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.


Sterling Resources Ltd. and Petrotal Ltd. Announce Closing of Reverse Take-Over and Completion of Peruvian Asset Acquisition

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Calgary, Alberta – December 18, 2017 – Sterling Resources Ltd. (“Sterling” or the “Corporation”) (TSXV: SLG) and PetroTal Ltd. (“PetroTal”) are pleased to announce the completion of the previously announced reverse take-over by way of a statutory plan of arrangement (the “Arrangement”) involving Sterling and PetroTal under the Business Corporations Act (Alberta). Pursuant to the Arrangement, each common share of PetroTal (“PetroTal Share”) was exchanged for 5.35 common shares of Sterling (“Sterling Shares”) resulting in the issuance of an aggregate of 203,300,005 Sterling Shares. As part of the Arrangement, Sterling and PetroTal were amalgamated and continued as one corporation under the name “Sterling Resources Ltd.” (“New Sterling”).

In addition, New Sterling has completed the acquisition of all the issued and outstanding common shares of Gran Tierra Energy International (Peru) Holdings B.V., an indirect wholly-owned subsidiary of Gran Tierra Energy Inc. (“GTE”), for 187,250,000 common shares of New Sterling (“New Sterling Shares”), at a deemed price of approximately US$0.1869 per New Sterling Share (the “Acquisition”), and an option to retain a 20% working interest in Block 107 following the drilling of an initial exploration well (“GTE Option”). GTE holds approximately 45.8% of the outstanding common shares of New Sterling.

The TSX Venture Exchange (the “TSXV”) granted conditional approval of the transactions on December 15, 2017, and final acceptance will be predicated upon the satisfactory achievement of certain conditions required by the TSXV, including completion of all outstanding filing requirements, delivery of customary legal opinions and corporate documentation and delivery of material agreements in respect of the transactions. Final acceptance of the Arrangement, Acquisition and Financing will occur upon the issuance of a Final Exchange Bulletin by the TSXV. The New Sterling Shares will only commence trading on the TSXV under the symbol “SLG” once all conditions have been satisfactorily met and the TSXV issues the Final Exchange Bulletin.

Pure Play Development and Exploration in Peru

  • With over US$50 million cash(1) and no debt, New Sterling is well-positioned to execute on its pure play Peruvian development and exploration business plan
  • New Sterling’s business plan is primarily focused on unlocking value through the establishment of production and full field development of the Bretaña Oil Field
  • In addition, New Sterling will continue to advance technical work on the Block 107 Osheki prospect with the intention of farming-down working interest to finance exploration drilling

New Sterling Highlights

  • Team with extensive Peruvian experience supported by a board of established international oil & gas professionals
  • 100% working interesting in Bretaña, one of the largest undeveloped discoveries in Peru with 330 MMboe of best estimate discovered oil in place and 39.8 (37.6 net) MMbbl of 2C contingent resources at 12% recovery factor (2)
  • Substantial infrastructure in place at Bretaña, with the ability to deliver first production by Q4 2018 for USD$24 million in anticipated capital expenditure
  • Robust netbacks of USD$24/bbl forecasted for Bretaña oil (3)
  • Fully financed to commercial production at Bretaña targeting 5,000 bbl/d in first half of 2019
  • Significant recovery factor upside at Bretaña as analogous fields in Peru have achieved recovery factors of approximately 20% - 40% versus 12% estimated for Bretaña (2)
  • Exploration upside potential with seismically defined Block 107 Osheki prospect and 2.2 million net undeveloped acres including Block 95 (100% working interest), Block 107 (100% working interest subject to the GTE Option) and Block 133 (100% working interest)

Notes:

  1. After giving effect to the Arrangement, the Acquisition and the Financing (defined below), as well as certain adjustments, including transaction costs
  2. Based on the independent assessment of contingent resources completed by Netherland Sewell & Associates, Inc. (“NSAI”), a qualified reserves evaluator as defined in Canadian National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), with an effective date of June 30, 2017 and prepared in accordance with the Canadian Oil and Gas Evaluation Handbook and the standards established by NI 51-101 (the “NSAI Contingent Resources Assessment”)
  3. Based on USD$55/bbl Brent crude price less USD$7/bbl quality discount, USD$11/bbl lifting costs, USD$6/bbl barging costs, USD$5/bbl pipeline tariff and USD$2/bbl royalty payments

Manuel Pablo Zúñiga-Pflücker, President and Chief Executive Officer of New Sterling, commented: “Our commitment to investors, the country of Peru and to our employees is to deploy capital in an efficient manner to unlock value for our shareholders, increase activity in Peru and grow our business for the future. Beginning with the Bretaña oil field, we are confident in our ability to unlock the potential of this large established oil discovery through the application of proven oilfield practices. The team we have assembled in Peru has a track record of successful development in-country and their experience working fields like Bretaña will be key to our success. PetroTal’s team joins an existing GTE team in Peru whose experience and knowledge will be instrumental in the go-forward plan and we look forward to working together.”

“Over the next few months we will methodically pursue important milestones, including the conversion of contingent resources to reserves, the installation of production equipment at the Bretaña oil field, and the work-over of the existing Bretaña well to initiate first production within the next twelve months. New Sterling will also advance the search for a joint venture partner to drill the Osheki prospect in Block 107.”

The Financing

On December 12, 2017, PetroTal issued 34 million subscription receipts for total gross proceeds of US$34 million pursuant to a brokered private placement (the “Financing”) co-led by Eight Capital and Pareto Securities AS and including PillarFour Securities Inc. Each subscription receipt was exchanged for one PetroTal Share on December 18, 2017 without any further action required on the part of the holders of the subscription receipts and without payment of any additional consideration.

Following completion of the transactions, New Sterling has a total of 537,740,990 New Sterling Shares issued and outstanding, as well as 23,540,000 common share purchase warrants exercisable to purchase New Sterling Shares at an exercise price of approximately US$0.1869 per New Sterling Share. At the next annual general meeting of the holders of New Sterling Shares, shareholders will be asked to approve a change of New Sterling’s name to “PetroTal Corp.” A further review will be ongoing to determine if a share consolidation is appropriate.

An aggregate of 208,650,005 New Sterling Shares and 23,540,000 common share purchase warrants exercisable to purchase New Sterling Shares are subject to value escrow pursuant to TSXV escrow requirements.

Eight Capital acted as exclusive financial advisor to PetroTal with respect to the Arrangement and Acquisition and PillarFour Securities LLP acted as exclusive financial advisor to Sterling with respect to the Arrangement.

New Sterling Management Team and Board of Directors

With the closing of the transaction, the directors and executive officers of New Sterling are now:

Manuel Pablo Zúñiga-Pflücker

Director, President and Chief Executive Officer

Gregory Smith

Executive Vice President and Chief Financial Officer

Charles Fetzner

Vice President, Asset Development

Estuardo Alvarez-Calderon

Vice President, Operations

Sanjib Gill

Corporate Secretary

James B. Taylor

Director

Douglas C. Urch

Director

Gary S. Guidry

Director

Ryan Ellson

Director

Gavin Wilson

Director

Mark McComiskey

Director

Additional Information

Please refer to the filing statement of Sterling dated November 29, 2017 for additional information regarding New Sterling, the Arrangement, the Acquisition and the Financing, which is available under Sterling’s profile on www.sedar.com.

