anyone got any ideas about the block trades that went through today?

website: http://www.sterlingenergyplc.com/



weather: www.nhc.noaa.gov/refresh/graphics_at4+shtml/084938.shtml?50wind120

Neither am I, but Hightech asked about any negative point and that was one, although it is a small point. A lot of positive points in the results as I'm sure all have read.

You're welcome Andy.

bella - 11 May'05 - 12:18 - 3956 of 3964

bella - you got that from where?


Looks like we will never know.

Oh well.................(sighs)

The most important thing is that all holders who express a preference, are pleased with the results.

Not many shareholders of other small caps can say the same.

I may get a bit frustrated now and then about the movement or lack of it, in respect of the share price, but I have been here long enough now not to worry.

Production and reserves in the GOM more than doubled last year and is targetted to double again by end 05, I'm happy with that.

Also, getting 8% of Chinguetti "which lays the
foundation for a quantum leap in production and cash flow in the first quarter
of 2006" also makes me happy.

love the word quantum, especially when followed by the word leap...

Good results
Good fundamentals
Good management
Good numbers
Good prospects
Good investment

Who wants the price of something we should be buying more of to be high now?

sd

gav,

I think that the US comments are the most intriguing of the lot within the rns for the reason that they are the sole contributor to the bottom line until Q1 2006 when the Chinguetti development is scheduled to start producing. The rns said:

2005 Progress and Outlook:

US drilling and workovers programme aims to double production there by year-end

I did not take it from the above comment that the earnings contribution from the US would double this year, but rather that by the year end they would be producing twice the amount that they are producing now. In which case earnings growth could realistically be anything between 10% and 90%. I would therefore be interested to learn what the output over the course of the whole year is expected to be.

The reason for this is quite simple in so far as their PE ratio is imo quite high atm. That's fine so long as their expected growth can support the high ratio and offer an undemanding PEG. Anything over 40% and I believe that they are a buy. Anything less and I feel that they are probably either fairly- or over-priced.

It's no good just having a 1 year "flash-in-the-pan" though and I'd also be interested to learn what their growth projections from the US for 2006 and beyond are.

Btw, thanks for your comments about broadband on the ESY thread. We still haven't decided what to do.

hilary, why dont you arrange to go to the AGM and ask these questions if they bother you?

"It's no good just having a 1 year "flash-in-the-pan"................ "

You really know your stuff don't you?

I still respect you view, even if it is wrong.

Hope things are good with you and yours.

Good luck for the future.

seawallwalker,

I asked a serious question and had hoped that either you, Gav or somebody else on the thread might know the answer. If not, I can always give them a call.

As for knowing my stuff ........... Yes, you're right. I do.

Hi Hilary,

I agree with you that the comments re the GOM production are indeed very interesting. As to the statement you highlighted, I to read that as the aim for 2005 is to produce twice as much daily as they did in 04. In today's RNS, they don't seem to mention an aim of doubling earnings for 05 but of production.

The average daily production numbers are taken from today's RNS. By end 03, daily production was 5.3 mmcfge/d rising to 10.2 mmcfge/d by end 04 with a target for 05 of 20 mmcfge/d. I would argue that these figures are quite impressive, especially if they do hit the 05 target. As to total output projections for 05 and 06 are, I don't have the exact numbers.

You make an interesting point re a 1 year flash in the pan which I also agree with. It's no use having one excellent year and then not being able to build on it. However I feel that growth will continue over the next few years. A lot of the drilling planned for 04 seems to have been moved into 05 due to expanding the Houston office. Between 3 and 6 drills are planned for 05 in existing fields so I'm assuming this is why they are confident in doubling production in 05. Looking further into 06, I have no details as to what will be drilled in the US. However, as you know 06 brings Chinguetti online with revenue from the 8% share in the field plus the sliding royalty payments for other production in Mauritania. I would also expect that by 06 we should have some more activity in some of SEY's other assets.

I note that Sterling are doing a presentation at this years Oilbarrel conference in June. Perhaps by then we will have a some indication as to end 05/06 drilling plans. I guess one of the reasons why I am bullish on Sterling over the next few years is that I feel higher oil prices are here to stay, but that's a different discussion.

