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Press release from CNW Group

STERLING RESOURCES ANNOUNCES 2010 OPERATING AND FINANCIAL RESULTS AND NI 51-101 RESERVES DISCLOSURE

Tuesday, April 19, 2011

STERLING RESOURCES ANNOUNCES 2010 OPERATING AND FINANCIAL RESULTS AND NI 51-101 RESERVES DISCLOSURE17:04 EDT Tuesday, April 19, 2011CALGARY, April 19 /CNW/ - Sterling Resources Ltd. (TSXV: SLG) ("Sterling" or the "Company"), an international oil and gas company with exploration and development assets in the United Kingdom, Romania, France and the Netherlands, is pleased to announce operating and financial results for the year ended December 31, 2010.  Unless otherwise noted all figures contained in this release are denominated in Canadian dollars.The net loss for the year ended December 31, 2010 was $5.0 million ($0.03 per common share - basic and diluted) compared to income of $66.4 million ($0.51 per share - basic; $0.50 - diluted) for the year ended December 31, 2009.  The income for 2009 relates primarily to the gain on disposition of one-third of the Company's interest in Breagh and varying interests in the surrounding blocks.  Excluding this one-time gain, the loss in 2010 is broadly comparable to 2009.Capital expenditures during 2010 totalled approximately $56.0 million compared to $21.1 million during 2009.  Of this total $49.8 million was invested in the United Kingdom, $3.9 million in Romania and $2.2 million in the Netherlands.  Net working capital as at December 31, 2010 was $138.4 million compared to $72.7 million as at December 31, 2009.  Cash and cash equivalents at December 31, 2010 stood at $142.6 million compared to $81.8 million at December 31, 2009.Sterling is pleased to report that the Company Interest Best Estimate (2C) Contingent Resources have increased by 245 percent from 39 MMBOE at year-end 2009 to 96 MMBOE at year-end 2010.  In accordance with the provisions of National Instrument 51-101, additional reserves disclosure is contained in this release and can also be found on the SEDAR (System for Electronic Document Analysis and Retrieval) website at www.sedar.com and on Sterling's website at www.sterling-resources.com"During 2010 Sterling's financial capability was strengthened, due to the quality of our assets and the support of our incumbent shareholders, new equity investors and the banks," stated Mike Azancot, Sterling's President and CEO.  "The strength of Sterling's reserve base has again been confirmed by RPS Energy, our reserves evaluators.  Proved plus Probable (2P) Reserves of 32.8 MMBOE are maintained mainly from Breagh, with Cladhan now contributing significantly to the Best Estimate (2C) unrisked Contingent Resources and Best Estimate (P50) unrisked Prospective Resources of 96 MMBOE and 482 MMBOE respectively.  Our Best Estimate (P50) unrisked Prospective Resources have increased by 171 percent this year. In addition, Sterling has added Unconventional Best Estimate (P50) Prospective Resources of 1.5 Tcf on an unrisked basis for onshore Romania.  With our financial strength and high quality asset base we look forward to pursuing our potential drilling campaign of 11 wells in 2011 and proceeding with implementation of the Breagh development along with the planning of the Cladhan and Ana/Doina developments" added Mr. Azancot.Operational milestones achieved during 2010 included the following:During May, the Company announced that it had signed a farm-in agreement with Wintershall (E&P) Limited to acquire a 25 percent working interest in UK Central North Sea Blocks 21/21, 21/22 and 21/27b.  A well subsequently drilled on the Blakeney prospect on Block 21/27b encountered a 71 foot, 14-15 degree API oil column.In mid-August, the Company reported that development of the Breagh field moved forward with the important award of the engineering, procurement and construction (EPC) contract to build the jacket and topsides to Heerema Vlissingen B.V.  Heerema will construct the jacket, topsides and piles at their Vlissingen yard in the Netherlands with a planned delivery date of late July 2011.During September, Sterling announced successful test results for the Cladhan well 210/29a-4Z, for which the initial drilling success was previously announced on August 30th.  The Drill Stem Test (DST) of the well was conducted by perforating the interval at a Measured Depth (MD) of 10,806 to 10,869 feet. The well was flowed for a total of 18.7 hours, over which 13 hours were stabilized at an average rate of 5,903 barrels of 34 degree API oil per day on a 28/64 inch fixed choke, with a final wellhead pressure of 1,874 psig.  