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
T: (713) 894-4156

Abbreviations

bbl barrels
bbl/d barrels per day
MMbbl million barrels
boe barrels of oil equivalent
boe/d barrels of oil equivalent per day
MMboe million barrels of oil equivalent

Presentation of Oil and Gas Information

For the purpose of calculating unit costs, natural gas volumes have been converted to a boe using six thousand cubic feet equal to one barrel unless otherwise stated. A boe conversion ratio of 6:1 is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion conforms to NI 51-101. Boe may be misleading, particularly if used in isolation. Contingent resources are the quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology underdevelopment, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies are conditions that must be satisfied for a portion of contingent resources to be classified as reserves that are: (a) specific to the project being evaluated; and (b) expected to be resolved within a reasonable timeframe. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.

Estimates related to contingent resources:

Estimated cost to achieve commercial production

General timeline including the estimated date of first commercial production

Estimated recovery technology (conventional or unconventional)

Basis of project (conceptual or predevelopment)

Bretaña (Block 9)

USD$22.1 million

10 – 12 months

Conventional

Pre-development

Estimates of contingent resources included in this press release relating to the Bretaña oilfield are based upon the NSAI Contingent Resources Assessment.

The estimates of contingent resources provided in this press release are estimates only and there is no guarantee that the estimated contingent resources will be recovered. Actual contingent resources may be greater than or less than the estimates provided in this press release and the differences may be material. There is no assurance that the forecast price and cost assumptions applied by NSAI in evaluating the contingent resources will be attained and variances could be material. There is uncertainty that it will be commercially viable to produce any part of the contingent resources.

Estimates of contingent resources are by their nature more speculative than estimates of proved reserves and would require substantial capital spending over a significant number of years to implement recovery. Actual locations drilled and quantities that may be ultimately recovered from our properties will differ substantially. In addition, we have made no commitment to drill, and likely will not drill, all of the drilling locations that have been attributable to these quantities.

The contingent resources estimates that are referred to herein are risked as to chance of development (i.e. the level of risk associated with the chance of development was assessed by NSAI as part of the evaluations that were conducted). Risks that could impact the chance of development include, without limitation: geological uncertainty and uncertainty regarding individual well drainage areas; uncertainty regarding the consistency of productivity that may be achieved from lands with attributed resources; potential delays in development due to product prices; access to capital; availability of markets and/or take-away capacity; and uncertainty regarding potential flowrates from wells and the economics of those wells. Risk assessment is a highly subjective process dependent upon the experience and judgment of the evaluators and is subject to revision with further data acquisition or interpretation.

The following classification of contingent resources is used in the press release:

  • Low Estimate (or 1C) means there is at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate
  • Best Estimate (or 2C) means there is at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate
  • High Estimate (or 3C) means there is at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate

In general, the significant factors that may change the contingent resources estimates include further delineation drilling, which could change the estimates either positively or negatively, future technology improvements, which would positively affect the estimates, and additional processing capacity that could affect the volumes recoverable or type of production. Additional facility design work, development plans, reservoir studies and delineation drilling is expected to be completed by New Sterling in accordance with its long-term resource development plan.

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking information or statements. Statements about: the trading of New Sterling Shares on the TSXV, final regulatory approvals and the timing thereof; the change of New Sterling’s name and a possible share consolidation; New Sterling’s business strategy, objectives, strength and focus, including plans to install equipment, work over existing wells and identify a joint venture partner; and New Sterling’s ability to create value for shareholders in the Bretaña oil field, including by converting contingent resources to reserves, among others, are forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements.

The forward-looking statements and information are based on certain key expectations and assumptions made by New Sterling, including expectations and assumptions concerning: the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, the need for incremental financing to commercial production, reservoir characteristics, recovery factor, exploration upside, prevailing commodity prices and the actual prices received for New Sterling’s products, the availability and performance of drilling rigs, facilities, pipelines and other oilfield services, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital and skilled personnel, and the accuracy of New Sterling’s geological interpretation of its drilling and land opportunities.

Although New Sterling believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because New Sterling can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, 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, and delays or changes in plans with respect to exploration or development projects or capital expenditures), commodity prices, the uncertainty of estimates and projections relating to production, cash generation, costs and expenses, health, safety, litigation and environmental risks, access to capital as well as additional risks associated with operating in a developing country. Due to the nature of the oil and natural gas industry, drilling plans and operational activities may be delayed or modified to react to market conditions, results of past operations, regulatory approvals or availability of services causing results to be delayed. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. New Sterling assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless 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 release.


Sterling Resources Ltd. and Petrotal Ltd. Announce Closing of Usd$34 Million Brokered Private Placement Financing

NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Calgary, AB (December 12, 2017) – Sterling Resources Ltd. (“Sterling” or the “Corporation”) (TSXV: SLG) and PetroTal Ltd. (“PetroTal”) are pleased to announce the closing of PetroTal’s previously announced brokered private placement offering of 34,000,000 subscription receipts (the “Subscription Receipts”) for aggregate gross proceeds of USD$34 million (the “Financing”). The Financing was completed through a syndicate of investment dealers co-led by Eight Capital and Pareto Securities and including PillarFour Securities Inc.

Each Subscription Receipt will be exchangeable into one common share in the capital of PetroTal without any further action required on the part of the holder of the Subscription Receipt and without payment of any additional consideration, upon the closing of the business combination of Sterling and PetroTal (the “Proposed Transaction”) as further described in the filing statement of the Corporation dated November 29, 2017 (the “Filing Statement”).

About Sterling

Sterling is a publicly-traded company listed on the TSX Venture Exchange (the “TSXV”) with its common shares listed and posted for trading on the TSXV under the symbol “SLG”.

About PetroTal

PetroTal, a company incorporated under the laws of Alberta, is a private junior oil and gas exploration, development and production company formed for the purpose of acquiring, and subsequently enhancing and producing oil and gas from properties in Latin America. PetroTal currently has no production and has not conducted active operations since its incorporation.

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. The forward-looking statements and information are based on certain key expectations and assumptions made by Sterling, including expectations and assumptions concerning Sterling, PetroTal, the Proposed Transaction, the Financing, the timely receipt of court, TSXV and regulatory approvals and the satisfaction of other closing conditions in accordance with the terms of the arrangement agreement entered into between Sterling and PetroTal. Although Sterling and PetroTal believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because neither Sterling nor PetroTal can give any assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Sterling and PetroTal undertake no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

Reader Advisory

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Filing Statement, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

The TSXV has in no way passed upon the merits of the Proposed Transaction 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 release.

Contacts

For further information, please contact:

John Rapach

Greg Smith

Sterling Resources Ltd.

PetroTal Ltd.

