage proving - A01 A06 wells in produc0on, Onset of instrument contamination - A07 frac ongoing Breagh2014ProducEon 140 Facili0es…
Breagh well A07 fracking plans 190,000 lbs, wing length 280 Treatment 2 - Zone 1 90,000 lbs, Treatment 1 - Zone 3 wing length 200 Stimulation Vessel Big Orange18 AGM - 30th May 2014 Page 22
Breagh - outlook Increase eld gas deliveries - A07 Hydraulic S0mula0on to increase rate - Breagh Alpha Inll wells A08 CommiWed Staged frac cuts across heterogeneity A09 & A10 proposed Other wells and s9mula9ons to be…
Breagh reserves GIIP for Breagh unchanged Recovery improvements - Fracture s0mula0on of wells - Increased well count o BA plavorm Net MMboe(1) Phase 1 Phase 1+2 YE 2012 reserves 25.070 30.937 YE 2013 reserves 24.990…
Cladhan - summary First Produc0on March 2015 Project in progress - Tern topsides mods commenced - 1st subsea campaign nearing comple0on - Drilling P1 producer AGM - 30th May 2014 Page 26
UK exploration Central North Sea - Beverley area - Blakeney & Feugh Southern North Sea - Ossian/Darach area - Niadar area AGM - 30th May 2014 Page 27
UK Exploration Niadar prospect (49/19b) Prospective resources - 59 118 bcf(1) Proven productivity - Highly productive Rotliegendes Reservoir Infrastructure nearby Quick development options Top Leman Sandstone 3-D depth map…
UK Exploration Ossian prospect (36/30,42/2a,3a,4,& 5) (1) Industry leading play concept - New Play Mature Basin - 168 435 Bcf Prospective Resource(1) Carboniferous potential (1) Source: Sterling end 2013 NI 51-101F1, P50…
Romania - activity highlights ExxonMobil/OMV Petrom carve-out completed Explora0on - 1385 km2 3D seismic acquired - Muridava-1 well results Equity reduc0on process for all blocks underway Midia Gas Development - Secured…
Romania - significant acreage position BLOCK 15 MIDIA SHALLOW & BLOCK 13 PELICAN 216 Bcf (net) Con0ngent Resources (P50) Ana and Doina(1) development opportunity 38 Bcf (net) Con0ngent Resources (P50) Eugenia(1) Current…
Romania - seismic acquisition areas Eugenia 100 km2 Luceafurul 580 km2 Ana/Doina 500 km2 Ioana 100 km2 Bianca 100 km2 AGM - 30th May 2014 Page 32
Romania - Doina Trend 3D seismic NE SW Clara Doina Ana Lead Gina AGM - 30th May 2014 Page 33
Netherlands CONTINGENT AND PROSPECTIVE RESOURCES (1) AS OF DECEMBER, 31 2012 (RPS) Net to Sterling working interest GAS Con0ngent (2C) Prospec0ve (Best) 0 Bcf 163 Bcf OIL Con0ngent (2C) Prospec0ve (Best) 12 MMbbls 19…
Netherlands seismic shoot 500 km2 Broadband 3D, due to start before end-May with CGG AGM - 30th May 2014 Page 35
Netherlands - prospectivity BePer dene exis0ng discoveries BePer dene explora0on poten0al near salt features AGM - 30th May 2014 Page 36
Four year activity schedule Expected high ac0vity level across exis0ng porvolio 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 United Kingdom A07 frac, A08 Drill A09, A10 Breagh Phase 1 development O n s h o r…
Production growing and diversifying over next 5 years Sterlings net produc0on increases materially in coming years: Cladhan expected on-stream Q1 2015 Breagh Phase 2 expected on-stream Q3 Sterling estimate 2017 Crosgan…
FINANCIAL UPDATE AGM - 30th May 2014 Page 39
UK gas prices Short term weakness Since the start of 2014, the average gas price for 2014 has fallen by nearly 20% Very mild winter in UK and Europe UK storage largely full Several LNG cargoes have ooaded recently in…
Breagh: cash flow generation (Phase 1) RPS 10% NPV, Phase 1, 2P reserves, post tax at end-2013: 437m RPS uses 232m of tax losses linked to Breagh licences only at end 2013 - leads to tax payable from 2018 U0liza0on of…
Cladhan: additional cash flow from 2015 RPS 10% NPV, Phase 1, 2P reserves, post tax at end-2013: 76m RPS uses 34m of tax losses linked to Breagh licences only at end 2013 - leads to tax payable from 2016 U0liza0on of…
Romania: attractive economics Low royalty rate at 3-13.5% and corporate tax at 16% Tax/royalty system being revised to reect higher gas prices Gas prices have been liberalized in accordance with published schedule (see chart) but…
Financial: balance sheet and tax Tax Very signicant UK tax losses: 376m RFCT loss at Mar 31, 2014, 351m SCT loss (Sterling es0mates) Group Consolidated Balance Sheet at Mar 31, 2014 including accrual of RFES(1) for Q1 2014…
Financial: cash and cash flow Total Cash & Cash Equivalents (including restricted) at Mar 31, 2014 56m Expected Q2-Q4 2014 Breagh opera0ng cash ow plus proceeds of Es'mated Q2-Q4 2014 expenditures (prior to planned farm-outs)…
Low valuation compared to peer group 3.5 3.0 2.5 2.0 Price/ Core NAV 1.5 Average 1.2 1.0 0.47 0.5 0.0 0.9 0.8 0.7 0.6 Average 0.6 Price/ 0.5 RENAV 0.4 0.31 0.3 0.2 0.1 0.0 Source:…
Summary Cash genera0ve, full-cycle E&P company Signicant UK tax losses with no tax payable un0l 2021; value exceeds current market cap Signicant explora0on and appraisal ac0vity over next few years Small addi0onal debt…
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