Petrotal Announces First Oil From Bretana and Provides Operations Update

Calgary, Alberta and Houston, Texas – July 3, 2018—PetroTal Corp. (“PetroTal” or the “Company”) (TSX-V: TAL) is pleased to announce that it has achieved first oil production from the Bretana Norte discovery well (the “Discovery Well” or the “well”) at the Bretana field in Block 95 in Peru. The Company is also pleased to provide further operations updates for both Bretana and Block 107. All figures referred to in this press release are denominated in U.S. dollars.

OPERATIONS HIGHLIGHTS

  • First oil production achieved in five months, significantly ahead of schedule
  • Discovery well flowed oil without stimulation
  • Well produced 100 percent oil with minimal natural gas and no formation water to date
  • Commissioning of facilities is progressing as expected and on schedule
  • Water handling facilities on schedule for commissioning in October, 2018
  • 7,000 barrels of oil produced to date through the ongoing long-term testing phase
  • Signed oil sales contract allows for strong operating netbacks to PetroTal
  • First oil sales and shipment expected in early July, 2018
  • Osheki prospect in Block 107 remapped, independent resource audit being prepared

OPERATIONS UPDATE

The Company initially provided guidance that the Discovery Well, which had been tested but not produced, could commence production in 10 to 12 months from PetroTal taking over operational control of the field in late December 2017. The Company is pleased to announce that on June 1, 2018 the well was placed on production through long-term testing, allowing for the start of the commissioning of the newly installed oil production facilities, five months earlier than anticipated. Field personnel have controlled the choke sizes of the well over the initial four weeks to carefully manage the commissioning of the facilities and to properly commission the facilities. The Discovery Well is testing oil from the Vivian formation, producing 100 percent oil with minimal natural gas and no formation water. As previously announced, the Company is restricting the well flow rates to avoid water production until the required water injection facilities are installed and commissioned in October of this year.

In addition to putting the Discovery Well on production, the Company is installing initial water handling facilities at Bretana.  The project is on schedule to begin commissioning water treatment and reinjection facilities by late October 2018.  At that time, oil production rates from the Discovery Well are anticipated to increase to between 2,000 and 2,300 barrels per day (“Bbls/d”).  The Company has also completed refurbishment and construction on the existing drilling pad and is now able to drill additional wells without causing material interruptions to production.

Manolo Zuniga, President and Chief Executive Officer of PetroTal, stated: “We are extremely pleased for having been able to achieve first production in just five months.  The well and the newly installed equipment have met expectations of field personnel and there have been no issues with achieving oil flow at sufficient rates to commission equipment.  As mentioned above, the well is being produced under a restricted choke to avoid producing water until the full facilities are installed to handle produced water in October of this year.  In the meantime, the well is expected to produce without stimulation at rates of up to 1,000 Bbls/d, depending on the planned activities and objectives of field personnel, gather well and reservoir data, and meet the requirements of the initial oil sales contract which calls for PetroTal to sell up to 1,000 Bbls/d to the Iquitos refinery.”

OIL SALES CONTRACT

The Company is pleased to announce the execution of an initial oil sales contract with PetroPeru, Peru’s state oil company and owner of the Iquitos refinery, pursuant to which the Company is entitled to sell up to 1,000 Bbls/d to the refinery during the initial long-term testing phase.  The Company successfully negotiated a discount equivalent to 14 percent from Brent; however the Company does not pay pipeline tariffs during the contract term as all oil is barged to the refinery.  Additionally, the crude oil will be picked up at the Bretana field and transported to the refinery by PetroPeru at a cost equivalent to our internal cost projections.  As a result, the Company expects to achieve strong operating netbacks.  The Company expects to deliver most of the initial oil recovered to date to the refinery in early July.  The chart below outlines the Company’s anticipated operating netbacks at certain benchmark reference prices:

The higher per unit lifting costs included above are driven by the initial lower production rates during the initial commissioning and testing phase.  The Company expects future lifting costs to approximate $11.00 per barrel (“Bbl”) once production reaches 5,000 Bbls/d.

Mr. Zuniga continued “As demonstrated, the avoidance of paying the pipeline tariff effectively reduces our cost structure, thus the negotiated 14 percent discount is beneficial for both PetroTal and PetroPeru, the owner of the Iquitos refinery.  We use a lifting cost of $21.95 per Bbl on this initial production as the early restriction on production rates affect the unit costs.  Additionally, we have yet to finalize the commissioning process, so this initial estimate could vary.  In any event, you can see that this is a robust project.”

BLOCK 107 OSHEKI PROSPECT

The Company has completed the remapping of the Osheki prospect based on all available data.  The revised maps suggest there is closure on the structure and up to three producing horizons may hold hydrocarbons.  Updated maps are available in the investor presentation on the Company’s website at www.petrotalcorp.wpengine.com.

In addition, the Company has retained Netherland, Sewell & Associates, Inc., qualified independent reserves evaluators, to prepare an initial hydrocarbons volumes assessment of the Osheki prospect.
Once this assessment is complete, the Company expects to open the Block 107 data room for prospective partners to review.