T: +44 7818 418845

T: 713-894-4156


Sterling Resources Ltd. and Petrotal Ltd. Announce Sedar Filing of Filing Statement

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Calgary, Alberta – December 1, 2017 Sterling Resources Ltd. (“Sterling” or the “Corporation”) (TSXV: SLG) and PetroTal Ltd. (“PetroTal”) are pleased to announce that a filing statement (the “Filing Statement”) prepared in accordance with the requirements of the TSX Venture Exchange (the “TSXV”) in connection with the previously announced business combination of Sterling and PetroTal pursuant to a plan of arrangement (the “Proposed Transaction”) has been filed under Sterling’s profile on SEDAR and is available at www.sedar.com.

For additional information about the Proposed Transaction, please see the joint press release of Sterling and PetroTal dated November 9, 2017, which is available under Sterling’s profile on SEDAR at www.sedar.com.

The Proposed Transaction is currently anticipated to close on or about December 11, 2017. Closing of the Proposed Transaction is subject to a number of conditions including, but not limited to, the completion of a brokered private placement offering of subscription receipts for aggregate gross proceeds of a minimum of USD$25 million (the “Financing”) anticipated to close on December 8, 2017 and closing conditions customary to a transaction of the nature of the Proposed Transaction, including those described in the Filing Statement.

PetroTal is pleased to announce that it is anticipated that the aggregate gross proceeds of the Financing will be approximately USD$34 million. The Financing is being co-led by Eight Capital and Pareto Securities AS on behalf of a syndicate of investment dealers that includes PillarFour Securities Inc.

Eight Capital is acting as financial advisor to PetroTal and PillarFour Securities LLP is acting as financial advisor to Sterling with respect to the Proposed Transaction.

Trading in the shares of the issuer resulting from the Proposed Transaction (the “Resulting Issuer”) is expected to commence on the TSXV under the name “Sterling Resources Ltd.” shortly after closing and following the issuance by the TSXV of its final bulletin in respect of the Proposed Transaction. The trading symbol of the Resulting Issuer will be “SLG”.

About Sterling

Sterling is a publicly-traded company listed on the TSXV, and incorporated under the laws of Alberta. Sterling was previously engaged in the exploration for, and the development and production of, crude oil and natural gas in the United Kingdom and the Netherlands. In May 2017, before the Proposed Transaction was entered into, Sterling commenced a plan to wind-up and dissolve the company. The plan involved redeeming all issued and outstanding bonds, cancelling and paying in full Sterling's credit facilities, disposing of all funding arrangements for projects, and completing three consecutive cash distributions to the holders of Sterling common shares, with the final cash distribution set to be issued immediately prior to Sterling's formal dissolution. With all of Sterling's debt disposed of, and one of the cash distributions completed before the Proposed Transaction, on June 30, 2017, Sterling's remaining assets consisted of approximately USD$19 million in net working capital as at September 30, 2017.

About PetroTal

PetroTal, a company incorporated under the laws of Alberta, is a private junior oil and gas exploration, development and production company formed for the purpose of acquiring, and subsequently enhancing and producing oil and gas from properties in Latin America. PetroTal currently has no production and has not conducted active operations since its incorporation.

Additional Information

Additional information regarding the Proposed Transaction will be made publicly available by Sterling and PetroTal in due course.

For further information, please contact:

John Rapach

Greg Smith

Sterling Resources Ltd.

PetroTal Ltd.

T: +44 7818 418845

T: 713-894-4156

Reader Advisory

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Filing Statement, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

The TSXV has in no way passed upon the merits of the Proposed Transaction 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 release.

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking information or statements. The forward-looking statements and information are based on certain key expectations and assumptions made by Sterling, including expectations and assumptions concerning Sterling, PetroTal, the Resulting Issuer, the Proposed Transaction, the Financing, the timely receipt of court, TSXV and regulatory approvals and the satisfaction of other closing conditions in accordance with the terms of the arrangement agreement entered into between Sterling and PetroTal. Although Sterling believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Sterling can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Sterling undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.


Sterling Resources Ltd. Announces 2017 Third Quarter Financial and Operating Results

Calgary, Alberta, Canada, November 29, 2017 ‐ Sterling Resources Ltd. (TSXV:SLG) (“Sterling” or the “Company”) announces interim operating and financial results for the three and nine month periods ended September 30, 2017. Unless otherwise noted, all figures contained in this release are denominated in United States dollars. The Company’s interim condensed consolidated financial statements and management’s discussion and analysis (“MD&A”) for the reporting period have been filed on SEDAR at www.sedar.com and posted on the Company’s website at www.sterlingresources.com.

On November 9, 2017 Sterling Resources Ltd. (“Sterling”) and PetroTal Ltd. (“PetroTal”) entered into an arrangement agreement (the “Arrangement Agreement”) whereby Sterling and PetroTal will complete a business combination pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Alberta Business Corporations Act (the “PetroTal Transaction”). The Plan of Arrangement will result in the amalgamation of Sterling and PetroTal under the name Sterling Resources Ltd. (“New Sterling”).

Pursuant to the PetroTal Transaction, each common share of PetroTal (“PetroTal Share”) will be exchanged for 5.35 common shares of Sterling (“Sterling Shares”), following which Sterling and PetroTal will be amalgamated to form New Sterling. The PetroTal Transaction is expected to constitute a “Reverse Takeover” pursuant to the policies of the TSX Venture Exchange (the “TSXV”) and is subject to the acceptance of the TSXV. Sterling is at arms’ length to PetroTal.

In addition, PetroTal has entered into a share purchase agreement dated as of November 9, 2017 (the “SPA”) with Sterling, Gran Tierra Energy Inc. (“GTE”), and its wholly owned subsidiary Gran Tierra Energy International Holdings Ltd. (“GTEIH”), to acquire Gran Tierra Energy International (Peru) Holdings B.V. (“GTE Peru”), an indirect wholly-owned subsidiary of GTE. Pursuant to the SPA and in the manner set forth in the Plan of Arrangement, New Sterling shall acquire all of the issued and outstanding common shares in the capital of GTE Peru (the “GTE Peru Shares”) and, in consideration for the GTE Peru Shares, New Sterling shall issue 187,265,918 common shares of New Sterling (“New Sterling Shares”) to GTEIH at a deemed price of approximately $0.1869 per New Sterling Share, subject to adjustment in cash as set forth in the SPA (the “Acquisition”). As additional consideration for the transactions contemplated in the SPA, GTEIH shall receive a 20 per cent working interest in Block 107 of the Bretaña field located in Peru at closing of the Acquisition and, following the drilling of an initial exploration well, GTEIH may, for no additional consideration, elect to either retain its 20 per cent working interest (a “Positive Election”) or transfer its 20 per cent working interest to New Sterling for no consideration. From and after the date of a Positive Election, GTEIH will pay its pro rata share of costs associated with its 20 per cent working interest. GTE is at arms’ length to PetroTal and Sterling.

