Stratic Energy Corp - Results and Reserves for 2007

RNS Number:5337S
Stratic Energy Corporation
17 April 2008

NEWS RELEASE

Results and Reserves for 2007 and Operations Update

CALGARY and LONDON, April 17, 2008 - Stratic Energy Corporation (TSX Venture: '
SE', AIM 'SE.') ("Stratic" or the "Company") announces its results for 2007, a
summary of reserves, including reserves evaluation, and provides an update on
its operations. The reserves and reserve evaluation have been independently
assessed by Ryder Scott Company, L.P. in accordance with the standards specified
by Canadian National Instrument 51-101.

Highlights in 2007:

Reserves

• Net proved and probable reserves increased by 298% from 4.8 mmboe to 19.1
mmboe, of which 60% are in the North Sea, 39% in Italy and 1% in Turkey

• Present value of proved and probable reserves (pre tax) of US$568.8
million, based on year end commodity prices and a 10% discount rate. Post
tax present value on the same basis is US$353.2 million

• Further contingent resources in Breagh, Cairngorm and Bowmore in North Sea
and Turkey Phase II project provide upside to present value of proved and
probable reserves

Corporate

• Acquisition of Grove Energy Limited for US$103 million provided valuable
mix of development and appraisal projects: Longansesi gas discovery in
Italy, Horizon West oil discovery and Breagh gas discovery in North Sea

• Portfolio rationalisation resulting in withdrawal from Morocco, Tunisia,
Romania and deepwater Sicily Channel for net proceeds of US$6 million

• Stratic shares listed on AIM in London in June 2007

Operational

• West Don field development plan submitted and expected to be approved
imminently; key contracts for drilling rig and floating production vessel
awarded

• Development planning work on Horizon West and Turkey Phase II projects
advanced and now in final stages of evaluation; expect to sanction both
projects by mid year 2008

• Reached agreement with ENI for the development of Longanesi gas discovery
in Italy; project team mobilised, development plan, production licence
application and environmental permits expected to be submitted mid year 2008

• Successful appraisal well on Crawford in North Sea moves project into
development planning phase; target to submit field development plan by end
2008

• Successful appraisal well on Breagh in North Sea to be followed up with up
to three further wells commencing mid 2008; target to submit a field
development plan in early 2009

• Gas tested from three exploration wells in the Black Sea, Turkey following
on from the initial deeper water discovery well drilled at the end of 2006.
Provides basis for further gas development

• Results of 3D seismic interpretation and reservoir engineering studies
upgrade potential of Cairngorm discovery in North Sea; planning underway for
well in late 2008 to test potential high productivity of fractured granite
reservoir

• Extensive 2D seismic survey completed over Block 17, Syria; numerous
attractive prospects identified for exploration drilling campaign in late
2008

• First gas from Turkey Phase I project in May 2007 provides valuable cash
flow but fails to meet production expectations; net reserves in Turkey
downgraded by 1.0 mmboe

Financial (all amounts in US dollars)

• Net loss for year of $47.3 million, reflecting Turkey reserves downgrade
and exceptional expenses; loss of $21.5 million (2006: $11.2 million)
excluding these items

• Total assets increased to $260.6 million; shareholders' equity increased
by 250% to $157.2 million

• Convertible notes issue raises $42.5 million in March 2008

• New bank facilities totaling $150 million secured in 2008.

Kevin Watts, Stratic's President and Chief Executive Officer, commented:

"We have built a strong foundation for the company in 2007. Our booked reserves
have quadrupled, we advanced all of our development projects, and we have
drilled six successful wells out of six to provide future growth. We intend to
build on this foundation through a busy and exciting program in 2008. The six
development projects underway or in the development planning stage demonstrate
the scale of our recent progress and the potential we believe our portfolio
holds. Ongoing work on all these projects in 2008 will bring closer the material
production growth we set out to deliver.