ABOUT PETROTAL

PetroTal is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru.  The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors that is focused on safely and cost effectively developing and exploiting the Bretana oil field.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

 

ABOUT BRETANA FIELD

Oil in the Bretaña field was first discovered in the 1970’s and was subsequently re-discovered. Several wells have been drilled to delineate the field and recent seismic has de-risked the structure. The rediscovery well drilled in 2014 tested 18.5 degrees API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The Company acquired the assets in Peru on December 18, 2017. The Company is working to put the field on long-term test and begin production as early as Q4 2018.

ABOUT PETROTAL

PetroTal is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru.  The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretaña oil field.

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

http://petrotalcorp.wpengine.com/

 

READER ADVISORIES

FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to: the Company’s objectives; drilling, reactivation, water and other activities and the anticipated costs and results of such activities, including with respect to the Discovery Well; cost controls and savings; anticipated future production and revenue, including resulting from sales to PetroPeru; future development and growth prospects, including identifying a joint venture partner to develop the Osheki prospect.  All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, "expect", “plan”, “estimate”, “potential”, “will”, “should”, “continue”, “may”, “objective” and similar expressions.  The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure, including the Refinery, to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside,  prevailing commodity prices and the actual prices received for PetroTal’s products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of PetroTal’s geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company’s growth strategy, general economic conditions, availability of required equipment and services and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company’s production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the Company’s annual information form and management’s discussion and analysis for the year ended December 31, 2017 which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

OIL AND GAS INFORMATION: This press release contains metrics commonly used in the oil and natural gas industry, such as operating netbacks (calculated on a per unit basis as oil revenues less royalties and barging, pipeline and lifting costs). These terms have been calculated by management and do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons. Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare PetroTal’s operations over time. All oil and gas disclosure contained in this press release complies with the requirements of National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).

References in this press release to production test rates, initial test production rates, and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for PetroTal. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.

FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about PetroTal’s prospective results of operations, operating netbacks, operating costs and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about PetroTal’s anticipated future business operations. PetroTal disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. All FOFI contained in this press release complies with the requirements of Canadian securities legislation, including NI 51-101.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.


Sterling Resources Ltd. Announces Name Change to PetroTal Corp.

Calgary, Alberta and Houston, Texas – June 6, 2018— PetroTal Corp. (“PetroTal” or the “Company”) (TSX-V: TAL) is pleased to announce that it has changed its corporate name from “Sterling Resouces Ltd.” to “PetroTal Corp.” effective today.

Effective at the market opening on June 6, 2018, the common shares of the Company will commence trading on the TSX Venture Exchange under the Company’s new name and under the new trading symbol “TAL”.

ABOUT PETROTAL

PetroTal is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretana oil field.

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

http://www.sterling-resources.com/

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements. More particularly, this press release contains statements concerning changes to the listing of the Company’s common shares on the TSX Venture Exchange as a result of the name change. In addition, the use of any of the words “anticipate”, “believe”, “expect”, “plan”, “intend”, “can”, “will”, “should”, and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained herein are based on certain key expectations and assumptions made by the Company, including but not limited to expectations and assumptions concerning the receipt of required regulatory approval. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct.

The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.


Sterling Resources Ltd. Reports Results of Annual General and Special Meeting

Calgary, Alberta and Houston, Texas – June 4, 2018—Sterling Resources Ltd. (“Sterling” or the “Company”) (TSX-V: SLG) announces that the following matters were approved by the shareholders at the Company’s annual general and special meeting (the “Meeting”).

At the Meeting, the shareholders elected Manuel Pablo Zuniga-Pflucker, Douglas C. Urch, Gary S. Guidry, Ryan Ellson, Gavin Wilson and Mark McComiskey as directors of the Company.

Sterling is pleased to announce the appointment of Douglas C. Urch as the new Chairman of the Board. Mr. Urch, a director of the Company since December 2017, has over 35 years of oil and gas industry experience. Mr. Urch is the Executive Vice President, Finance and Chief Financial Officer of Bankers Petroleum Ltd. and previously was Vice President, Finance and Chief Financial Officer of Rally Energy Corp. Mr. Urch is a Chartered Professional Accountant (CPA), a member of the Financial Executives Institute, and a designated member of the Institute of Corporate Directors (ICD). Mr. Urch graduated from the University of Calgary with a Bachelor of Commerce degree. Sterling would like to convey its appreciation to Mr. James B. Taylor. His leadership, talent and expertise have been a great asset to the Company in his time of Chairman and the Company would like to wish Mr. Taylor all the best in his future endeavors.

The shareholders approved the stock option plan and the performance and restricted share unit (“PRSU”) plans. Copies of the stock option plan and the PRSU plans are attached to the Management Information Circular dated April 30, 2018, which is available on SEDAR at www.sedar.com and the Company’s website at www.sterling-resources.com.

The shareholders approved the change of the name of the Company to “PetroTal Corp.”. The name change will not affect the validity of currently outstanding share certificates of the Company or the trading of the Company’s common shares (“Common Shares”). Shareholders will not be required to surrender or exchange any of the Corporation’s share certificates that they currently hold. It is anticipated that the name change will become effective the week of June 4th and that the Common Shares will trade under the ticker symbol “TAL” on the TSX Venture Exchange (TSXV).

The shareholders also approved the consolidation of the Common Shares by a consolidation ratio of between four (4) and eight (8) pre-consolidation Common Shares for each one post-consolidation Common Share. The consolidation will occur at a time determined by the Board and announced by a press release of the Company. Notwithstanding approval being received, the board of directors may determine not to proceed with the consolidation, at its discretion.