In conjunction with the closing of the PetroTal Transaction, PetroTal will enter into an agreement with a syndicate of investment dealers (the “Agents”) co-led by Eight Capital and Pareto Securities AS and including PillarFour Securities Inc., for a brokered private placement offering of subscription receipts (“Subscription Receipts”) on a best efforts agency basis at a price of US$1.00 per Subscription Receipt for aggregate gross proceeds of a minimum of US$25 million (the “Financing”). The Financing is expected to close on or about December 7, 2017. Each Subscription Receipt will be exchangeable into one PetroTal Share without any further action required on the part of the holder of the Subscription Receipt and without payment of any additional consideration, upon the closing of the PetroTal Transaction.

While Sterling anticipates the satisfactory completion of the Proposed Transaction, in the event that PetroTal is unable to complete the Financing on satisfactory terms, PetroTal and Sterling will be unable to complete the Proposed Transaction. In that circumstance, Sterling will undertake steps to effect its liquidation and winding up and the distribution of its remaining assets to the Sterling Shareholders as soon as practicable and in the manner previously disclosed to the Sterling Shareholders.

FINANCIAL AND OPERATING HIGHLIGHTS

  • Net working capital was a surplus of $19.0 million as at September 30, 2017, and has increased during the quarter from $17.2 million as at June 30, 2017 following the reversal of the provision for wind-up costs as it is no longer the intention of the company to wind-up.
  • For the nine month period ended September 30, 2017, the Company recorded a net loss of $4.8 million ($0.03 per weighted average Common Share) from continued operations and a loss of $242.9 million ($1.65 per weighted average Common Share) from discontinued operations compared with a net loss of $2.6 million ($0.01 per weighted average Common Share) from continued operations and a net loss of $30.3 million ($0.10 per weighted average Common Share) from discontinued operations in the nine month period ended September 30, 2016. The net loss in 2017, compared to 2016, was much higher following the completion of the ONE Transaction which resulted in a write-down of $172.0 million on the disposed operations.
  • For the three month period ended September 30, 2017, the Company recorded a net income of $1.7 million ($0.01 per weighted average Common Share) for continued operations compared with a net loss of $1.1 million ($0.01 per weighted average Common Share) for continued operations and a net loss of $4.9 million ($0.03 per weighted average Common Share) for discontinued operations in the three month period ended September 30, 2016. The net income in 2017, compared to the net loss in 2016, was mainly due to the reversal of the provision for wind-up costs.

NON-GAAP FINANCIAL MEASURES

This news release contains references to ”Net working capital” which, as used in this news release, is defined as current assets less current liabilities excluding the Cladhan funding arrangements (now disposed of) and is used to monitor the short term financial health of the company. Net working capital (deficit) provides additional information that management believes is meaningful in describing the Company's operational performance, liquidity and capacity to fund capital expenditures and other activities. Net working capital (deficit) does not have a standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other entities. Readers are cautioned that this measure should not be construed as an alternative to other measures of financial performance calculated in accordance with GAAP.

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.

Filer Profile No. 00002072

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 PetroTal Transaction, the Acquisition and the Financing and the wind‐up and dissolution of the Company.

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 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.

ABOUT STERLING

Sterling Resources Ltd. is a Canadian-listed company whose registered office is in Calgary, Alberta. The Common Shares are listed and posted for trading on the TSXV under the symbol “SLG”.

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Sterling Resources Ltd. and Petrotal Ltd. Announce Business Combination, Strategic Acquisition of Operations in Peru and $25 Million Equity Financing

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Calgary, Alberta – November 9, 2017 – Sterling Resources Ltd. (“Sterling”) (TSXV: SLG) and PetroTal Ltd. (“PetroTal”) are pleased to announce that they have entered into an arrangement agreement dated as of November 9, 2017 (the “Arrangement Agreement”) whereby Sterling and PetroTal will complete a business combination pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Alberta Business Corporations Act (the “Transaction”). The Plan of Arrangement steps will result in the combination of Sterling and PetroTal under the name Sterling Resources Ltd. (“New Sterling”).

New Sterling will be led by the existing management team of PetroTal: Manuel Pablo Zúñiga-Pflucker (President, Chief Executive Officer and Director), Gregory E. Smith (Executive Vice President, Chief Financial Officer and Director), Charles R. Fetzner (Vice President, Asset Development) and Estuardo Alvarez-Calderon (Vice President, Operations).

Upon completion of the Plan of Arrangement, New Sterling’s board of directors will be comprised of a combination of representatives from PetroTal (Manuel Pablo Zúñiga-Pflucker, James B. Taylor, and Douglas C. Urch), Sterling (Gavin Wilson and a director yet to be determined) and Gran Tierra Energy Inc. (“GTE”) (Gary S. Guidry and Ryan Ellson).

Summary of the Plan of Arrangement and Related Transactions

Pursuant to the Transaction, each common share of PetroTal (“PetroTal Share”) will be exchanged for 5.35 common shares of Sterling (“Sterling Shares”) and Sterling and PetroTal will be amalgamated to form New Sterling. The Transaction is expected to constitute a “Reverse Takeover” pursuant to the policies of the TSX Venture Exchange (the “TSXV”) and is subject to the acceptance of the TSXV. Sterling is at arms’ length to PetroTal.

In addition, PetroTal has entered into a share purchase agreement dated as of November 9, 2017 (the “SPA”) with Sterling, GTE (NYSE MKT: GTE, TSX: GTE), a Delaware corporation, and its wholly owned subsidiary Gran Tierra Energy International Holdings Ltd. (“GTEIH”), to acquire Gran Tierra Energy International (Peru) Holdings B.V. (“GTE Peru”), an indirect wholly-owned subsidiary of GTE. Pursuant to the SPA and in the manner set forth in the Plan of Arrangement, New Sterling shall acquire all of the issued and outstanding common shares in the capital of GTE Peru (the “GTE Peru Shares”) and, in consideration for the GTE Peru Shares, New Sterling shall issue 187.25 million common shares of New Sterling (“New Sterling Shares”) to GTEIH at a deemed price of approximately USD$0.1869 per New Sterling Share, subject to adjustment in cash as set forth in the SPA (the “Acquisition”). As additional consideration for the transactions contemplated in the SPA, New Sterling will grant GTEIH a 20% working interest in Block 107 at closing of the Acquisition and, following the drilling of an initial exploration well, GTEIH may, for no additional consideration, elect to either retain its 20% working interest (a “Positive Election”) or transfer its 20% working interest to New Sterling for no consideration. From and after the date of a Positive Election, GTEIH will pay its pro rata share of costs associated with its 20% working interest. GTE is at arms’ length to PetroTal and Sterling.

In conjunction with the closing of the Transaction, PetroTal has entered into an agreement with a syndicate of investment dealers (the “Agents”) co-led by Eight Capital (which is a “member” within the meaning of the TSXV’s policies) and Pareto Securities AS (which is not a “member” within the meaning of the TSXV’s policies) and including PillarFour Securities Inc. (which is not a “member” within the meaning of the TSXV’s policies), for a brokered private placement offering of subscription receipts (“Subscription Receipts”) on a best efforts agency basis at a price of USD$1.00 per Subscription Receipt for aggregate gross proceeds of a minimum of USD$25 million (the “Financing”). The Financing is expected to close on or about December 7, 2017. Each Subscription Receipt will be exchangeable into one PetroTal Share without any further action required on the part of the holder of the Subscription Receipt and without payment of any additional consideration, upon the closing of the Transaction. The terms of the Financing are outlined below under the heading “Brokered Financing”.