Cheers

Gav

An article on Sharecast re today's results.

http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=478671

hilary unless I misunderstood your question, the answer is in recent previous posts and in the finals as repeated by gav.

http://business.timesonline.co.uk/article/0,,8211-1608603,00.html

Sterling Energy

STERLING Energy used the occasion of its full-year profit release yesterday to wax lyrical about its ambitions to double production from its gas assets in the US, while at the same time retaining an exposure to share price-pumping exploration activity in Africa. This combination alone should have been enough to propel its share price. Investors, fair jostled by oil and gas minnows seeking their attention, appeared unimpressed. The shares dropped p to 15p.

Sterlings plans warrant closer attention, however. Its most famous investment, an 8 per cent stake in the Chinguetti field off Mauritania, is not due to start producing oil until early next year. That forces investors to look at Sterlings gasfields in the Gulf of Mexico. These fuel handsome flows of cash from the business. Last year Sterling was able to double daily output to 10.2 million cubic feet of gas a day.

This year Sterling expects again to double its gas output at relatively modest cost of about 13 million. It is also likely to receive higher gas prices than it did in 2004. The implications for profits which rose 130 per cent last year are both obvious and mouth watering.

The catalyst for a share price re-rating, however, lies in Africa. Sterling will participate in up to ten exploration wells this year. Exploration is a hit-and-miss game but in Sterlings case partners are shouldering the bulk of the costs. Shareholders who participated in last Novembers 97 million cash raising may feel a little sore at the current share price. But for investors happy with the risk profile, the omens are good. Buy.

SWW, thanks for the last post, nice article, sums things up quite well. Oilbarrel article this morning:

12.05.2005
Sterling Posts Record Results And Highlights Its Position In Mauritania
Sterling Energy, which has posted record full-year financial results for 2004 that were largely in line with analysts expectations, illustrates the balancing act many E&P companies try to pull off, that of backing high risk/high reward exploration in frontier territories with a solid base of profitable production in proven oil provinces. The AIM-quoted company has established its solid base on the US Gulf coast, which represents its sole source of cash flow, while the frontier exploration lies in Africa, where the company has interests across the continent stretching from Mauritania to Madagascar.

The exploration hotspot of Mauritania represents one of Sterlings key assets but until this weeks results presentation many investors were confused as to what exactly the company had negotiated there. In October 2004, Sterling signed a deal with the Mauritanian government, positioning itself as a strategic partner to the fledging oil state. Under the terms of the deal, Sterling will fund the countrys new state oil company, GPC, as it takes up its 12 per cent share in the Chinguetti oilfield, which, when it comes onstream at a rate of 75,000 barrels per day in the first quarter of 2006, will be that countrys first oil production. Sterling paid a signature bonus of US$15.5 million to the Mauritanian government and has made a US$130 million letter of credit available to GPC. This deal gives Sterling an eight per cent economic inertest in the field.

Its been quite difficult to get to the bottom of the deal they had done in Mauritania but it seems to work out as an eight per cent interest in the Chinguetti field, which does give us a bit more guidance, said Richard Slape, oil analyst with Seymour Pierce. Given what theyve paid, it doesnt seem to be a bad deal.

The company will also, through an existing sliding scale royalty agreement with Premier Oil, benefit from revenues from Chinguetti and the other developments lined up offshore Mauritania. When the Tiof field, for example, some 25 km north of Chinguetti, is declared commercial, as seems increasingly likely, Sterling will receive a bonus of US$2 million plus royalty payments when the field then comes onstream.

Elsewhere in Africa, the company is keen to make progress on its two licences in the AGC, the joint zone between Senegal and Guinea-Bissau. Earlier this year, Sterling farmed out 55 per cent of its interest in the Dome Flore permit in the shallow waters of the AGC, which holds two significant heavy oil discoveries with around 800-1,000 million barrels in place. A one year study is planned for the heavy oil while light oil prospects identified on the seismic data could be tested by exploration drilling in 2006/7.