ABOUT STERLING

Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretana oil field.

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

http://www.sterling-resources.com/

FORWARD-LOOKING STATEMENTS

All statements included in this news release that address activities, events or developments that Sterling expects, believes or anticipates will, should or may occur in the future are forward-looking statements.  In particular, this news release contains forward-looking statements with respect to the timing of the Company’s name change, the anticipated consolidation of the Common Shares, the timing of the consolidation and the ratio between the pre-consolidation Common Shares for each one post-consolidation Common Share.

These forward-looking statements involve assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. These statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other-forward looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: trading volumes and volatility in the price of Common Shares on the market as such trading may impact the applicable consolidation ratio to be implemented by the Company, if at all. Readers should also carefully consider the matters listed under the heading "Risk Factors" in the Company's MD&A.

Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. These statements speak only as of the date of the news release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.


Sterling Resources Ltd. Reports 2018 First Quarter Financial Results and Operations Update

Calgary, Alberta and Houston, Texas — May 30, 2018—Sterling Resources Ltd. (“Sterling” or the “Company”) (TSX-V: SLG) is pleased to provide a summary of its 2018 first quarter financial and operating results as of March 31, 2018.

Selected financial, operational and reserves information is outlined below and should be read in conjunction with the Company’s unaudited consolidated financial statements (“Financial Statements”), and management’s discussion and analysis (“MD&A”) for the quarter ended March 31, 2018, which are available on SEDAR at www.sedar.com and the Company’s website at www.sterling-resources.com. All figures referred to in this press release are denominated in U.S. dollars.

2018 FIRST QUARTER HIGHLIGHTS

  • Made significant progress on first phase of oil facilities installation and is ahead of schedule
  • First production through commissioning of oil production equipment expected in June 2018
  • Costs on overall first phase coming in approximately 25 percent less than budgeted

OPERATIONS UPDATE

The Company previously announced that over the past five months, the Company has significantly advanced the 2018 capital program at the Bretana oil field. On December 18, 2017, the Company acquired a 100 percent working interest in the field and announced that the field would come online in 10 to 12 months for an estimated cost of approximately USD$24.6 million, including capital expenditures relating to oil production facilities and workovers of an existing oil producer well and a water disposal well. The Company now estimates this project will cost approximately USD$18.3 million, which is 25 percent less than originally budgeted. The Company’s use of a wireline unit, rather than a workover rig, to remove plugs and remediate the oil producer and water disposal wells cost USD$300,000, significantly less than the budgeted USD$2.0 million. Additional savings resulted from the execution of a turn-key contract to build and install all the production facilities and a corresponding contract for the personnel and costs associated with construction at the Bretana field.

The Company anticipates that the existing oil producing well will initially produce 100 percent oil with no water. The Company will commission the oil production facilities, with first production as early as June 2018, four to six months ahead of the original guidance. The initial commissioning phase will require the well to be choked to a quarter inch, which would allow the Company to produce approximately 1,000 barrels of oil per day (“bbl/d”) until the water production and re-injection handling facilities are installed and commissioned in October, after which it is anticipated that the well will be opened to approximately 2,250 bbl/d. The Company intends to sell the initial 1,000 bbl/d production at the Iquitos refinery, which has capacity to purchase the Company’s initial production, with the additional 1,250 bbl/d production to be transported via the existing oil pipeline for marketing and sale.

Manolo Zuniga, Sterling’s President and Chief Executive Officer, stated, “We continue to see opportunities to save time and capital as we prepare for the Long-Term Test of the discovery well in Bretana. This is a key milestone achieved significantly ahead of schedule and under budget. We are currently about 90 percent through installation of oil production facilities which will allow us to open the well to begin the commissioning process. This will provide both data and cash flow over the next four months, which coincides with when we plan to have the first phase of the water handling equipment installed and ready for commissioning. At that time, once we have the facilities tested, we can open the well and produce at higher rates.”

FINANCIAL HIGHLIGHTS

The following table summarizes key financial highlights associated with the Company’s financial performance.

 

ABOUT BRETANA FIELD

Oil in the Bretana field was first discovered in the 1970’s and was subsequently re-discovered by Gran Tierra Energy Inc. (“Gran Tierra”). Several wells have been drilled to delineate the field and recent seismic has de-risked the structure. The rediscovery well drilled by Gran Tierra in 2014 tested 18.5 degree API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The Company acquired the assets in Peru on December 18, 2017 from Gran Tierra.

ABOUT STERLING

Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretana oil field.

 

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

http://www.sterling-resources.com/

 

FORWARD-LOOKING STATEMENTS

All statements included in this news release that address activities, events or developments that Sterling expects, believes or anticipates will, should or may occur in the future are forward-looking statements.  In particular, this news release contains forward-looking statements with respect to the timing of the Company’s name change, the anticipated consolidation of the Common Shares, the timing of the consolidation and the ratio between the pre-consolidation Common Shares for each one post-consolidation Common Share.

These forward-looking statements involve assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. These statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other-forward looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: trading volumes and volatility in the price of Common Shares on the market as such trading may impact the applicable consolidation ratio to be implemented by the Company, if at all. Readers should also carefully consider the matters listed under the heading "Risk Factors" in the Company's MD&A.

Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. These statements speak only as of the date of the news release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.