Strategic Rationale of the Plan of Arrangement and Related Transactions

Management and the board of directors of each of Sterling and PetroTal believe their respective shareholders will benefit from the following attributes of the Transaction:

  • Pure-play Peruvian strategic partnership between Sterling, PetroTal and GTE;
  • Pro forma net cash position of approximately USD$40 million(1);
  • 100% working interest in Block 95 which includes Bretaña, one of the largest undeveloped discoveries in Peru with 330 MMboe of best estimate discovered oil in place and 39.8 (37.6 net) MMbbl of 2C contingent resources (12% recovery factor(2));
  • Substantial infrastructure in place at Bretaña, with the ability to deliver first production by Q4 2018 for USD$24 million in anticipated capital expenditure;
  • Robust netbacks of USD$24/bbl forecasted(3);
  • Fully financed to commercial production at Bretaña targeting 5,000 bbl/d in first half of 2019;
  • Significant recovery factor upside at Bretaña as analogous fields in Peru have achieved recovery factors of approximately 20% - 40% versus 12% estimated for Bretaña(2); and
  • Exploration upside potential with seismically defined Block 107 Osheki prospect.

Notes:

  1. After giving effect the Plan of Arrangement, the Acquisition and the Financing, as well as certain adjustments, including transaction costs.
  2. Based on the NSAI Contingent Resources Assessment (defined below).
  3. Based on USD$55/bbl Brent crude price less USD$7/bbl quality discount, USD$11/bbl lifting costs, USD$6/bbl barging costs, USD$5/bbl pipeline tariff and USD$2/bbl royalty payments.

Overview of New Sterling

Corporate Strategy

New Sterling’s assets will include the Bretaña oil field on Block 95 (100% working interest), Block 107 (80%-100% working interest, depending on whether GTEIH makes a Positive Election to retain its 20% working interest) and Block 133 (100% working interest), which are located onshore Peru.

Following completion of the Transaction, New Sterling’s business plan will be focused on building value through the development and exploration of material oil assets in Peru across its 2.2 million net acres of undeveloped land. New Sterling’s immediate focus is to: (i) develop the Bretaña oil field, one of the largest undeveloped discoveries in Peru, by applying management’s knowledge and leveraging management’s experience with the local suppliers and regulatory bodies; and (ii) secure a farm-in partner to finance the drilling of the large Osheki prospect.

New Sterling’s management team has extensive engineering, geological, geophysical, technical, financial and operational experience and valuable knowledge of oil and gas operations throughout Latin America and, in particular, Peru.

Bretaña – Block 95

Based on an independent assessment of contingent resources with respect to GTE’s Peruvian exploration and development properties in the Bretaña oil field, located in Block 95 of the Marañón basin of Peru, which was completed by Netherland Sewell & Associates, Inc. (“NSAI”), a qualified reserves evaluator as defined in Canadian National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), with an effective date of June 30, 2017 (the “NSAI Contingent Resources Assessment”), and prepared in accordance with the Canadian Oil and Gas Evaluation Handbook and the standards established by NI 51-101, the risked (2C) contingent resources for such properties are:

Peru - Bretaña oil field (Block 95)

Unrisked Contingent Resources(1)(2) 2C

Risk Factor(3)

Risked Contingent Resources(1)(4) 2C

Oil (MMbbl)

39.8 (37.6 net(5))

90%

35.8 (33.8 net(5))

Notes:

  1. All of the contingent resources have been classified as heavy oil with a gravity of 18.5 degrees API. There is uncertainty that it will be commercially viable to produce any portion of the resources.
  2. “Unrisked Contingent Resources” are 100% of the volumes estimated to be recoverable from the field in the event that it is developed.
  3. NSAI has determined that a 90% chance of development is appropriate for the contingent resources based on an assessment of a number of criteria, including: (a) the expected timetable for development; (b) the economics of the project; (c) the marketability of the oil and gas production; (d) the availability of infrastructure and technology; (e) the political, regulatory and environmental conditions; (f) the project maturity and definition; (g) the availability of capital; and (h) the expectation that the operator will undertake development. See “Presentation of Oil and Gas Information”.
  4. The volumes reported here are “risked” in the sense that they have been adjusted for chance of development, meaning the risk that the field may not be developed in the form envisaged or may not be developed at all. The risked contingent resource volumes have been determined by multiplying the un-risked volumes by a 90% chance of development.
  5. The net contingent resources have been determined by deducting the company’s share of royalty burdens from the gross contingent resources.

Exploration Prospects

The initial exploration portfolio consists of the Osheki prospect, located in Block 107. Osheki is a large oil prospect that, if successful, is expected to deliver light sweet crude. The Osheki prospect is anticipated to be part of the same petroleum system as the Los Angeles light oil field located 150 km to the north in the Ucayali Basin and considered to be on trend with the Camisea gas condensate field, with 10.4 TCF of natural gas and 505 MMboe of condensate reserves(1) to the south. PetroTal intends to seek farm-in partners to finance the drilling of an exploration well targeting the Osheki prospect once the Transaction has been completed.

Note:

  1. Peru Ministry of Energy and Mines Annual Hydrocarbon Reserves Book as of December 31, 2015.

Information with respect to PetroTal’s work program and the Assets will be included in the filing statement to be filed on SEDAR in connection with the Transaction at www.sedar.com.

Financial Information

The table below presents selected financial information for PetroTal on a consolidated basis. Neither PetroTal nor its wholly-owned subsidiary, PetroTal LLC, has conducted active operations since their incorporation.

Six Month period ended June 30, 2017(1) (in thousands of U.S. Dollars)

Revenues

-

Expenses

$276.4

Net Loss

$276.4

Total Assets

$2.3

Total Liabilities

$380.5

Total Shareholders’ Deficit

$378.2

Note:

  1. Based on the unaudited interim financial statements prepared in respect of PetroTal LLC for the six month period ended June 30, 2017.

The table below presents selected financial information for GTE’s Peru business on a combined carve-out basis for the year ended December 31, 2016 and for the six month period ended June 30, 2017.

Six Month period ended June 30, 2017(1)

(in thousands of U.S. Dollars)

Year ended December 31, 2016(2)

(in thousands of U.S. Dollars)

Asset Impairment

$444

$30, 601

Net Loss

$1,288

$32,827

Total Assets

$98,643

$98,529

Total Liabilities

$31,700

$467,479

Net Parental Investment

$66,943

$(368,950)

Notes:

  1. Based on the unaudited combined carve-out financial statements prepared in respect of GTE’s Peru business for the six month period ended June 30, 2017 prepared in accordance with IAS 34, ‘Interim Financial Reporting’.
  2. Based on the audited combined carve-out financial statements prepared in respect of GTE’s Peru business for the year ended December 31, 2016 prepared in accordance with International Financial Reporting Standards.

