Corporate Presentation Including 2014 results April 2015 1 www.sterlingenergyplc.com
Disclaimer This presentation has been prepared by, and is the sole responsibility of, the directors of Sterling Energy PLC (the Company ). This presentation and the information contained in it does not constitute a prospectus or listing particulars relating to the Company and has not been approved by the UK Listing Authority, nor does it constitute or form any part of any offer or invitation to purchase, sell or subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any securities in the Company, nor shall this presentation or any part of it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract therefore. No reliance may be placed, for any purposes whatsoever, on the information contained in this presentation, or upon its completeness or accuracy and this presentation should not be considered a recommendation by or on behalf of the Company or any of its directors, members, officers, employees, agents, advisers or any other person in relation to any purchase of, or subscription for, Ordinary Shares. No representation or warranty, express or implied, is given by or on behalf of the Company or any of its directors, members, officers, employees, agents, advisers or any other persons as to the accuracy, fairness, completeness or sufficiency of the information or opinions contained in this presentation and none of the information contained in this presentation has been independently verified or approved. All financial information contained within this presentation has not been approved by the Company s auditors and, as such, may be liable to change. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in such information or opinions. This presentation and its contents and any accompanying information communicated verbally as part of the presentation, including the speeches of the presenters, any question and answers session and any materials distributed in connection with it, is being made only to and is directed only at (i) persons in the United Kingdom having professional experience in matters relating to investments, being investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the FPO ), (ii) high net worth companies, unincorporated associations and other bodies in the United Kingdom within the meaning of Article 49(2) of the FPO, (iii) in the United States to persons the Company reasonably believes to be qualified institutional buyers, as defined in Rule 144A(a)(1) of the United 2 States Securities Act of 1933, as amended (the Qualified Institutional Buyers ) and (iv) persons to whom the presentation may otherwise lawfully be made (together Relevant Persons ). This presentation must not be acted on or relied upon by any persons who are not Relevant Persons. Any investment or investment activity to which this presentation relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Neither this presentation nor any copy of it may be distributed, forwarded to, or transmitted in or into the United States of America (except to persons the Company reasonably believes to be Qualified Institutional Buyers), Canada, Australia, Republic of South Africa, Japan or their respective territories or possessions or to any national, citizen or resident thereof or any corporation, partnership or other entity created or organised under the law thereof, nor into any other jurisdiction where the distribution thereof would breach any applicable law. Any failure to comply with the foregoing restrictions may constitute a violation of United States, Canadian, Australian, South African or Japanese securities laws. The distribution of this presentation in other jurisdictions may be restricted by law and any persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. This presentation must not be copied, reproduced, published, distributed, disclosed or passed to any other person at any time without the prior written consent of the Company. By accepting receipt of this presentation you agree to be bound by the limitations set out above. Certain statements in this presentation are or may constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed by such forward-looking statements. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. 2