Sterling Resources Ltd. Provides Operations Update in Respect of The Bretana Oil Field

Calgary, Alberta and Houston, Texas – May 16, 2018—Sterling Resources Ltd. (“Sterling” or the “Company”) (TSX-V: SLG) is pleased to provide an update on its operations in Block 95 of the Bretana oil field in Northwest Peru.

OPERATIONS UPDATE

Over the past five months, the Company has significantly advanced the 2018 capital program at the Bretana field. On December 18, 2017, the Company acquired a 100 percent working interest in the field and announced that the field would come online in 10 to 12 months for an estimated cost of approximately USD$24.6 million, including capital expenditures relating to oil production facilities and workovers of an existing oil producer well and a water disposal well. The Company now estimates this project will cost approximately USD$18.3 million, which is 25 percent less than originally budgeted. The Company’s use of a wireline unit, rather than a workover rig, to remove plugs and remediate the oil producer and water disposal wells cost USD$300,000, significantly less than the budgeted USD$2.0 million. Additional savings resulted from the execution of a turn-key contract to build and install all the production facilities and a corresponding contract for the personnel and costs associated with construction at the Bretana field.

The Company anticipates that the existing oil producing well will initially produce 100 percent oil with no water. The Company will commission the oil production facilities, with first production as early as June 2018, four to six months ahead of the original guidance.  The initial commissioning phase will require the well to be choked to a quarter inch, which would allow the Company to produce approximately 1,000 barrels of oil per day (“bbl/d”) until the water production and re-injection handling facilities are installed and commissioned in October, after which it is anticipated that the well will be opened to approximately 2,250 bbl/d.  The Company intends to sell the initial 1,000 bbl/d production at the Iquitos refinery, which has capacity to purchase the Company’s initial production, with the additional 1,250 bbl/d production to be transported via the existing oil pipeline for marketing and sale.

Manolo Zuniga, President and Chief Executive Officer of the Company, commented, “The Company’s progress to date is a direct result of having the right team in place to execute our program.  Their expertise, along with financial discipline, has set the stage to deliver production ahead of schedule and significantly under budget.  Not only is the capital expenditure savings significant, but the initial oil production and sales will bring important cash flow to the Company.”

A full review of the progress at the Bretana field can be found in the updated corporate investor presentation which is available on the Company’s website at www.sterling-resources.com.

ABOUT STERLING

Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru.  The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board, focused on safely and cost effectively developing and exploiting the Bretana field. The Bretana field is being developed on a modular basis which allows the Company to install the oil and water handling facilities in phases, allowing for more efficient use of capital during the field development.

 

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

http://www.sterling-resources.com/

 

READER ADVISORIES

FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to: the Company’s objectives; the Company’s capital program, capital budget, cash flow and proposed drilling, reactivation, water and other activities and the anticipated costs and results of such activities; cost controls and savings; anticipated future production and revenue; future development and growth prospects. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, "expect", “plan”, “estimate”, “potential”, “will”, “should”, “continue”, “may”, “objective” and similar expressions. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside, prevailing commodity prices and the actual prices received for Sterling’s products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of Sterling’s geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company’s growth strategy, general economic conditions, availability of required equipment and services and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company’s production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the Company’s annual information form and management’s discussion and analysis for the year ended December 31, 2017 which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.


Sterling Resources Ltd. Announces Mailing of Meeting Materials and Details of Proposed Share Consolidation and Name Change

Calgary, Alberta and Houston, Texas – May 9, 2018—Sterling Resources Ltd. (“Sterling” or the “Company”) (TSX-V: SLG) is pleased to announce that it has mailed a management information circular (the “Circular”) to holders (“Shareholders”) of its common shares (“Shares”) in connection with an annual general and special meeting (the “Meeting”) of Shareholders to be held in the Clarkson & Tétrault Boardroom at the offices of McCarthy Tétrault LLP, Suite 4000, 421 – 7th Avenue S.W., Calgary, Alberta on Wednesday, May 30, 2018 at 10:00 a.m. (Calgary time).

At the Meeting, Shareholders will be asked to consider for approval, among other things, a resolution authorizing a consolidation of the Shares on the basis of a ratio of between four and eight pre-consolidation Shares for each one post-consolidation Share (the “Consolidation”) and a resolution authorizing a change of the Company’s name to “PetroTal Corp.” (the “Name Change”).

CONSOLIDATION

The Company has experienced a significant increase in its share count as a result of the reverse take-over with PetroTal Ltd. (“PetroTal”) and the acquisition of Gran Tierra Energy International (Peru) Holdings B.V., an indirect wholly-owned subsidiary of Gran Tierra Energy Inc., completed on December 18, 2017. The Company wishes to reduce the outstanding share amount to a level more in keeping with its industry peers. The Company believes the Consolidation will provide a share capital structure that will better attract investors and enhance future growth opportunities. The exact Consolidation ratio will be determined by the board of directors of the Company (the “Board”) when the Board considers it to be in the best interests of the Corporation to implement such a Consolidation. Notwithstanding approvals being received, the Board may determine not to proceed with the Consolidation, at its discretion.

The Company currently has 537,740,991 issued and outstanding Shares. In the event that the Consolidation is completed, for example, on a four for one basis, the Company would have approximately 134,435,248 Shares outstanding following the Consolidation. In addition, the exercise price and number of Shares issuable upon the exercise of outstanding convertible securities, including purchase warrants, will be proportionally adjusted upon the implementation of the Consolidation.