Information with respect to PetroTal’s financial statements and the financial statements of GTE’s Peru business will be included in the filing statement to be filed on SEDAR in connection with the Transaction at www.sedar.com, together with pro forma financial statements of Sterling giving effect to the Transaction.

Brokered Financing

In conjunction with the closing of the Transaction, PetroTal has entered into an agreement with the Agents, for a brokered private placement offering of Subscription Receipts on a best efforts agency basis at a price of USD$1.00 per Subscription Receipt for aggregate gross proceeds of a minimum of USD$25 million. The Financing is expected to close on or about December 7, 2017. Each Subscription Receipt will be exchangeable into one PetroTal Share without any further action required on the part of the holder of the Subscription Receipt and without payment of any additional consideration, upon the closing of the Transaction.

The gross proceeds from the Financing will be held in escrow pending the completion of the Transaction, which is expected to close on or around December 11, 2017. If all conditions to the completion of the Transaction (other than funding) are satisfied on or before December 31, 2017, the net proceeds from the sale of the Subscription Receipts will be released from escrow to PetroTal and each Subscription Receipt will be exchanged for one PetroTal Share. If the Transaction is not completed on or before December 31, 2017, or is terminated at an earlier time, then the purchase price for the Subscription Receipts will be returned to subscribers, together with a pro rata portion of interest earned on the escrowed funds, if any.

The Agents will be entitled to receive from PetroTal a cash commission equal to 6.0% of the gross proceeds of the Financing upon the release to PetroTal of the escrowed funds on the closing date of the Transaction. In addition, PetroTal will issue warrants to the Agents to purchase such number of Subscription Receipts (or PetroTal Shares, Sterling Shares or Resulting Issuer Shares, as applicable) as is equal to 2.0% of the Subscription Receipts sold pursuant to the Financing.

The Agents have the option to purchase up to an additional 3,750,000 Subscription Receipts, exercisable in whole or in part, at any time up to 48 hours prior to closing of the Transaction, for additional aggregate gross proceeds of up to USD$3.75 million.

The net proceeds of the Financing are expected to be used to fund PetroTal’s development program following completion of the Transaction and for general corporate purposes. Completion of the Financing is a condition precedent to the completion of the Transaction. In the event PetroTal is unable to complete the Financing on satisfactory terms, PetroTal and Sterling will be unable to complete the Transaction. In that circumstance, Sterling will undertake steps to effect its liquidation and winding up and the distribution of its remaining assets to the Sterling Shareholders as soon as practicable and in the manner previously disclosed to the Sterling Shareholders.

Sterling and PetroTal intend to issue a press release disclosing further information about the Financing once such information is available.

New Sterling Management Team and Board of Directors

Subject to and following the closing of the Transaction, the directors and officers of New Sterling are expected to be the following individuals:

Manuel Pablo Zúñiga-Pflucker, Chief Executive Officer and Director (Houston, Texas, USA)

Manuel Zúñiga is a petroleum engineer with 30 years of industry experience and was a founder and the President and Chief Executive Officer of BPZ Resources, Inc. (“BPZ Resources”). A native Peruvian, Mr. Zúñiga has extensive experience in Peru, as well as other countries in Latin America, and has established relationships with operators and government agencies in country. Mr. Zuniga holds a Bachelor of Science degree in Mechanical Engineering from the University of Maryland and a Masters of Science degree in Petroleum Engineering from Texas A&M University.

Gregory Smith, Executive Vice President and Chief Financial Officer (Houston, Texas, USA)

Mr. Smith has over 20 years of experience in the oil and gas sector, most recently with Houston based offshore operator Energy XXI and prior to that with BPZ Resources. Mr. Smith holds a Bachelor of Science degree in Communications from Missouri State University and a Masters in Business Administration from the Mays Business School at Texas A&M University.

Charles Fetzner, Vice President, Asset Development (Houston, Texas, USA)

Charles Fetzner is a geologist with over 35 years of experience managing exploration and development projects throughout the USA, Latin America, East and Southeast Asia, North Africa and the Middle East. Previously, Mr. Fetzner has held senior roles with BPZ Resources, Sun E&P/Oryx Energy and Apache Corporation. Mr. Fetzner received a Bachelor of Science degree in Geology from the University of New Hampshire in 1979.

Estuardo Alvarez-Calderon, Vice President, Operations (Houston, Texas, USA and Lima, Peru)

Estuardo Alvarez-Calderon brings more than 35 years of oil and gas experience to New Sterling, 28 of which were with Occidental Petroleum, Americas where he was focused on Latin America & Peru. While at Occidental, Mr. Alvarez-Calderon worked in most of the basins of Peru, including Marañón (Blocks 1-AB, 4, 54, 64 and 101), Ucayali, Huallaga and Madre de Dios. Mr. Alvarez-Calderon received a Bachelor of Science degree in Geology from the University of Texas at Austin and is registered on the Texas Board of Professional Geoscientists.

Sony Gill, Corporate Secretary (Calgary, Alberta)

Sanjib (Sony) Gill is a partner in the Business Law Group in the Calgary office of the national law firm McCarthy Tétrault LLP and has extensive experience in all aspects of a public and private company creation, growth, restructuring and value maximization. Mr. Gill also acts as a corporate secretary for and sits on the board of numerous public and private oil and gas companies. Mr. Gill is a member of the Law Society of Alberta and the Canadian Bar Association.

James B. Taylor, Director (Santa Fe, New Mexico, USA)

James B. Taylor brings more than 45 years of technical and executive experience to the board of directors of New Sterling. He has led global development oil and gas projects in Latin America, Southeast Asia, the Middle East and Russia. Previously, Mr. Taylor has served on the boards of BPZ Resources, Wilbros Group, TMBR-Sharp Drilling, Solana Petroleum of Colombia and Arakis Energy. Mr. Taylor spent a large part of his career with Occidental Petroleum where he held various senior and executive level roles, Including Executive VP of Worldwide Exploration and Development and COO of Canadian Occidental.

Douglas C. Urch, Director (Calgary, Alberta)

Douglas Urch has over 35 years of oil and gas industry experience. Previously, Mr. Urch was the Executive Vice President, Finance and Chief Financial Officer of Bankers Petroleum Ltd. and Vice President, Finance and Chief Financial Officer of Rally Energy Corp. Mr. Urch is a Chartered Professional Accountant (CPA) 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.

Gary S. Guidry, Director (Calgary, Alberta)

Gary Guidry is a professional engineer with more than 35 years of experience developing and maximizing assets in the international oil and gas industry. Mr. Guidry has direct experience managing large, international projects, including assets in Latin America, Africa, the Middle East and Asia. Mr. Guidry is currently the President and Chief Executive Officer of GTE and, most recently, Mr. Guidry was the President and Chief Executive Officer of Caracal Energy (“Caracal”), a London Stock Exchange listed company with operations in Chad, Africa. Mr. Guidry received a Bachelor of Science degree in Petroleum Engineering from Texas A&M University in 1980 and is an Alberta-registered professional engineer and a member of APEGA.