Sterling holds a 39.9 percent interest and is operator.In late September, the Company reported that agreement had been reached with Teesside Gas & Liquids Processing (TGLP) for the processing and redelivery of natural gas to be produced from the Breagh gas field in the UK North Sea. The scope of the agreement also includes the facilitation of the construction of a 10 kilometre section of onshore pipeline across the River Tees and required construction work at the Teesside Gas Processing Plant (TGPP), a plant owned by TGLP. RWE Dea UK holds a 70 percent interest in Breagh and is operator; Sterling holds the remaining 30 percent interest.Early in October, the Company announced the successful drilling of a second Cladhan sidetrack well located in Block 210/29a in the UK North Sea.  This second sidetrack (210/29a-4Y) of the discovery well was drilled to a total depth of 11,530 feet MD to a downdip location 3,580 feet south east of the original well and 2,690 feet due east of the first sidetrack bottom hole location.  The well encountered in excess of 60 feet of vertical thickness of net hydrocarbon bearing sandstones.  Preliminary analysis indicated good quality sand with an average porosity of 20 percent and most importantly, the well did not encounter an oil water contact at this downdip location.  Lowest known oil occurred at a depth of 11,333 feet MD giving a minimum vertical oil column of 425 feet.On November 1st, Sterling announced that it had been successful in the UK 26th Offshore Licensing Rounds awards, which were announced by the UK Department of Energy and Climate Change (DECC).  Sterling was exclusively awarded licenses for Blocks 21/30f and 22/26c located in the UK Central North Sea, located to the east of the Company's existing Sheryl and Blakeney discoveries.  In addition to these Blocks, the Company was also awarded licenses for Blocks 42/13b, 42/17 & 42/18 jointly with partner and operator RWE Dea UK.During November, Sterling announced that the contract for the engineering, installation and pre-commissioning of the offshore pipeline and associated fibre optic cable for the Breagh development project in the UK North Sea had been awarded to Allseas Construction Contractors SA ("Allseas") by RWE Dea UK, operator of the Breagh project.  Allseas will perform the required detailed design engineering and will lay the approximately 100 kilometers of 20 inch export line, 3 inch mono ethylene glycol line and fibre optic cable from the Breagh 'A' platform location to a beach valve station located on Coatham Sands, Teesside, UK.In late November, the Company announced that approval had been received from the Dutch authorities to transfer to Sterling interests in five licenses within the F-Quad and L-Quad areas offshore Netherlands.  With this license transfer process completed Sterling holds a 50 percent interest in the shallow geological horizons in blocks F14, F16, F17, F18 and L01b and is operator.  The five blocks cover 1,550 square kilometers and are located 80 kilometers offshore in a water depth of 45 meters.  The shallow horizons in these blocks contain four oil discoveries, with several wells which tested oil with API gravities in excess of 30 degrees.During 2010 the following key corporate activities were completed:In August, the Company completed a bought-deal financing agreement with a syndicate of underwriters to issue 23,423,500 shares at a price of $1.90 per share including exercise in full of an underwriters' overallotment option of 2,368,500 common shares at the same price.  The net proceeds of $41,759,000, after fees and expenses, are intended to be used towards any required equity component of the Breagh project financing.In December, the Company completed a bought-deal financing agreement with a syndicate of underwriters to issue 29,920,500 common shares at a price of $3.00 per share including exercise in full of an underwriters' over-allotment option of 3,250,500 common shares at the same price.  The net proceeds of $85,100,000 after fees and expenses are intended to used towards the planned appraisal program on the Cladhan discovery in the first half of 2011; other exploration and appraisal activities in the UK, Romania, France and the Netherlands; initial pre-development work on the offshore Romania gas projects; and for general corporate purposes.Subsequent Events:In early March of 2011, Sterling announced the successful drilling of appraisal well 42/13a-6 in the Breagh field located in the United Kingdom Southern North Sea.  The well was drilled to a measured depth of 8,624 feet and preliminary analysis of the open hole logs by the operator indicated 62 feet of net gas bearing sands. The well has been suspended for future use as a production well.During March of 2011, the Company announced that it had executed reciprocal agreements with Valiant Petroleum plc to facilitate the exchange of certain UK North Sea assets.  The transaction was completed on April 19th, 2011 and has received the approval of the DECC. Sterling has acquired a 25 percent interest and operatorship of Blocks 210/29c and 210/30b in the Northern North Sea. In exchange, Valiant has obtained a 40 percent interest in Sterling's Central North Sea licenses in Blocks 21/30f and 22/26c, recently awarded to Sterling in the most recent 26th UKCS licensing round.  