Looking ahead, at Cairngorm, which we operate, we have the opportunity to add
further significant production volumes to our short-term profile, while wells on
East Breagh and in Syria provide longer term appraisal and exploration upside.
At the Longanesi gas field in Italy, which gives the company valuable exposure
to the buoyant European gas market, we expect the pace of activity to pick up as
the project team gains traction.

I am delighted that we have able to secure financing for our forward program on
good terms in extremely volatile market conditions. We can now look forward with
confidence to the production and cash flow growth the portfolio is capable of
delivering."

Reserves summary

The Company has today filed its annual statement (Form NI 51-101) of oil and gas
reserves data as at December 31, 2007, which includes a report from the
Company's independent reserves evaluator. The full annual statement is available
on the Company's website and will be available at www.sedar.com. Net proved and
probable reserves have increased from 4.8 mmboe at December 31, 2006 to 19.1
mmboe at December 31, 2007, as summarised below:

Net proved plus probable reserves: (2) Oil Gas Total
(mmbbls) (bcf) (mmboe)(1)
December 31, 2007 11.4 46.0 19.1
December 31, 2006 3.5 7.7 4.8

Present value cash flows of net proved and probable reserves as at December 31,
2007:

Present value cash flow, net proved plus PV 10 % before PV 10 % after
probable reserves:
income taxes income taxes
(US$ millions) (US$ millions)
Forecast price and cost assumptions 478.0(3) 298.8
Constant price and cost assumptions 568.8 353.2

(1) The boe conversion ratio of 6 mcf: 1 bbl is based on an energy
equivalency and does not necessarily represent value equivalency at the wellhead

(2) Based on forecast price and cost assumptions

(3) As evaluated by Ryder Scott Company, L.P.

The increase in net proved and probable reserves reflects: the reserves acquired
as part of the Grove Energy acquisition, the recognition of proved and probable
reserves attributable to the Crawford field in the UKCS following the successful
appraisal well drilled on that field last year, net of a downward adjustment in
proved and probable reserves of 1.0 mmboe attributable to the Company's assets
in Turkey. This adjustment principally reflects poorer-than-expected production
performance from the East Ayazli field and the decision to re-categorise the
deeper water Akcakoca area volumes which could be developed under Phase II as
contingent resources rather than reserves.

Operational update

Development and production:

In the UK sector of the North Sea, Stratic's field developments are making
excellent progress. Late in 2007, the Field Development Programme ("FDP") for
the West Don oil field (Stratic 17.25%) was submitted for UK Government
approval, a drilling rig contract for the development drilling was signed and
the Northern Producer floating production facility secured under a flexible
lease arrangement. Government approval of the West Don FDP is expected in the
second quarter of 2008. Development drilling on West Don and its sister field,
Don South West, will commence once the John Shaw semi-submersible drilling rig
is released from its current contract (currently anticipated in late July 2008)
and is expected to continue through to March 2009, with first oil expected
shortly thereafter.

At the Crawford oil field (Stratic 19.0%) the partners have moved the project
into the development planning phase, with a target of submitting a FDP by the
end of 2008, following the successful appraisal well drilled late last year.
Work throughout 2008 will consist of reservoir engineering studies, facilities
engineering studies, offtake identification and negotiation, development
optimisation and preparation of the FDP and environmental impact assessment.

In the Dutch sector of the North Sea, the Horizon West (block P8a; Stratic 48%
of field unit) project operator, Chevron, is finalising the development plan,
budget and arrangements with host infrastructure owners. Following the front-end
engineering and design ("FEED") study conducted by the operator, the budget has
increased from earlier estimates reflecting the requirement for a heavyweight
jack-up drilling unit and more extensive host platform modifications. The
partnership is reviewing the impact of these changes prior to investment
approval, which is targeted for mid 2008. Drilling activity will depend on the
availability of a suitable jack-up rig, but is expected to commence in the
second half of 2008.

In Italy, the operator for the Longanesi gas field development, ENI, has
mobilised the project team and expects to submit the field development plan to
the authorities by mid 2008. The approval process covering this plan and the
related environmental impact assessment involving a number of different
licensing authorities will then follow, with construction and drilling work on
site expected to commence in the second half of 2009.

