Sterling Energy losses widen as it progresses Odewayne

Upstream oil and gas company Sterling Energy reported an adjusted EBITDAX loss of $0.29m (£0.11m) in its first half on Friday, widening from its first half loss of $0.26m a year earlier.

The AIM-traded firm said its loss after tax was also bigger for the six months ended 30 June, at $0.87m, compared to $0.6m in 2019.

It said cash resources at period end stood at $43.8m, down from $45.5m year-on-year, adding that it remained debt-free and fully carried for Odewayne operations.

The company said its ongoing focus was on capital discipline, with cash general and administrative overheads reduced by 3% to $1.1m.

A further 10% decrease was expected for the 2020 full year, compared with 2019 full-year costs of $2.6m.

It also described a “proactive focus” on treasury management, with interest received totaling $0.29m, down from $0.57m a year ago.

On the operational front, at the Odewayne block in Somaliland, the firm said operating committee meetings were held in the third quarter, where the operator presented an update on their latest technical work.

The final products of the reprocessing of 1,000 kilometres of 2D seismic data to pre-stack time migration were delivered the first quarter, with Sterling's assessment of the technical data underway.

Sterling said it continued to support the operator in progressing the technical understanding of the block through the period.

The board also said it was continuing its merger and acquisition mandate for “transformational” growth, and had screened more than 20 separate opportunities globally in 2020, with three of these progressing to the level of indicative offer.

Both asset and corporate screening levels remained “high”, the directors said.

Sterling had noted an increase in the number of merger and acquisition opportunities on the market due to the impact of Covid-19, and said it remained “well-positioned” to capitalise on potential future opportunities.#

“Whilst Sterling's progress on interpreting the results of the reprocessing of the 2D seismic data has been hindered by Covid-19, Sterling intends to finalise this work by year-end 2020,” said chief executive officer David Marshall.

“Once this interpretation is complete, a review of the prospectivity will be concluded and inform on the next steps for Sterling on the licence.”