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

oilbarrel.com

"Sterling Energy Remains Bullish Despite Production Problems At Chinguetti

2006 had been shaping up to be a record year for Sterling Energy, with the first six months of the year delivering production volumes 150 per cent higher than the first half of 2005. Given booming commodity prices this promised to deliver a cash bonanza to the AIM quoted E&P. But problems at the Chinguetti oilfield offshore Mauritania have thrown a cloak of uncertainty over these bright prospects, although the company is keen to stress that the project will still meet its projected financial returns.

Over the first half of the year, Sterling was producing more than 25 million cubic feet of gas equivalent per day (cfge/d). The company’s US assets contributed 7.8 million cfge/d with gas prices averaging US$7.25 per thousand cubic feet, which is a nice little earner. What’s more, the first two three cargoes from the newly onstream Chinguetti oilfield and the income from its royalty interest agreement netted Sterling more than US$32 million.

But the production problems at Chinguetti, which started operations in late February, have tarnished what was one of the jewels in Sterling’s portfolio. The field should be producing 75,000 barrels per day gross but output is running at around half that due to problems with a number of production wells and gas handling equipment. The operator, Woodside of Australia, is taking steps to resolve the problems and will drill infill wells over the course of 2006/early 2007 to shore up production numbers.

In a pre-close trading statement ahead of its interim results on September 22, Sterling said the current studies and operations underway at Chinguetti will “help to clarify the optimum future production levels and will enable estimates of Chinguetti and other Mauritanian reserves to be updated later in the year”.

A spokesman for Sterling said the Chinguetti issue was not a major cause for concern. “The increased oil price has offset the problem with the production,” he said. And speaking last month at the AGM chairman Richard O’Toole said that despite the current difficulties the company remains “confident that the project will meet our projected financial returns”.

Even so, investors hate this kind of uncertainty: production problems can sometimes herald far more fundamental issues with the reservoir and its ability to perform over the longer term. Regular communications about the current remediation programme and its implications will go some way to alleviate these jitters - this is particularly the case for those companies that are far more exposed to Chinguetti than Sterling, which has what amounts to an 8 per cent interest in the project.

The good news for Sterling followers is that this canny company is exposed to future upside in Mauritania but not to the costs and risks of funding the necessary development work. This is because of the royalty agreements inherited from its December 2003 £40 million acquisition of Fusion Oil & Gas. These agreements give Sterling a cash bonus of US$1-2 million for each development approved over 50 million barrels plus a sliding scale royalty that depends on the oil price and whether the state oil firm, Societe Mauritanienne Des Hydrocarbures (SMH), backs in for its 12 per cent of the project. In the case of Chinguetti, this royalty calculation worked out at 5.28 per cent.

Sterling has a sliding scale royalty interest in the Tiof discovery, which could be declared commercial by year-end. Tiof would be developed in phases, with the first phase drawing on between 40 and 60 million barrels of oil resulting in production of 50,000 bpd by 2009 - yet Sterling does not have to pay a penny towards these development costs but will still enjoy a slug of the production. The Mauritania partners are also eying the Tevet, Labeidna and Banda oil discoveries as potential satellite tie-backs to Chinguetti - again at no cost to Sterling, which retains a royalty interest in the resulting production.

However, Sterling is likely to seek greater exposure to future Mauritania developments by repeating the funding deal it struck with SMH for Chinguetti. The company raised cash on the UK equity market in order to provide the Mauritanian government with the cash it needs to fund its share of the Chinguetti field development costs (to date some US$96 million of the US$130 million letter of credit has been drawn). In return Sterling was awarded what amounts to an 8 per cent economic interest in the field. This was quite a coup for the AIM firm but this time round Sterling is likely to face more competition as other firms will be keen to shake hands with the oil authorities in this newest producing nation.

In the meantime, Sterling is keeping busy elsewhere. It has recently spudded the Trehan-1 well onshore Southern Louisiana in the States, the first of four planned exploration wells in the US over the second half of the year. It also holds a 3 per cent royalty interest in the 150 million barrel Colin prospect now drilling offshore Mauritania and will largely be carried through three exploration wells in Gabon and Equatorial Guinea. In addition, work is underway on the 4,000 km of 2D data acquired offshore Madagascar and, the company says, the initial results give cause for optimism."

DIYDAVE

These are big issues and should not be in low case, but will be off for now.
best luck.