Blocks 210/29c and 210/30b are adjacent to Blocks 210/29a and 210/30a in which Sterling as operator has discovered and is currently delineating the Cladhan field.In March of 2011, well 48/28b-2 was completed on the Grian prospect in Block 48/28b in which Sterling holds a 57 percent interest.  Although a good quality sandstone reservoir was encountered, no gas was found and the well has been plugged and abandoned.In April of 2011, development of the Kirkleatham field in north-east England, in whichSterling holds a 47 percent interest, was completed.  First gas production was achieved on April 19th, 2011.  The production is anticipated to be stabilized at an initial gross rate of 5 MMcf/d from the single well.  Gas will be sold to the nearby chemical plant and the results from early production may lead to additional drilling or conversion to a gas-storage facility.During April of 2011 the Company announced further success at Cladhan in Block 210/30a in the United Kingdom North Sea.  The successful well, 210/30a-4, is located 1.1 kilometres southeast and downdip of the most recent appraisal well 210/29a-4Y and was drilled to a total measured depth of 12,252 feet having encountered two separate reservoir zones. No oil water contact was found and the minimum effective vertical oil column has now increased to 1,228 feet. Sidetrack drilling to the east into the fan system is underway. This will be followed by another sidetrack into the central channel and then a possible vertical well below the current rig position into the southern edge of the northern channel system. The Company intends to provide a revised independent resource evaluation towards the middle of 2011 when the current drilling campaign has been completed.Reserves and Resources Summary:Proved plus Probable (2P) Reserves of 32.8 MMBOE are maintained.Best Estimate (2C) unrisked Contingent Resources have increased by 245 percent year over year from 39 MMBOE at year-end 2009 to 96 MMBOE at year-end 2010.Best Estimate (P50) unrisked Prospective Resources have increased by 171 percent year over year from 282 MMBOE at year-end 2009 to 482 MMBOE at year-end 2010.Best Estimate (P50) unrisked Unconventional Prospective Resources of 1.5Tcf have been added during 2010. Company Share Reservesas at December 31, 2010(MMBOE) (1)Net Present Value Before Tax(4)as at December 31, 2010(Millions of Canadian $) Total ProvedProved plus ProbableProved plus Probable plus PossibleTotal ProvedProved plus ProbableProved plus Probable plus PossibleBreagh (2)23.631.639.0374.3479.8588.5Kirkleatham (2)0.10.20.52.96.312.8Sheryl (3)-1.11.5-15.922.2Company Total (5)23.732.841.0377.2502.0623.5  Unrisked Contingent Resources (6)(8)as at December 31, 2010 Company ShareUnrisked Prospective Resources (7)(8)as at December 31, 2010 Company Share  1C2C3CLowEstimateBestEstimateHighEstimate  P(90) (9)P(50) (9)P(10) (9)P(90) (9)P(50) (9)P(10) (9)GasBcf2403103847661,2602,267OilMMbbls334461145272776  Unrisked Unconventional Contingent Resources as at December 31, 2010 Company ShareUnrisked Unconventional Prospective Resources as at December 31, 2010 Company Share (10)  1C2C3CLowEstimateBestEstimateHighEstimate  P(90) (9)P(50) (9)P(10) (9)P(90) (9)P(50) (9)P(10) (9)GasBcf---3001,5007,000OilMMbbls------Notes:(1)Gross before royalties       (2)Gas converted to BOE at 6 Mcf = 1 BOE      (3)Oil        (4)Discounted at 10% per annum      (5)Company Reserve totals are arithmetic aggregations of multiple estimates, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give particular attention to the estimates of individual classes of Reserves and appreciate the differing probabilities of recovery associated with each class. For Proved (1P) Reserves these totals have a much higher than 90% probability of occurring on an unrisked basis. For Proved plus Probable plus Possible (3P) Reserves, these totals have a much lower than 10% probability of occurring on an unrisked basis.(6)Contingent Resources are those quantities of petroleum estimated as of a given date to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. The Resource volumes shown represent probabilistic totals of several entities within each license or block area. There is no certainty that it will be commercially viable to produce any portion of the Contingent Resources.(7)Prospective Resources are those quantities of petroleum estimated as of a given date to be potentially recoverable from undiscovered accumulations by application of future development projects. There is no certainty that any portion of the Prospective Resources will be discovered or, if discovered, that it will be commercially viable to produce any portion of the Resources. These Prospective Resources are in areas of the field or geological horizons, in which the presence of hydrocarbons require confirmation by drilling.