In Turkey, gas production from the South Akcakoca Sub-Basin ("SASB") Phase I
development resumed from the Akkaya and East Ayazli fields on February 11, 2008
and commenced from the Ayazli field on March 14, 2008. Production levels are
currently around 27 mmscf per day (gross, Stratic share: 3.3 mmscfd or 550
boepd). Further remedial work is under evaluation to optimise production over
the balance of the year. Phase II of the development of the deeper water SASB
discoveries made in late 2006 and early 2007 is nearing completion of the
project definition phase. Stratic currently has a more conservative estimate of
recoverable volumes for this phase of development than the operator, TPAO,
requiring a measured approach to the investment decision.

Exploration and appraisal:

Stratic's exploration and appraisal drilling program for the next 18 months is
now firming-up and is expected to include the drilling of around eight wells
over that period. These are expected to include appraisal wells on the Breagh,
Cairngorm and Bowmore discoveries in the UK North Sea, and an onshore
exploration well on Block 17, Syria.

At Breagh (Stratic 10%), the Company plans to drill at least two and possibly
three wells in 2008 following the successful West Breagh appraisal well 42/13-3
drilled in late 2007. We recently announced that the Ensco 70 drilling rig has
been secured for the 2008 Breagh drilling program, which is planned to include a
further appraisal/development well on West Breagh designed to test the
productivity of a high-angle section in this reservoir in order to optimise the
development plan. Conceptual development planning work has also commenced. A
second well will be drilled to test a large mapped extension of the structure to
the east, which is potentially larger than the existing West Breagh discovery.

At Cairngorm (blocks 16/2b and 16/3d; Stratic 50% and operator), Stratic has now
completed the subsurface study of the fractured granite reservoir encountered in
the original 16/3a-11 discovery well and has concluded that the recorded flow
rate of 2,900 bopd was impacted by the premature cementing of the well prior to
testing. Fracture studies based on detailed picks from the 3D seismic data,
integrated with regional stress information, have led to the development of a
dynamic reservoir model that suggests that the Cairngorm granite can be
commercially developed. Interpretation of the 3D seismic acquired last year has
also led to a maturation of several prospects and leads in the shallower
Tertiary sandstones. Stratic is planning a well to target two of the Tertiary
prospects and then intersect the Cairngorm granite reservoir adjacent to the
original well, with the intention of intersecting the same fracture system. The
well will be designed to be used as the first of two production wells. A site
survey was completed in February 2008 and a drilling unit for a second half 2008
spud is currently being sourced. If the well is successful it is anticipated
that Cairngorm could demonstrate high productivity, and therefore has potential
for attractive early cash flow.

At Bowmore (block 15/24a; Stratic 30%), the operator, Nippon Oil, is undertaking
well planning activities with a view to spudding an appraisal well on this gas
condensate discovery around the end of 2008 or early 2009. The well will be
designed to test the interpreted extension and thickening of reservoir sand
down-dip. Stratic expects that it will farm out part of its equity in Bowmore
prior to drilling.

At Block 17, Syria (Stratic 35% and operator), new seismic data acquired in 2007
has now been interpreted with very encouraging results. The partnership is
currently reviewing the prospect inventory with a view to selecting a target to
drill in the fourth quarter of 2008. There are encouraging signs that it may be
possible to advance the development of any new discoveries independently of the
nearby discoveries in the Palmyra Gas Basin.

Looking further ahead, Stratic is planning for at least two operated wells in
the North Sea in 2009: an exploration well on Block 210/20a in the UK sector and
a likely appraisal well on one of the existing discoveries on the F Quad blocks
in the Dutch sector.

Financial:

The Company has today filed its Management's Discussion and Analysis (MD&A) and
the audited Consolidated Financial Statements for 2007, which are available on
the Company's website and will be available at www.sedar.com.