SWW,

Thanks for posting that, an interesting article, and pretty fair in it's assessment of the current situation IMO.


I have to admit the Mauritanian production now seems to have some doubt over the reserve figures, in the north field, and Hardman are going to do another evaluation in Spetember I believe.

I remain a holder, as I think SEY have other production and exploration assets that offer long term growth prospects, whatever happens at Ching, and as they rightly say, the lower prodution has been offset by the much higher oil price!

Andy - Chinguetti may have doubts, however I no longer see that as the central issue.

As the article points out, there are other assets, other than Mauritania, and they are the reson I have come back into the fold for the long term.

I am not as fully committed as I once was, and therefore I am no longer nervous about what is going on, (lesson learnt!).

Sterling are opening up operations in interesting places, and if they are not a takeover target, (and personally I don't think they are), then they are set for good organic growth over the next few years.

I can afford to almost forget about this stock now, while following that growth.

Madagacscar is the new key for me and I am somewhat excited by the prospect of new drilling with Exxon as a partner.

Mauritania is somewhat an interesting side play that finances the rest, and that's all.

sterling energy is for long term play. patience and focus will reward.
will buy everytime the sp drops, increasing my holdings each time.
just looking at sp graph over five years indicate excellent management at work here. this is a company looking for a BREAKTHROUGH. now with this high oil price level, the cash flow must be very healthy, allowing sterling to enter another stage of acquisition or maturity. with excellent projets, and reliable management with smart board of directors, i remain happily invested. remember little fish in big waters can swim. best luck.

SWW,

I agree, I see SEY as a long term play in Madagascar, Exxon are a superb partner to have, IMO, and add confidence in the project.

I agree that Mauritanian revenue is important to provide the finance for the forthcoming projects, and I also see the GOM as important too, due to it's political stability.

I hope SEY will continue to expand in the GOM, and onshore USA, for the longer term, as this in itself is fairly secure revenue, and US energy prices are rising steadily, year on year.

I would have thought that they would have looked at PRE, given their proximity to each other in the GOM, and PRE's low market cap.

Andy - they looked at PRE before as I recall, I should thing if they ever did, the PRE shareholders would be very relieved.

I once held them it was too exciting for me, all that promnise and no fulfilment.

However the USA production would be useful.

SWW,

Absolutely, it was the US production that would be the attraction of PRE for me, they could achieve economies of scale quite easily there iIwould imagine, and add production in a politically stable part of the world too.

I would like to see SEY really try and add to their US resources, they could piotentially become quite valuable, and offer some offset against the more risky plays, IMO.

Of course Andy, you remember that Harry Wilson was a director for Pan Andean Board before Sterling was formed from Lepco's reverse takeover?

The price is cheap at the moment and frankly not necessarily going up, so why not?

A nice little rise... Good to see some blue on the portfolio with SEY & CHP.

Can anyone explain the drop in SP with buys to sales 10:1 ??

Long term holders have long since abandoned attempts to explain intraday movements of SEY. Expand your time frame and you won't have to worry about it!
rgds

remember, in order to jump high, one needs to backtrack first, then zoom.
remember the athletes. would prefer the sp to drop more so i can top up more.
in for longterm only. as BLAISE PASCAL SAID: "all of human unhappiness comes from one single thing: not knowing how to remain at rest in a room"
please do not ask me to explain more. BEST LUCK

all,

That's an interesting 9.47% rise at the end of trading today!

As we were down .75 at one point today, it's quite a turnaround to be 2.25p up!

SEY doesn't normally move with such velocity, I wonder if we have some news coming, or whether it was just MM manipulation of the SP?

A really good day. Doesn't make sense, more sales than buys! Still a nice jump though, could be good news on the way...

or could be just end of day squaring of books

cynic, you are a cynic!

Oh, so you are.

All right then.

No news to justify the late spike then?

AFX NEWS
UNKNOWN INVESTOR TO BUY YUKOS
the director of yukos, which was declared bankrupt yesterday, is in negotiations with an unknowned investor who is ready to purchase it. such negotiations are in hand. Gerashchenko recently said on Echo radio that there was an organisation ready to pay Yukos debts and become owner of the group.
which company is it?
could it be little fish SEY?
MUST KEEP MY EYES OPEN.

georgetrio

nice thought.

my money is on well results for sey movement yesterday??

regards