Ryan Ellson, Director (Calgary, Alberta)

Ryan Ellson has more than 17 years of experience in a broad range of international corporate finance and accounting roles. Mr. Ellson is currently the Chief Financial Officer of GTE and, most recently, Mr. Ellson was Head of Finance for Glencore E&P (Canada) and prior thereto Vice President, Finance at Caracal. Mr. Ellson is a Chartered Accountant (CA) and holds a Bachelor of Commerce degree and a Master of Professional Accounting degree from the University of Saskatchewan.

Gavin Wilson, Director (Zurich, Switzerland)

Gavin Wilson is a Director of Sterling and an Investment Manager for Meridian Group of Companies, a private investment company. Mr. Wilson was the Founder and Manager of RAB Energy and RAB Octane, listed investment funds, from 2004 until 2011. From 1992 to 2003, he worked with Canaccord Capital London, an investment banking company, as Head of Oil and Gas, responsible for sales and Corporate Brokering/Finance. He holds a Bachelor of Arts degree in French History and Civilization.

The Transaction

Pursuant to the Transaction:

  1. subject to the terms of the Arrangement Agreement, each holder of PetroTal Shares shall be deemed to have exchanged such PetroTal Shares for Sterling Shares and shall receive 5.35 Sterling Shares for each PetroTal Share held by such shareholder;
  2. each PetroTal purchase warrant, each such warrant entitling the holder thereof to acquire one PetroTal Share, that is not exercised immediately prior to closing of the Transaction shall be adjusted in accordance with paragraph (i) above;
  3. PetroTal and Sterling will amalgamate and continue as one corporation operating in the oil and gas industry segment; and
  4. the Acquisition shall be completed.

Completion of the Transaction is subject to the satisfaction of a number of conditions, including, but not limited to: (i) completion of the Financing for minimum gross proceeds of no less than USD$25 million; (ii) the PetroTal Approvals (as defined below) have not been withdrawn, amended, changed or otherwise qualified; (iii) receipt of Court approval of the Transaction; (iv) satisfaction or waiver of all of the conditions to the closing of the Acquisition, other than those which shall be satisfied under the Plan of Arrangement; (v) receipt of TSXV conditional approval for the Transaction and the issuance of Sterling Shares pursuant to the Transaction; and (vi) receipt of all regulatory, governmental and third party approvals required prior to completion.

The current holders of PetroTal Shares and warrants to acquire PetroTal Shares have each unanimously resolved to approve the Transaction (collectively, the “PetroTal Approvals”). Sterling will not be required to obtain shareholder approval of the Transaction pursuant to section 4.1 of TSXV Policy 5.2 as a result of the following factors: (i) the Transaction is not a “Related Party Transaction” (within the meaning of the TSXV’s policies); (ii) Sterling is without active operations; (iii) Sterling is not and will not be subject to a cease trade order or suspended from trading upon completion of the Transaction; and (iv) Sterling Shareholder approval of the Transaction is not required to be obtained under applicable corporate or securities laws.

Eight Capital is acting as financial advisor to PetroTal with respect to the Transaction. Eight Capital has provided a formal opinion that, subject to the various factors, assumptions, qualifications and limitations upon which the opinion is based, the consideration to be received by PetroTal pursuant to the Transaction is fair, from a financial point of view, to PetroTal’s shareholders.

PillarFour Securities LLP is acting as financial advisor to Sterling with respect to the Transaction. PillarFour Securities LLP has provided a formal opinion that, subject to the various factors, assumptions, qualifications and limitations upon which the opinion is based, the consideration to be paid by Sterling pursuant to the Transaction is fair, from a financial point of view, to Sterling (the “Sterling Fairness Opinion”).

After considering, among other things, the Sterling Fairness Opinion and other relevant matters including the effects of the Transaction on the Sterling Shareholders and other stakeholders of Sterling, the board of directors of Sterling has unanimously determined that the Transaction is in the best interests of Sterling and fair to the Sterling Shareholders.

Upon closing of the Transaction: (i) New Sterling is expected to have approximately USD$40 million in cash; and (ii) GTE is expected to own, control or direct approximately 38%(1) the Sterling Shares issued and outstanding but, pursuant to an agreement to be entered into with New Sterling at closing, will be restricted from exercising voting rights for greater than 30% of the Sterling Shares outstanding from time to time.

Trading of the Sterling Shares will be halted until the Transaction has closed.

Note:

  1. GTE’s ownership is based on equity consideration received pursuant to the Acquisition. Resulting Issuer Shares received by GTE pursuant to the Acquisition will be subject to escrow with the following release schedule: 10% at closing of the Transaction, 15% after 6 months, 15% after 12 months, 15% after 18 months, 15% after 24 months, 15% after 30 months and 15% after 36 months post-closing of the Transaction.

About Sterling

Sterling is a publicly-traded company listed on the TSXV, and incorporated under the laws of Alberta. Sterling was previously engaged in the exploration for, and the development and production of, crude oil and natural gas in the United Kingdom and the Netherlands. In May 2017, before the Transaction was entered into, Sterling commenced a plan to wind-up and dissolve the company. The plan involved redeeming all issued and outstanding bonds, cancelling and paying in full Sterling’s credit facilities, disposing of all funding arrangements for projects, and completing three consecutive cash distributions to the holders of Sterling Shares (“Sterling Shareholders”), with the final cash distribution set to be issued immediately prior to Sterling’s formal dissolution. With all of Sterling’s debt disposed of, and one of the cash distributions completed before the Transaction, on June 30, 2017, Sterling’s remaining assets consisted of approximately USD$19.0 million in net working capital as at Sept 30, 2017.

About PetroTal

PetroTal, a company incorporated under the laws of Alberta, is a private junior oil and gas exploration, development and production company formed for the purpose of acquiring, and subsequently enhancing and producing oil and gas from properties in Latin America. PetroTal currently has no production and has not conducted active operations since its incorporation.

The current directors and officers of PetroTal are: Manuel Pablo Zúñiga-Pflucker (President, Chief Executive Officer and Director), Gregory E. Smith (Executive Vice President, Chief Financial Officer and Director), Charles R. Fetzner (Vice President, Asset Development), Estuardo Alvarez-Calderon (Vice President, Operations) and Sony Gill (Director).

As of the date of this press release, 4,000,001 PetroTal Shares are issued and outstanding.

As a group, the directors and senior officers of PetroTal own or control (directly or indirectly) 1,844,933 PetroTal Shares representing approximately 46% of the outstanding PetroTal Shares.

Additional Information

Additional information regarding the Transaction and PetroTal will be made publicly available by Sterling in due course, including pursuant to the filing statement to be filed on SEDAR in connection with the Transaction at www.sedar.com.

Sterling will apply to the TSXV for an exemption from the sponsorship requirements in connection with the Transaction. There is no assurance that such exemption will be granted.

PetroTal’s work program and other oil and gas information regarding PetroTal and the Assets will be submitted to the TSXV for its review.