Overview Targeting High Impact Exploration Africa focused portfolio Significant exploration acreage Odewayne (Somaliland) Ntem (Cameroon) Ampasindava & Ambilobe (Madagascar) C-3 (Mauritania) Strong balance sheet Cash of ~$100m, debt free Cash equivalent to ~30p/share 3 Experienced management team 3
Board of Directors - Track Record of Managing Value Creation Executive Directors Alastair Beardsall Chairman 35 years of international oil industry experience As Executive Chairman of Emerald Energy, refinanced Emerald at 25p/share (2003) and sold at 750p/share (2009) Non-exec Director of Jupiter Energy (AIM/ASX) Eskil Jersing Chief Executive Officer 30 years of International Exploration experience Senior Exploration & Management positions at Shell, Marathon & Apache Former Head of New Ventures at Petrobras Oil & Gas BV 4 Non-executive Directors Keith Henry Chairman of Regal Petroleum and Greenko Group, and a non-executive director of KSK Power Ventur. Previously CEO Brown & Root, National Power, Kvaerner Engineering and Construction Nick Clayton Non-executive Director of Circle Oil and Alpha Petroleum Resources Limited and adviser to Geopark. Former Global Head of Oil & Gas Corporate Finance for Dresdner Malcolm Pattinson Chairman of GTO Ltd Previously Director of Aurelian Oil and Gas Plc and Exploration Director at Ranger Oil and Hamilton Oil 4
Capital Structure Sterling Energy PLC - listed on AIM 2002 Shares in issue 220.1 million LTIP (exercise 40p/43p) FULLY DILUTED 12.7 million 232.8 million Significant Shareholders Waterford 29.9% Mistyvale Limited* 15.2% YF Finance Limited 9.8% Denis O Brien 7.2% Sprott US Holdings Inc. 5.1% 5 Sub Total 67.2% Corporate re-structuring 2009 Board and management changes Raised 81m at 52p/share Board and Management ~1% 6% of issued share capital under option * Formerly Soyuzneftegas Capital Limited 5
Summary of 2014 Results 6 2014 2013 Production 432 bopd 527 bopd Average realised oil price 94.2 / bbl $101.1 / bbl Reserves 292,000 bbl 559,000 bbl Revenue $16.0 million $18.4 million Adjusted EBITDA $5.1million $9.1 million (Impairments) / reversals 1 ($7.9 million) 2 $4.4million G&A cash expense ($5.4 million) ($6.1 million) G&A - net of re-charges & capitalisation ($2.1 million) ($3.2 million) (Loss) / Profit after tax ($12.3 million) $8.3 million Inventories of oil for resale $2.2 million $2.7 million Cash $108.1 million $120.8 million 1 Chinguetti (Mauritania) $6.0 million / Ampasindava (Madagascar) $1.9 million 2 Chinguetti (Mauritania) 6
Cameroon, West Africa - Country Overview Economy (2013)* GDP: $27.88 billion ($1,205 per capita) Industry 27.3% Agriculture 20.6% Oil & Gas** - Oil production ~63,000 bopd - Proved oil reserves ~200 million barrels - Proved gas reserves ~5 trillion cubic feet 7 Government - Independence in 1960 - Multi-party presidential system - President Paul Biya Held office since Nov 1982 Elected for further 7 year term in Oct 2011 * Source: CIA World Factbook **Source: US Energy Information Administration 7
Cameroon - Ntem Block Sterling Energy 100% interest, and operator Ntem - deep water exploration play 3D seismic over 2/3 rd of the block Water depth 400 2,000 metres Exploration Well Bamboo -1 Drilled 1H 2014 Total depth 4,747 m in 1,600 m of water All work commitments now met for current period 8 8
Cameroon Bamboo-1 Result Bamboo -1 results Targeted stratigraphically trapped Upper Cretaceous submarine fans All targets were found to be well developed high porosity sandstones No significant hydrocarbon shows were recorded W Upper Cretaceous stacked fan complex E Pliopleistocene Miocene Palaeogene R s 9 R R Lwr. Cretaceous Maast-Campanian R Santonian R Turonian Cenomanian- Albian s s s Migration route s Source Interval Base Post rift R Reservoir 4 km Ntem Additional Cretaceous and Tertiary prospects in the block are being reevaluated by incorporating the significant new data from Bamboo-1 9
Cameroon - Exploration Setting Block I, O and Yo-Yo Miocene discoveries made by Noble Energy Ebome Fields Perenco operated production, principally from Lower Cretaceous. KH field is nearest Upper Cretaceous discovery to Ntem Bamboo-1 well encountered thick, porous sandstones in Upper Cretaceous target, but water-bearing 10 CM-1A & Eboni-1 Good quality sands. CM- 1A reported thin net pay and oil shows while Eboni-1 saw gas shows Okume Complex & Ceiba Field Hess operated production from Upper Cretaceous stratigraphic/structural closures 2013 Production ~55kbopd 10