(8)Company Resource totals shown by Resource category are statistical aggregates of unrisked Resources at a company level. For Contingent Resources the statistical aggregates assume no dependencies between discoveries and for Prospective Resources these statistical totals assume no dependencies between prospects.(9)The P(50) or 2C is considered to be the best estimate of the quantity that will actually be recovered. If probabilistic methods are used there should be at least a 50 percent probability P(50) that the quantities actually recovered will equal or exceed the estimate. Similarly, the 1C or P(90) and 3C or P(10) represent the low and high estimates respectively.(10)Unconventional Prospective Resources are based on RPS' assessment of Silurian Wenlockian shale gas potential in the Sud Craiova license.  RPS calculates the potential based on mapping of the extent of the Wenlockian shale, geochemical analysis of outcrop shale samples, a well test on license that produced gas from the shale and comparison with the analogous Haynesville Shale gas reservoirs in the U.S.A.  The volumes cited here are unrisked.  RPS assigns a geological probability of success of 5% to the prospect.(11)The estimates of Reserves and Resources for individual properties may not reflect the same confidence level as estimates of Reserves and Resources for all properties, due to the effects of aggregation.The Company's hydrocarbon resources were independently evaluated by RPS Energy in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions and evaluation practices and procedures, as specified by National Instrument 51-101. ("NI 51-101").  The definitions for each of the categories, including the conditions around contingent resources can be found on page 23 of Sterling's 2010 Annual Report.  There is no certainty that it will be commercially viable to produce any portion of the reserves.The evaluation uses the RPS Energy forecast prices and costs as at December 31, 2010.  Complete details regarding Sterling's Resources for the year ended December 31, 2010 and in a format specified by NI 51-101 can be found in Sterling's forthcoming Annual Information Form which will be filed on SEDAR at www.sedar.com or on the Company's website www.sterling-resources.com.  Audited consolidated financial statements and associated notes, and the Management Discussion and Analysis can also be found on SEDAR and at Sterling's website.Sterling Resources Ltd. is a Canadian-listed international oil and gas company headquartered in Calgary, Alberta with assets in the United Kingdom, Romania, France and the Netherlands.  The shares are listed and posted for trading on the TSX Venture Exchange under the symbol "SLG".Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.Filer Profile No. 00002072Forward-Looking StatementsAll statements included in this press release that address activities, events or developments that Sterling expects, believes or anticipates will or may occur in the future are forward-looking statements. In addition, statements relating to reserves or resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources described can be profitably produced in the future.These forward-looking statements involve numerous assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.  In addition, these statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other-forward looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: the impact of general economic conditions in the areas in which Sterling operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations.  Readers should also carefully consider the matters discussed under the heading "Risk Factors" in the Company's Annual Information Form.Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur.  Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements.  These statements speak only as of the date of the press release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.Financial outlook information contained in this press release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available.  Readers are cautioned that such financial outlook information contained in this press release should not be used for purpose other than for which it is disclosed herein.     For further information: visit www.sterling-resources.com or contact: Mike Azancot, President and Chief Executive Officer, Phone: 44-1330-826764, Mobile: 44-7740-432883, mike.azancot@sterling-resources.com David Blewden, Chief Financial Officer, Phone: 44-1330-826766, Mobile: 44-7771-740804, david.blewden@sterling-resources.com. George Kesteven, Manager, Corporate and Investor Relations, Phone: (403) 215-9265, Fax: (403) 215-9279, george.kesteven@sterling-resources.com