NAME CHANGE

The Company proposes to change its name to “PetroTal Corp.” to reflect its current business activities. Prior to the reverse take-over, PetroTal actively pursued opportunities in Latin America, specifically Peru, since inception in 2016.  The Company’s management team is known by local officials and counterparties in Peru as PetroTal and the management team believes the name has value in the country.

Approval of the Consolidation and Name Change by Shareholders would, subject to approval of the TSX Venture Exchange (the “TSXV”), allow the Board to implement the Consolidation and Name Change without any further action on the part of Shareholders.

Further details with regard to the background, reasoning and impact of the Consolidation and the Name Change, are contained in the Circular dated April 30, 2018, a copy of which is available on SEDAR at www.sedar.com.

ABOUT STERLING

Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board, focused on safely and cost effectively developing and exploiting the Bretana oil field.

 

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

http://www.sterling-resources.com/

 

READER ADVISORIES

FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to, the Consolidation and the Name Change.  All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, "expect", “plan”, “estimate”, “potential”, “will”, “should”, “continue”, “may”, “objective” and similar expressions. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the timely receipt of all required Shareholder, TSXV and regulatory approvals. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks.  Please refer to the risk factors identified in the Company’s annual information form and management’s discussion and analysis which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Completion of the Consolidation and Name Change are subject to a number of conditions, including but not limited to, TSXV acceptance. There can be no assurance that the Consolidation and Name Change will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the Circular prepared in connection with Meeting at which Shareholder approval will be sought for the Consolidation and Name Change, any information released or received with respect to the Consolidation and Name Change may not be accurate or complete and should not be relied upon.

The TSXV has in no way passed upon the merits of the Consolidation and Name Change and has neither approved nor disapproved of the contents of this press release.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.


Sterling Resources Ltd. Reports 2017 Year-End Financial Results and Reserves Summary

Calgary, Alberta and Houston, Texas – April 30, 2018 – Sterling Resources Ltd. (“Sterling” or the “Company”) (TSX-V: SLG) is pleased to provide a summary of its 2017 year-end financial and operating results and the results of an independent evaluation of its oil reserves, prepared by Netherland, Sewell & Associates, Inc. (“NSAI”), a qualified reserves evaluator, as of December 31, 2017.

Selected financial, operational and reserves information is outlined below and should be read in conjunction with the Company’s audited consolidated financial statements (“Financial Statements”), management’s discussion and analysis (“MD&A”) and annual information form (“AIF”) for the year ended December 31, 2017, which are available on SEDAR at www.sedar.com and the Company’s website at www.sterling-resources.com. All figures referred to in this press release are denominated in U.S. dollars.

2017 YEAR-END HIGHLIGHTS

  • Completed a reverse take-over transaction and amalgamated with PetroTal Ltd. (“PetroTal”)
  • Completed the acquisition of Gran Tierra Energy International (Peru) Holdings B.V., an indirect wholly-owned subsidiary of Gran Tierra Energy Inc. (“Gran Tierra”)
  • Commenced operation of Bretana oil field assets
  • 2P Reserves estimated at approximately 39.8 million barrels of oil
  • 3P Reserves estimated at approximately 79.3 million barrels of oil
  • NPV-10 of approximately $282 million for 2P Reserves and $775 million for 3P Reserves

OPERATIONS UPDATE

The Company’s objective of developing the Bretana oil field on a modular basis and putting the field online by year-end 2018 is on target. Existing facilities have been transported from storage to the field and new oil production facilities have arrived. Once installed, the Company will begin commissioning an initial set of oil production facilities. Formation water treatment facilities, reinjection facilities and oil production facilities for this first phase are expected to be ready for commissioning by late 2018 and fully operational by year-end. Both the existing oil production wells and water reinjection wells have been intervened to remove plugs and are ready for operation. The Company is negotiating future oil prices and pipeline tariffs with Peru’s state oil company, PetroPeru, and the crude oil price formula to calculate royalty payments with Peru’s state agency, Perupetro S.A.

Manolo Zuniga, Sterling’s President and Chief Executive Officer, stated, “We are pleased to have completed the reverse take-over and merger of PetroTal and Sterling. We have assumed operation of the Bretana assets and are moving forward with plans to put the Bretana oil field online.  Since acquiring the assets in December 2017, we have initiated field development and facilitated an independent evaluation of the reserves. We are also preparing to drill Bretana’s second oil producer, and are readying the data room to promote the Osheki prospect.”

NEAR AND MEDIUM-TERM OBJECTIVES

  • Maintain cost controls to ensure the Bretana oil field comes online within the capital budget
  • Reactivate oil production and water injection wells
  • Commission equipment to facilitate a safe transition to full production

FINANCIAL HIGHLIGHTS

The following table summarizes key financial highlights associated with the Company’s financial performance.

December 31, 2017
US$000s
December 31, 2016
US$000s
Revenues - -
Expenses 2,754 -
Net Loss 2,754 -
Total Assets 98,766 -
Total Liabilities 16,723 -
Total Shareholders’ Equity 82,043 -

The year ended December 31, 2017 was a transformative year for the Company. The transactions that were completed had a significant impact on the comparability of the Company’s period over period results. See Sterling’s Financial Statements and MD&A for further details.