The following table summarises the financial results reported today:

2007 2006

Total revenues ($000) 3,293 676

Net loss ($000) 47,288 11,222
per share - basic ($) (0.20) (0.08)
per share - diluted ($) (0.20) (0.08)

Petroleum and natural gas additions ($000) (1) 47,879 32,426
Total assets ($000) 260,645 54,249
(Net debt)/cash ($000) (28,206) (3,787)
Shareholders' equity ($000) 157,166 44,936

1 Excluding Grove Acquisition

The net loss for the year ended December 31, 2007 was $47.3 million compared
with a loss of $11.2 million for the same period last year. This result includes
a non-cash impairment charge for in the fourth quarter in respect of the
Company's Turkey properties of $29.4 million, as a result of the reduction in
reserves for the Turkish properties of 1.0 mmboe. The result also includes a
$6.9 million credit for future taxes in Italy resulting from a reduction in the
rate of Italian corporate tax and other one-off expenses relating to the Grove
acquisition and AIM listing of $3.3 million. The result excluding these items
was therefore a loss of $21.5 million, compared with a loss of $11.2 million for
2006.

Stratic has secured new finance facilities totaling $192.5 million in early
2008. These facilities comprise $150 million of new bank facilities and a $42.5
million issue of 9% convertible notes, due 2013. These notes are convertible
into Stratic shares at a price of $1.00 per share, which represented a premium
of 45% over the share price at the time of issue. The new bank facilities
comprise: a $110 million senior, secured Borrowing Base facility, a $5 million
working capital facility and a $35 million Undeveloped Asset-Backed ("UDAB")
facility. The Borrowing Base facility will be used principally to finance
Stratic's share of capital expenditure on its portfolio of development assets
while the UDAB Facility is available for funding expenditure on approved
pre-development assets. The facilities have also been used to retire existing
bank debt.

Stratic anticipates capital expenditures of around $100 million in 2008, with
the majority of this expenditure incurred on its field development projects.
This expenditure will be funded from the proceeds of the new convertible note
issue, debt facilities, operating cash flow and existing resources.

For further information contact:

Kevin Watts, Chief Executive Officer +44 20 7766 7900
Peter Thomas, Chief Financial Officer +44 20 7766 7920
Mark Bilsland, Chief Operating Officer +44 20 7766 7900

Patrick d'Ancona, M:Communications +44 20 7153 1547

Canadian Investor Relations
Roger Fullerton +1 952 929 7243
Email: roger.fullerton@straticenergy.com

Website: www.straticenergy.com

About Stratic: Stratic Energy Corporation is a Canadian-incorporated
international oil and gas business focused on adding value principally through
the appraisal, development and production of existing discoveries, supplemented
by a low to moderate risk exploration program. Stratic's principal interests are
in the UK and Dutch sectors of the North Sea, Italy, Turkey and Syria. Its
shares are listed on the TSX Venture Exchange in Toronto and on AIM, London and
its principal operating office is in London, UK.

Forward-looking statements

This news release contains certain forward looking statements, which involve
assumptions with respect to future plans, production levels and results, and
capital expenditures. The reader is cautioned that all such forward looking
statements involve substantial risks and uncertainties and the assumptions used
in their preparation may not prove to be correct. Stratic's actual results could
differ materially from those expressed in, or implied by, these forward looking
statements and accordingly, the forward looking statements are qualified by
reference to these cautionary statements. The forward looking statements
contained herein are made as at the date of this news release. Stratic
undertakes no obligation to update or publicly revise forward looking statements
or information unless so required by applicable securities laws.

TSX-V and AIM notifications

The TSX Venture Exchange has not reviewed and does not accept responsibility for
the adequacy or accuracy of the contents of this release.

Stratic's Chief Operating Officer, Dr Mark Bilsland BSc (geology), PhD
(petroleum petrophysics), and member of the SPE, is the qualified person who has
reviewed and approved the technical information in this announcement for the
purposes of the AIM Rules for Companies (incorporating the Guidance Note for
Mining, Oil and Gas Companies).

This information is provided by RNS
The company news service from the London Stock Exchange
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