Oil and gas explorer Sterling Resources plans to raise more than £28million in a new share placing.
The firm, which has UK offices in Aberdeen and London, said today it had expected to cash in from the sale of offshore Romanian assets, a possible refinancing of a loan and revenue from production in the North Sea due to start next year.
However, it added there was “no assurance” this money would be available in time to cover “key expenditures and capital costs” coming up in 2013.
These are thought to relate mostly to the delayed and over budget Breagh development, in the southern North Sea, operated by RWE Dea and in which Sterling holds a 30% stake.
Costs have risen on the project from an original total of more than £400million to £623million.
First gas from Breagh has been put back from July this year to yesterday’s latest estimate of the end of March, with a chance this could slip to the end of May.
Calgary-based Sterling hopes to raise cash on Canada’s Toronto Stock Exchange, where it is listed.
The share placement follows a deal to sell a 65% stake in its Midia block it the Black Sea to ExxonMobil and OMV, agreed last month. Sterling is also selling parts of other blocks offshore Romania.
Last month, the firm said it would hold on to a 26.4% stake in the North Sea Cladhan field, which operator Taqa Bratani is looking to develop.
Although the company expects that additional proceeds or funds may be available to it prior to the end of the second quarter of 2013 from: (a) proceeds relating to the previously announced sale of its 65% interest in a portion of Block 15 Midia in the Romanian Black Sea, (b) proceeds that may result from its previously announced partial divestment process relating to its interest in the Luceafarul, Midia and Pelican blocks in offshore Romania, (c) funds that may be available to it upon successfully refinancing its credit facility, and (d) net cash flow from the company’s operations at the Breagh gas field, there is no assurance that such proceeds or funds will be available in time to cover the key expenditures and capital costs. The company has, therefore, determined that it is appropriate to raise additional funds pursuant to the offering to remove funding uncertainty in connection with the key expenditures and capital costs.
Meanwhile, Sterling has appointed finance and commodity trading executive John Collenette as a new director.