Cameroon & Equatorial Guinea Maritime Border Maritime Border Claim Equatorial Guinea made claims over Cameroon s maritime territory; The western and southern boundaries of the Ntem concession potentially affected. Declaration of Force Majeure In 2005 Sterling declared force majeure suspending the work obligations under the Ntem concession. Lifting of Force Majeure In January 2014 the joint venture partners and 11 SNH (the national oil company of Cameroon), agreed to lift force majeure to allow exploration activity to resume. Declaration of Force Majeure In May 2014 the joint venture partners declared force majeure suspending the work obligations under the Ntem concession. Expiry of current period In April 2015, Sterling received notice from SNH that the current period expired 22 April 2015. Outlook Sterling is in discussions with SNH to agree forward plan for further exploration of the Ntem block given Sterling s declaration of force majeure and SNH s declaration of expiry of the current period. 11
Somaliland (East Africa) Country Overview Economy (2012 estimate)* GDP: $1.4 billion ($347 per capita) Oil & Gas Very little exploration to date No production Government Somaliland was a protectorate of the UK until 1960 Declared independence from Somalia in 1991; allowed development of a stable, democratic government Not recognised as an independent country but favourable political contacts with a number of countries including UK 12 * Source: Wikipedia 12
Somaliland - Odewayne Basin Overview 13 Odewayne block is 22,840 km 2, equivalent to +/- 100 UKCS Blocks Unexplored block with no seismic control and no drilling to date Basin interpreted to be deep enough for Jurassic source rocks to be mature (3.5km+) Active hydrocarbon system confirmed by oil seeps within the block Sub-surface basin structure identified by 2013 aero-magnetic survey; multiple 3-way faultcontrolled traps likely. Structural style expected to be similar to the Nugaal Basin located to east of Odewayne 13
Somaliland Odewayne Block Play Elements Working petroleum system with multiple shows and oil seeps Excellent quality Jurassic source rock seen in outcrop Jurassic and Tertiary clastic reservoirs seen at outcrop Potential for Jurassic carbonate reservoir (proven in Ethiopia) Excellent Cretaceous reservoirs identified regionally in Ethiopia and Yemen may be present in Odewayne. 14 14
Somaliland - Odewayne Block Partners Genel (50% and operator) Sterling (40%) Petrosoma (10%) Licence Terms and Commitments Sterling carried by Genel for all costs in Periods 3 & 4 Period 3: May 2012 Nov 2016 Acquire airborne gravity and magnetics survey Acquire 500km 2D seismic data Period 4: Nov 2016 May 2018 15 Acquire 1000km 2D seismic data Drill one exploration well Current Status Activity suspended following a security threat Somaliland Government setting up Oilfield Protection Unit (OPU), expected to be operational 2016 The operator expects to start seismic acquisition in 2016 15
Madagascar Country Overview Economy (2013)* GDP: $10.53 billion ($453 per capita)* Agriculture 27.3% Industry 16.4% Government Elections held in Dec 2013 Hery Rajaonarimampianina elected President for a 5 year term 16 Oil & Gas Heavy oil discovered onshore ~100 years ago No material oil/gas production Offshore under explored * Source: CIA World Factbook 16
Madagascar Regional Potential Exploration of East African conjugate margins focused on Jurassic petroleum system Jurassic identified as major source rock Gas discoveries in Tertiary submarine fan and channel sandstone reservoirs Additional potential in Cretaceous deep water sandstones Madagascar prospective Jurassic source rocks well-developed at outcrop on conjugate margin Jurassic, Cretaceous & Tertiary depocenters identified Working petroleum systems Oil discovered onshore in 1901, not yet developed Multiple oil & gas shows in wells Multiple seeps 17 17
