STRE01 PRO Corporate update to Bondholders 28 October 2015
Table of contents Summary Background and proposed amendments Company update Appendix 28 October 2015 Corporate Presentation Page 2
Summary Despite significant operational/technical challenges in the early life of Breagh, performance since Q4 2014 has been excellent and fracking is the key to unlocking Breaghs full potential From late 2014 until announcement of…
Table of contents Summary Background and proposed amendments Company update Appendix 28 October 2015 Corporate Presentation Page 4
Background to Sterlings financial challenges Since the 225m STRE01PRO bond issue in April 2013, Sterling has experienced several challenges which have impacted both past and near term cash flow: Delayed production start-up as well as…
Sterling has reshaped its strategy, cost base and asset portfolio To assist in meeting its Bond obligations, Sterling has initiated several measures across its strategy, asset portfolio and organization Measures initiated in 2014 and…
LetterOne/Dea UK history Sterling has been heavily impacted by the L1/Dea UK ownership uncertainty: In March 2014, LetterOne Holdings S.A. announced the acquisition of RWE DEA AG (the entire upstream business of RWE AG, with…
Current financial/M&A situation Despite intensive efforts and many parallel refinancing/M&A processes, Sterling has not yet succeeded with any refinancing, asset or corporate sale principally due to impact of L1/Dea UK situation RBL…
Cash flow outlook Free cash flow pre and post debt service(1,2,3) USDm Excluding debt service (interest costs and scheduled instalments), Sterling expects to have a nearly neutral free cash flow over the next two years Material…
October 2015 amendment proposal Bond amendments: Deferral of the amortization instalment (including premium) due on 30 October 2015 (the October 2015 Instalment), until 29 February 2016 at the latest but earlier if triggered by the…
October 2015 amendment proposal (continued) Bondholder compensation principal terms: An initial amendment fee of 1 million, payable shortly after approval of the Bond Amendments in the Bondholder Meeting Potential additional…
Table of contents Summary Background and proposed amendments Company update Appendix 28 October 2015 Corporate Presentation Page 12
Overview of Sterling Resources E&P independent listed on TSX-V (Toronto, ticker SLG) Market cap of C31m (27 October 2015, at C0.07/share, 441.6m shares in issue) Net debt of US162m(1) (30 Sep 2015) 3 areas of operations: UK, the…
Breagh: field summary Participants Sterling (30%), DEA (70%, Op.) Material North Sea gas producer Field 2P Reserves(1) 452 Bcf sales gas, 1.7 MM bbls condensate Scale 1.1 Tcf full field gas-in-place (P50)(1) Net 2P Reserves(1) 136…
Breagh: production performance 2015 Steady state operations YTD 2015 production of 106 MMscf/d sales gas (full field) Plant shutdown for baseline inspection 2015 uptime 97% (excluding planned shutdown) Reliable facilities…
Breagh: highly successful fracking operations in 2014 A07 well producing August 2014 Drilled in in SE of field as Z1A producer Two zones fracked with 180,000 lbs of proppant pumped Stabilised initial production rate of 32 MMscf/d…
Breagh: future plans Application of 3D seismic interpretation New 3D acquired in 2014. Initial PSDM volumes received early October Key to finalizing locations (A09 and A10), additional well targets (A11 and A12) and unlocking Phase 2…
Breagh: capex update Sterling has updated its 2P capex profile since the RPS Mid-2015 Breagh Report, to reflect cash timing of expenditures, revised well and compression costs, and revised well and compression timings Key…
Cladhan: Field summary Participants Sterling 2%, TAQA (64.5%, op.), MOL (33.5%) 2P Reserves(1) 14.9 MMbbls field, 0.44 MMbbls net (post carry) First Production Nov 2015 Subsea development via Tern platform (operated by TAQA, 17km…
Significant value in tax losses Issuer has very significant UK tax losses Sterling Resources UK tax position As of 31 December 2014: 433m (673m) (RFCT) loss(1) and 397m (616m) (SCT) loss(1) Ring Fence Exploration Supplement…
Table of contents Summary Background and proposed amendments Company update Appendix 28 October 2015 Corporate Presentation Page 21
Group and Issuer balance sheets GROUP BALANCE SHEET m ISSUER BALANCE SHEET m 30 Jun 2015 31 Dec 2014 31 Dec 2013 30 Jun 2015 30 Dec 2014 31 Dec 2013 Assets Assets Cash & Cash Equivalents 11.3 17.7 34.7 Cash & Cash Equivalents (1)…
UK North Sea: additional assets Southern North Sea Crosgan discovery close to Breagh Net 2C Contingent Resources of 41 Bcf(1), before reflecting disappointing well results from the appraisal well announced in February 2015 Breagh…
Netherlands: probable oil development Sterling is operator of Jurassic and Early Cretaceous horizons in licences F17a, F18 (Sterling 35%) Net 2C Resources in F17a/18 of 12 MMbbls(1), in three oil discoveries Appraisal activity by…
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