2017 YEAR-END RESERVES SUMMARY (1)(2)(3)(4)(5)

Summary of Oil Reserves as of December 31, 2017.

Heavy Oil
Gross Net
Description (Mbbl) (Mbbl)
Proved
Developed Producing - -
Developed Non‑Producing - -
Undeveloped 14,683.6 14,683.6
Total Proved 14,683.6 14,683.6
Total Probable 25,075.7 25,075.7
Total Proved plus Probable 39,759.3 39,759.3
Total Possible 39,522.7 39,522.7
Total Proved plus Probable plus Possible 79,282.0 79,282.0

Summary of Net Present Values of Future Net Revenue as of December 31, 2017.

  Before Income Tax
  Discounted at Various Rates
    0%   5%   10%   15%   20%
Description   M$   M$   M$   M$   M$
Proved
Producing - - - - -
Developed Nonproducing - - - - -
Undeveloped 77,312.5 55,845.0 38,163.2 24,364.0 13,848.7
Total Proved 77,312.5 55,845.0 38,163.2 24,364.0 13,848.7
Total Probable 459,676.3 328,211.9 243,647.0 188,396.0 150,922.6
Total Proved plus Probable 536,988.8 384,056.9 281,810.2 212,760.0 164,711.2
Total Possible 1,217,838.5 743,997.6 492,773.1 348,619.2 260,204.5
Total Proved plus Probable plus Possible 1,754,827.3 1,128,054.5 774,583.4 561,379.2 424,975.8

Notes:

(1)     The tables summarize data contained in the independent report prepared by NSAI as at December 31, 2017 and as a result may contain slightly different numbers due to rounding. The data has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook and the reserve definitions contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

(2)     The Corporation owns a 100% working interest and a 100% net revenue interest in these properties.

(3)     Based on NSAI's December 31, 2017 escalated price forecast. See “Forecast Prices and Costs” in the AIF.

(4)     Future net revenue is after deductions for the Corporation’s share of royalty burdens, capital costs, abandonment and reclamation costs and operating expenses but before consideration of any Peruvian income taxes.

(5)     It should not be assumed that the undiscounted or discounted net present value (NPV) of future net revenue attributable to the Company's reserves estimated by NSAI represent the fair market value of those reserves.  All future net revenues are estimated using forecast prices and cost assumptions. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.  Actual reserves may be greater than or less than the estimates provided herein.

See Sterling’s March 8, 2018 press release and AIF for further details.

ABOUT BRETANA FIELD

Oil in the Bretana field was first discovered in the 1970’s and was subsequently re-discovered by Gran Tierra. Several wells have been drilled to delineate the field and recent seismic has de-risked the structure. The rediscovery well drilled by Gran Tierra in 2014 well tested 18.5 degree API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The Company acquired the assets in Peru on December 18, 2017 from Gran Tierra. The Company is working to put the field on long-term test and begin production as early as Q4 2018.

ABOUT STERLING

Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru.  The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretana oil field.

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

http://www.sterling-resources.com/

 

READER ADVISORIES

FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to: the Company’s objectives; the Company’s capital program, capital budget and proposed drilling, reactivation, water and other activities and the anticipated costs and results of such activities; cost controls; negotiations with PetroPeru and Perupetro S.A.; the size of the oil reserves of the Corporation and anticipated future production and revenue from such reserves; future development and growth prospects.  All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, "expect", “plan”, “estimate”, “potential”, “will”, “should”, “continue”, “may”, “objective” and similar expressions. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside,  prevailing commodity prices and the actual prices received for Sterling’s products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of Sterling’s geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company’s growth strategy, general economic conditions, availability of required equipment and services and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company’s production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the AIF and MD&A which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

PRESENTATION OF OIL AND GAS INFORMATION: Reserves are classified according to the degree of certainty associated with the estimates. Proved (1P) reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable (2P) reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Possible (3P) reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves. The qualitative certainty levels referred to in the definitions above are applicable to individual reserve entities (which refers to the lowest level at which reserves calculations are performed) and to reported reserves (which refers to the highest level sum of individual entity estimates for which reserve estimates are prepared).  Reported reserves should target the following levels of certainty under a specific set of economic conditions: at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated proved (1P) reserves; at least a 50 percent probability that the quantities actually recovered will equal or exceed the estimated proved plus probable (1P+2P) reserves; and at least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable plus possible (1P+2P+3P) reserves.

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.


Sterling Resources Ltd. Reports 2017 Year-End Reserves in Respect of the Bretana Field

Calgary, Alberta and Houston, Texas – March 8, 2018—Sterling Resources Ltd. (“Sterling” or the “Company”) (TSX-V: SLG) is pleased to provide a summary of the Company’s 2017 year-end reserves in the Bretana field in Northern Peru. Reserves numbers presented herein were derived from an independent reserves report (the “NSAI Report”) prepared by Netherland, Sewell & Associates, Inc. (“NSAI”) effective December 31, 2017. Unless otherwise noted, all figures referred to in this press release are denominated in U.S. Dollars.

2017 YEAR-END RESERVES HIGHLIGHTS

  • 2P Reserves estimated at approximately 39.8 million barrels of oil.
  • 3P Reserves estimated at approximately 79.3 million barrels of oil.
  • NPV-10 of approximately $282 million for 2P Reserves and $775 million for 3P Reserves.
  • Facilities being mobilized to the field to begin production by year-end.