Progress has been suspended on the companys Ntem concession in Cameroon pending resolution of a boundary dispute with neighbouring Equatorial Guinea.
In Gabon, where Sterling has interests in two shallow water permits, Iris Marin and Themis Marin, the Iboga-1 exploration well is due to spud later this year.
Backing up this exploration work are the companys holdings in the US, where it exited 2004 with production of 10.2 million cubic feet of gas per day. It expects to double that number this year as a result of new drilling - and if ever there was a place to be a gas producer then the energy-hungry US, with its booming gas market, is that place.

Sterling is one of the few UK E&P companies with exposure to the US natural gas market, said its broker Evolution Securities in a briefing note. Gas production doubled in 2004, and is expected to double again in 2005. The US gas price continues to show strength and is currently up 25 per cent compared to levels a year ago.

This rising tide helped the company post record results for 2004. Revenues doubled to hit 11.5 million, while net profit was up 87 per cent to stand at 2.97 million.

As well as its growing production streams in the US, the company expects to enjoy a monthly revenue by selling access to its operated pipelines and facilities to third parties. In all, Sterling has interests in 12 fields along the Gulf coast and it operates eight of them along with 21 offshore structures, over 68 miles of pipe and two onshore storage bases. This is no insignificant business although some analysts expect to see it increasingly overshadowed once Chinguetti starts to pump next year and progress is made on some of the other projects in West Africa.

It does seem that the focus going forward is going to be West Africa and, if that strategy is successful, its probable that the Gulf of Mexico business will be marginalised, said Slape of Seymour Pierce.

Thanks for the reply, Gav.

As I stated previously, I do see US growth this year as being the key issue which is likely to drive the share price in the short term. It probably goes without saying that if they had doubled their production by 1st Jan, then revenue growth (and therefore eps growth) would be around 100%, but if they aren't able to double it until December, growth will only be around 10% or 20%. Revenue growth for 2006 and beyond will likely come from Chinguetti, so US production increases then are not so critical.

Re the high oil prices, I'm not sure to what degree that will affect SEY as they are forward selling their production to guarantee a fixed and stable revenue. 2005 production looks to have been forward sold, although the 2003 accounts don't seem to show the price at which 2004 production was forward sold for comparison. They will, however, have got a significantly better price for 2005 production than they did for 2004 which was probably sold at around $4.70 or $4.80. This alone could account for a 25% or 30% increase in revenue for 2005.

As we did in 2004, for 2005 we have used the futures markets to 'sell' approximately $10 million of gas at prices averaging $6.20/mcfge. We intend to continue to use such contracts to cover part of our forecast production as part of our risk management.

I did notice that they were adversely affected by the fall in the greenback throughout the course of the year from $1.79 to $1.92. Cable is currently around $1.87, so any further weakening of sterling could presumably help them this current year.

Hope that helps.

seawallwalker,

The problem with articles like the one from the Times is that the journalist has not read the results properly. No financial journalist ever does, unfortunately. If he could read results properly, he would not be wasting his life writing for a newspaper.

He neglected to mention that last year's doubling of revenues from the US was as a result of acquisition and was wholly inorganic. Organically, revenues actually declined. Instead he gave the false impression that the doubling of revenues was about to be repeated again this year.

Morning Team

I see from the Traders Thread that the Questor column in the Telegraph rates Sterling as avoid, whereas the Times rates it as a buy. Curious. Hope more people read the latter than the former.

Average net production for the 1st Q was only 10.5mmcfge/d, and even if they reach 20 by year end, they will struggle to exceed 5bcfge for 2005 imho(3.4 for 2004). With the dilutive effect of the extra shares in 2005, the EPS could still be in the region of 0.4p, leaving a pretty pricey P/E unless higher prices/pipeline usage add significantly to profitability.
But surely this share is a play around 2006/2007 when the Mauritania assets start producing , when the P/E should fall to single figures and we will be hoping for EPS of 1p to 2p+ . The cash flow from the US assets is more about funding their exploration programmes. Providing it can do that and the African production comes on stream on time and ramps up quickly to expected rates, this share should be a good bet imho, dyor.
Any Comments?

just read the Times article. looks great to me. hopefully the Sundays will have something good to say as well.

And oil price has been above $50 all this year...$ recovered from it's lows + oil reserves are limited, so oil price cannot loose too ground regardles of growth etc...All IMO DYR