Madagascar Ampasindava Sterling 30%, Exxon 70% and operator Sterling carried by Exxon for ~US$28m future gross costs Large offshore block Area 7,379 km 2, water depth 200-2000m 4,300 km 2D seismic acquired and interpreted Sifaka prospect Re-evaluated as high risk, both technically and commercially 18 JV partners no longer consider Sifaka as a viable exploration prospect Forward activities Phase 3 of exploration period runs to July 2016 Exxon and Sterling have engaged with OMNIS to discuss the work programme 18
Madagascar Ambilobe Sterling 50% (operator), Pura Vida 50% Large under explored offshore block Area 17,650 km 2, water depths 0-2000m 5,500 km 2D seismic acquired and interpreted Leads in Cretaceous & Jurassic plays Forward activities Phase 2 of exploration period runs to July 2016 No outstanding work obligations Sterling carried by Pura Vida for 3D seismic in 2015, to mature leads to drill ready prospects (gross costs capped at $15 million) if joint venture partners elect to enter next phase (decision by 2016) the commitment is to drill one exploration well 19 19
Mauritania Country Overview Economy (2013)* GDP: $4.18 billion ($1,189 per capita) Industry 54.6% Agriculture 16.9% Oil & Gas** Oil production ~6,750 bopd Proved oil reserves ~20 million barrels Proved gas reserves ~1 trillion cubic feet 20 Government Independence in 1960 President Mohamed Ould Abdel Aziz: Held office since 2008 Elected for further 5 year term in June 2014 * Source: CIA World Factbook ** Source: US Energy Information Administration 20
Mauritania Regional Activity Blocks C8, C12 & C13 Recently announced Chevron farmin to Kosmos operated acreage Block C-3 2D data acquired Q4 2014. Extensive coverage now over acreage 21 FAN-1 Discovery Cairn operated discovery with 29m oil pay in Cretaceous aged fan. P50 STOIIP of 950 mmbbls reported SNE-1 Discovery Cairn operated discovery with 95m oil column and P50 resources of 330 mmbbls in Albian aged clastic reservoir 21
Mauritania Block C-3 Joint Venture Partners Sterling 40.5% * Tullow (Operator) 49.5% SMH 10% (carried by Sterling & Tullow during exploration) Shallow water exploration play Area 9,781 km 2, water depth ~100m Licence Terms and Commitments Phase 1: June 2013 June 2016 Acquire 1,600 km 2D seismic data acquired 2014 Phase 2: June 2016 June 2019 Acquire 700 km 2 3D seismic data Drill one exploration well Phase 3: June 2019 June 2022 Drill one exploration well Forward activities Processing of 2D seismic data (2015) Develop leads and drill ready prospects for drill or drop decision (H1 2016) Consider farm out to fund future work 22 * Pending Government approval and completion of transaction with Tullow 22
Mauritania - Production Chinguetti Field Current gross field production of ~ 5,500 bopd Sterling net financial interest in H1 2014 Economic interest via funding agreement Production averaged 432 bopd Net cash inflow for 2014 of $4.1 million 23 Royalty on Premier s interest: 5.28% of Premier s interests in Chinguetti production 23
New Ventures Previous projects Sangaw North #1 (Kurdistan) drilled and tested a potential resource of 804mmboe (gross) at $18m cost to Sterling. Bamboo #1 (Ntem, Cameroon) drilled and tested a potential resource of 450mmboe (gross) at no cost to Sterling Cash resources of ~$100m New ventures focused on Exploration in areas where team has technical and geographical experience Broaden asset portfolio Diversify assets and activity Opportunities Assets: farm-in or acquire Licence rounds Corporate transactions 24 24
Anticipated Activity Schedule Note: Company estimates 2015 2016 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Cameroon - Ntem Force Majeure Somaliland - Odewayne Madagascar - Ampasindava 25 well 2D well Madagascar -Ambilobe 3D Mauritania C3 Enter P2 Seismic Well Other Firm Contingent 25
Summary Focusing on high upside exploration programme Ntem (Cameroon) forward plans under review Odewayne (Somaliland) - 2D seismic expected in 2016 (carried by Genel) Ampasindava (Madagascar) - forward plans under review (carried by Exxon) Ambilobe (Madagascar) - 3D seismic in 2015 (carried by Pura Vida) C-3 (Mauritania) process 2D data to identify/mature drill ready prospects Acquire more New Ventures 26 Strong balance sheet Cash of ~$100 million Debt free 2015 work programme fully funded 26