The Company has certified total Proved + Probable (“2P”) reserves of 39.8 million barrels of recoverable oil at the Bretana field. The net present value of before tax future net revenues discounted at 10 percent (“NPV-10”) of 2P oil reserves is approximately $282 million. Additionally, the Company has certified Proved + Probable + Possible (“3P”) oil reserves of 79.3 million barrels, with a NPV-10 of approximately $775 million.

Manolo Zuniga, Sterling’s President and Chief Executive Officer, stated “We are pleased that our contingent resources have converted to reserves with financing in place. Due to limited field data, the 2P reserves are still based on an approximate 12 percent recovery factor of the estimated best-case 330 million barrels of original-oil-in-place. Our team is confident that recoveries should be higher based on their experience in analog fields. The 79.3 million barrels of 3P reserves reflect the concept of higher recoveries, as they are based on an approximate 16 percent recovery factor of the estimated high-case 500 million barrels of original-oil-in-place. We have already begun the process of preparing the location to mobilize equipment and facilities to the field to initiate the long-term testing phase and to deliver first production by year-end 2018.”

2017 YEAR-END RESERVES SUMMARY

The summary below sets forth Sterling’s reserves as at December 31, 2017, as presented in the NSAI Report.  The figures in the following tables have been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”) and the reserve definitions contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). In addition to the summary information disclosed in this press release, more detailed information will be included in Sterling’s annual information form for the year ended December 31, 2017 (the “AIF”) to be filed on SEDAR (www.sedar.com) and posted on Sterling’s website (www.sterling-resources.com) in April 2018.

Summary of Oil Reserves as of December 31, 2017

Summary.
Summary.

Summary of Net Present Values of Future Net Revenue as of December 31, 2017

Summary.
Summary.

(1) Based on NSAI's December 31, 2017 escalated price forecast. See “Summary of Pricing and Inflation Rate Assumptions – Forecast Prices and Costs”.

(2) It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company's reserves estimated by NSAI represent the fair market value of those reserves.  All future net revenues are estimated using forecast prices and cost assumptions. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.  Actual reserves may be greater than or less than the estimates provided herein.

Summary of Pricing and Inflation Rate Assumptions – Forecast Prices and Costs

The forecast cost and price assumptions assume increases in wellhead selling prices and include inflation with respect to future operating and capital costs.  Crude oil benchmark reference pricing, inflation and exchange rates utilized by NSAI as at December 31, 2017 were as follows:

Period Ending Oil Price (US$/BBL)
12-31-2018 67.76
12-31-2019 63.98
12-31-2020 61.07
12-31-2021 59.53
12-31-2022 58.97
12-31-2023 58.89
12-31-2024 59.09
12-31-2025 59.28

Thereafter, escalated 2 percent on January 1 of each year.

Future Development Costs

The following table sets forth development costs deducted in the estimation of Sterling’s future net revenue attributable to the reserve categories noted below:

Development Costs.
Development Costs.

The future development costs are estimates of capital expenditures required in the future for Sterling to convert the corresponding reserves to proved developed producing reserves.  The undiscounted future development costs are $325 million for proved plus probable reserves and $164 million for possible reserves (in each case based on forecast prices and costs).

ABOUT BRETANA FIELD

The Bretana field was first discovered in the 1970’s and subsequently re-discovered by Gran Tierra. The field has several wells drilled to delineate the field and recent seismic has also de-risked the structure. The rediscovery well was drilled in 2014 by Gran Tierra Energy Inc. (“Gran Tierra”), and that well tested 18.5 degree API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The Company acquired the properties in Peru on December 18, 2017 from Gran Tierra. The Company is working to put the field on long-term test and begin production as early as Q4 2018.

About Sterling Resources Ltd.

Sterling is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru.  The Company assumed control of the assets in Peru on December 18, 2017. The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretanaoil field.

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9026
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T : (713) 609-9101

Forward-Looking Statements

All statements included in this news release that address activities, events or developments that Sterling expects, believes or anticipates will, should or may occur in the future are forward-looking statements. In particular, this news release contains forward-looking statements relating to, but not limited to: Sterling’s business strategy, plans and management focus; the timing of release of the AIF, plans with respect to the Bretana field and the anticipated results from this project. In addition, statements relating to expected production, reserves, recovery, costs and valuation are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future.

These forward-looking statements involve numerous assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.  In addition, these statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: the impact of general economic conditions in the areas in which Sterling operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition, there are risks and uncertainties associated with oil and gas operations.  Readers should also carefully consider the matters listed under the heading "Risk Factors" in the filing statement of the Company which is available on SEDAR (www.sedar.com).

Although Sterling believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. These statements speak only as of the date of the news release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.

OIL AND GAS METRICS

This press release contains oil and gas metrics, including “future development costs”, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods. Future development costs are calculated as the sum of development capital plus the change in future development costs for the period.