For further information, please contact:

John Rapach

Sterling Resources Ltd.

T: +44 7818 418845

Greg Smith

PetroTal Ltd.

T: 713-894-4156

Abbreviations

bbl

barrels

bbl/d

barrels per day

MMbbl

million barrels

boe

barrels of oil equivalent

boe/d

barrels of oil equivalent per day

MMboe

million barrels of oil equivalent

TCF

trillion cubic feet

Presentation of Oil and Gas Information

For the purpose of calculating unit costs, natural gas volumes have been converted to a boe using six thousand cubic feet equal to one barrel unless otherwise stated. A boe conversion ratio of 6:1 is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion conforms to NI 51‑101. Boe may be misleading, particularly if used in isolation.

Contingent resources are the quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology underdevelopment, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies are conditions that must be satisfied for a portion of contingent resources to be classified as reserves that are: (a) specific to the project being evaluated; and (b) expected to be resolved within a reasonable timeframe. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.

Estimates related to contingent resources:

Estimated cost to achieve commercial production

General timeline including the estimated date of first commercial production

Estimated recovery technology (conventional or unconventional)

Basis of project (conceptual or pre-development)

Bretaña (Block 95)

USD$22.1 million

10-12 months

conventional

pre-development

Estimates of contingent resources included in this press release relating to the Bretaña oil field are based upon the NSAI Contingent Resources Assessment.

The estimates of contingent resources provided in this press release are estimates only and there is no guarantee that the estimated contingent resources will be recovered. Actual contingent resources may be greater than or less than the estimates provided in this press release and the differences may be material. There is no assurance that the forecast price and cost assumptions applied by NSAI in evaluating the contingent resources will be attained and variances could be material. There is uncertainty that it will be commercially viable to produce any part of the contingent resources.

Estimates of contingent resources are by their nature more speculative than estimates of proved reserves and would require substantial capital spending over a significant number of years to implement recovery. Actual locations drilled and quantities that may be ultimately recovered from our properties will differ substantially. In addition, we have made no commitment to drill, and likely will not drill, all of the drilling locations that have been attributable to these quantities.

The contingent resources estimates that are referred to herein are risked as to chance of development (i.e. the level of risk associated with the chance of development was assessed by NSAI as part of the evaluations that were conducted). Risks that could impact the chance of development include, without limitation: geological uncertainty and uncertainty regarding individual well drainage areas; uncertainty regarding the consistency of productivity that may be achieved from lands with attributed resources; potential delays in development due to product prices; access to capital; availability of markets and/or take-away capacity; and uncertainty regarding potential flow rates from wells and the economics of those wells. Risk assessment is a highly subjective process dependent upon the experience and judgment of the evaluators and is subject to revision with further data acquisition or interpretation.

The following classification of contingent resources is used in the press release:

  • Low Estimate (or 1C) means there is at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
  • Best Estimate (or 2C) means there is at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
  • High Estimate (or 3C) means there is at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

In general, the significant factors that may change the contingent resources estimates include further delineation drilling, which could change the estimates either positively or negatively, future technology improvements, which would positively affect the estimates, and additional processing capacity that could affect the volumes recoverable or type of production. Additional facility design work, development plans, reservoir studies and delineation drilling is expected to be completed by New Sterling in accordance with its long-term resource development plan.

Reader Advisory

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Sterling should be considered highly speculative.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction 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 release.

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning the Transaction, the Acquisition and the Financing, the expected composition of the board of directors of New Sterling, the application to the TSXV in respect of the Transaction, New Sterling’s business strategy, objectives, strength and focus, New Sterling’s capital expenditure program and expectations regarding drilling, production and the timing thereof.

The forward-looking statements and information are based on certain key expectations and assumptions made by Sterling, including expectations and assumptions concerning: Sterling, PetroTal, GTE, GTEIH, the Assets, New Sterling, the Acquisition, the Financing and the Transaction, the negotiation of the Financing on satisfactory terms, the timely receipt of all required securityholder, Court, TSXV and regulatory approvals, the satisfaction of other closing conditions in accordance with the terms of the Arrangement Agreement and the SPA, anticipated netbacks, the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, the need for incremental financing to commercial production, reservoir characteristics, recovery factor, exploration upside, prevailing commodity prices and the actual prices received for New Sterling’s products, the availability and performance of drilling rigs, facilities, pipelines and other oilfield services, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital and skilled personnel, and the accuracy of New Stering’s geological interpretation of its drilling and land opportunities.

Although Sterling believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Sterling can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to, the results of the due diligence review on any of Sterling, PetroTal or GTE by another party are less than satisfactory, the failure to complete the Financing on satisfactory terms or the parties are unable to obtain the required TSXV and shareholder approvals, risks associated with the oil and gas industry in general (e.g. operational risks in development, exploration and production, and delays or changes in plans with respect to exploration or development projects or capital expenditures), commodity prices, the uncertainty of estimates and projections relating to production, cash generation, costs and expenses, health, safety, litigation and environmental risks, access to capital as well as additional risks associated with operating in a developing country. Due to the nature of the oil and natural gas industry, drilling plans and operational activities may be delayed or modified to react to market conditions, results of past operations, regulatory approvals or availability of services causing results to be delayed. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Sterling undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.


Sterling Resources Ltd. Announces Discussion Regarding a Potential Transaction with a Third Party and Delay in Second Distribution

Calgary, Alberta, Canada, October 2, 2017‐ Sterling Resources Ltd. (TSX‐V:SLG) (“Sterling” or the “Company”) announces that it is engaged in preliminary discussions regarding a potential transaction with a third party involving a potential reverse take‐over of the Company. No agreement has been reached and there is no assurance that these discussions will continue, that any transaction will be agreed upon or the terms and conditions of any such transaction.

As a result, and until the conclusion, of such discussions, the board of directors of the Company has determined to delay the declaration and payment of the previously proposed second distribution which was originally anticipated to be made on or prior to September 30, 2017.

Management of the Company anticipates that discussions in relation to the potential transaction will be concluded by the end of October, at which time a public announcement will be made either in respect of the entrance into the transaction or in respect of the declaration of the second distribution and the associated record and distribution date thereof. Until such time, the Company will not make any further public announcement in relation to this matter.

Sterling is a Canadian‐listed company whose registered office is in Calgary, Alberta. The common shares are listed and posted for trading on the Toronto Stock Exchange Venture (TSX‐V) exchange under the symbol “SLG”.

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

Filer Profile No. 00002072

Forward-Looking Statements

All statements included in this news release that address activities, events or developments that Sterling expects, believes or anticipates will or may occur in the future are forward‐looking statements. In particular, this news release contains forward‐looking statements with respect to discussions in respect of a potential transaction and the results thereof and the declaration and payment of the second distribution.

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. Readers should also carefully consider the matters discussed under the heading “Risk Factors” in the Company’s Annual Information Form.

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 forwardlooking statements except as required by law.

For further information: visit www.sterling-resources.com or contact:

John Rapach, 
Chief Executive Officer
Phone: +44 7818 418845
john.rapach@sterling‐resources.com