The term original-oil-in-place (OOIP) is equivalent to total petroleum initially-in-place (“TPIIP”). TPIIP, as defined in the COGE Handbook, is that quantity of petroleum that is estimated to exist in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. A portion of the TPIIP is considered undiscovered and there is no certainty that any portion of such undiscovered resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of such undiscovered resources. With respect to the portion of the TPIIP that is considered discovered resources, there is no certainty that it will be commercially viable to produce any portion of such discovered resources. A significant portion of the estimated volumes of TPIIP will never be recovered.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


Sterling Resources Ltd. Announces 2018 Capital Budget

January 30, 2018 - Calgary, Alberta – Sterling Resources Ltd. (the “Company”) (TSXV: SLG) is pleased to announce that its Board of Directors (the “Board”) has approved the development budget of $30.6 million for fiscal 2018. The budget is focused towards bringing the Bretana oil field online in Block 95, in Northeast Peru. In this press release, all dollar amounts are in United States (“U.S.”) dollars.

2018 Capital Budget

Capital expenditures are expected to be allocated as follows:

Facilities and civil works/installation

$17.8 million

Well Workovers

$2.0 million

Permitting/Social

$2.1 million

Capitalized G&A

$2.7 million

New Bretana Oil Well (Spud)

$5.4 million

Osheki Prospect Block 107

$0.6 million

Total

$30.6 million

The Bretana oil field will require approximately $24.6 million to be put on production before year end. As highlighted in the table above, $17.8 million are in facilities and civil works to start production from the existing discovery well that tested oil during a short-term test prior to being shut in, as well as some maintenance work on the other projects. The remaining $4.8 million is mostly to complete the ongoing Bretana full field development environmental permit and for capitalized general and administrative (“G&A”) expenses. The Company also plans to invest $2.0 million to work over the existing oil well and the existing water reinjection well. The Company expects to spud Bretana’s second oil producing well before year end at a cost of $5.4 million, representing about one third of the total cost of this well that is expected to be completed in early 2019. The Company will also invest $0.6 million on Osheki’s logistics, with the expectation of bringing a joint venture partner to drill this important prospect the following year.

“Our team continues to execute the strategy laid out in our fundraising activities at the end of 2017,” stated Manolo Zuniga, President and Chief Executive Officer. “We continue to make progress for installation of facilities at the field to bring production online by year-end. We have also engaged third-party engineering firm Netherland, Sewell & Associates, Inc. (“NSAI”) to complete the year end 2017 reserves report. At June 30, 2016, NSAI estimated the field to most likely have 330 million barrels of oil in place, resulting in contingent 2C resources of 39.8 million barrels of recoverable oil. With the financing in place and the approved capital budget, we expect that the 2C contingent resources will convert to 2P (proved + probable) reserves. Additionally, the year end 2017 NSAI reserves report will also provide estimates for 1P (proved) and 3P (proved + probable + possible) reserves.”

The Company completed an arrangement (the “Transaction”) on December 18, 2017 which included PetroTal Ltd., a private exploration and production company based in Houston, and Gran Tierra Energy, Inc. of Calgary, Canada (NYSE/TSX:GTE). The Transaction brought Peruvian assets of Gran Tierra Energy, Inc. under Sterling Resources Ltd. for $35 million of equity consideration, and the PetroTal Ltd. management and Board of Directors assumed control of the Company. Concurrently, PetroTal Ltd. completed a $34 million brokered private placement, which along with $17 million held by the Company, brought total gross proceeds to over $50 million.

“With liquidity at year-end 2017 of approximately $47 million, and no debt, this capital budget is fully funded,” Greg Smith, Executive Vice President and Chief Financial Officer, commented. “With oil coming online at year-end 2018 and providing cash flow from operations, this project should remain self-funding going into 2019. G&A costs for fiscal 2018, excluding capitalized costs, are expected to approximate $4 million.”

Aiming to focus its capital on the Bretana oil field and finding a partner to drill the Osheki prospect, the Company has relinquished Blocks 123 and 129 back to the Peruvian government. Both blocks had completed their current exploration phase and the Company believes that relinquishing these blocks will allow the Company to reallocate close to USD $1 million to the Bretana and Osheki projects. The Company will therefore now have three blocks in Peru, Blocks 95 (Bretana oil field), Block 107 (Osheki prospect), and Block 133 (adjacent to Block 107 and whose leads follow the Osheki geologic trend).

About Sterling Resources Ltd.

Sterling is a publicly-traded junior oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. The Company assumed control of the assets in Peru on December 18, 2017. The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretana oil field.

For further information, please contact:

Greg Smith

Executive Vice President and Chief Financial Officer

T: (713) 894-4156

Forward-Looking Statements

This press release contains opinions, forecasts, projections, and other statements about future events or results that constitute forward-looking statements. More particularly, this press release contains statements concerning, but not limited to: the capital program of the Company, including, the drilling program, the reactivation program and other capital expenditures; the approach to and sufficiency of the 2018 capital budget and the Company’s expectation to be self-funding in 2019; the reserves report to be prepared by NSAI and the ability of the Company to convert contingent resources to reserves; the ability to put the Bretana oil field on production and the timing and cost thereof; and identifying a joint venture partner for the Osheki prospect and the potential to drill that prospect in 2019. In addition, the use of any of the words “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, “project”, “can”, “will”, “should”, “continue”, “may”, and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained herein are based on certain key expectations and assumptions made by the Company, including but not limited to expectations and assumptions concerning the availability of capital, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, the Company’s growth strategy, general economic conditions, availability of required equipment and services and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; as the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations, changes in legislation affecting the oil and gas industry, uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures as well as additional risks associated with operating in a developing country. Please refer to the risk factors identified in the filing statement of the Company which is available on SEDAR at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.