CALGARY, Feb. 19, 2013 /CNW/ - Stream Oil & Gas Ltd.
(TSX-V: SKO) ("Stream" or the "Company") is pleased to announce
that it has signed a gas sales agreement (the "Agreement") to sell
gas production from its Delvina field to Thermo Energy Albania Shpk
("Thermo Energy"). Thermo Energy intends to develop and build a 24
megawatt ("MW") thermal power plant in Delvina, Albania, utilize Stream's gas production and
sell the generated electricity to KESH (an Albanian power company)
and other clients. The Agreement is key to Stream's plans to
develop the potential of its substantial gas resource, which is
expected to result in future growth in production and reserves.
The Agreement provides for the delivery of
sufficient gas to power the 24 MW facility at 100% capacity.
The initial start-up unit of 2.2 MW of the plant will require
approximately 0.5 MMcf/d of gas from Stream, increasing to 6.5
MMcf/d when the plant is fully operational. Gas delivery is
expected to commence in the second quarter of 2013. The
Agreement has a term of one year, at which time the parties will
meet to negotiate a longer term agreement based on market pricing
and corresponding quantities. Stream will receive US$8.90/mcf for its gas in the first year; once
the Agreement is extended, the new price will be negotiated based
on European indexed natural gas prices.
Stream currently has the capacity to produce
approximately 2.5 MMcf/d from its Delvina field from two vertical
wells, Delvina 12 and 4. In order to increase productive
capacity to 6.5 MMcf/d, detailed preparations for the drilling of
the first horizontal well continues with the commencement of field
activities expected in 2013. The Delvina field is estimated to hold
approximately 184 BCF, with another 431 BCF from the adjacent
structures, of gas initially-in-place ("GIIP") according to
Stream's 2011 independent resource evaluation report.
"The signing of this agreement is a major step
forward in the development of the Delvina field," said Dr.
Sotirios Kapotas, President and
Chief Executive Officer. "In addition to providing benefit to
Stream in terms of revenue and justifying the drilling of the
horizontal well, the construction of the plant will assist in
creating in-country electricity generation for Albania and its people."
This is the first natural gas fired thermal
power plant to be constructed in Albania. The local Ministry of Environment
welcomes green power and the stable delivery of electrical power to
the country. With a growing demand for power, Albania currently relies on approximately 95%
of its electricity from existing hydropower plants with additional
power imported to balance the country's power demand and backup
production during dry and drought periods. As a result,
Albania is extremely dependent on
externally generated power and experiences blackouts or loss of
power from time to time.
Stream's activities in Delvina are expected to
provide significant reserve additions for the Company as reserves
and resources are converted to proved and probable reserves.
With this conversion Management anticipates growth in production
and cash flow resulting in increased shareholder value.
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Forward-Looking Statements
Information in this news release respecting
matters such as plans of development or exploration, reserves
estimates, production estimates and targets, development costs,
work programs and budgets constitute forward-looking information
(collectively, "forward-looking statements") under the meaning of
applicable securities laws, including Canadian Securities
Administrators' National Instrument 51-102 Continuous Disclosure
Obligations. Such forward-looking information is based on certain
assumptions, including the availability of funds for capital
expenditures necessary to construct the infrastructure required for
future development, a favorable political and economic operating
environment, a consistent rate of well re-completions and costs,
success rates, production performance and build-up periods for well
re-completions that are consistent with or an improvement over
historical levels.
The forward-looking statements contained
herein are made as of the date of this release solely for the
purpose of generally disclosing Stream's results and status of its
Delvina project. Investors are cautioned that these forward-looking
statements are neither promises nor guarantees, and are subject to
risks and uncertainties that may cause future results to differ
materially from those expected. Such forward-looking information
reflect management's current beliefs and are based on assumptions
made by and information currently available to the Company, and
involves known and unknown risks, uncertainties and other factors
which may cause the actual costs and results of the Company and its
operations to be materially different from estimated costs or
results expressed or implied by such forward-looking statements.
Such factors include, among others political and economic risks
associated with foreign operations, general risks inherent in
petroleum operations, risks associated with equipment procurement
and equipment failure, availability of qualified personnel, risks
associated with transportation, currency and exchange rate
fluctuations and other general risks inherent in oil and gas
operations.
Contingent resources disclosed herein
represent those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations, using
established technology or technology under development, but which
are not currently considered to be commercially recoverable due to
one or more contingencies. There is no certainty that any portion
of the resources will be discovered. If discovered, there is no
certainty that it will be commercially viable to produce any
portion of the resources.
Although the Company has attempted to take
into account important factors that could cause actual costs or
results to differ materially, there may be other factors that cause
costs and timing of the Company's program or results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking information. These forward-looking
statements are made as of the date hereof and the Company does not
assume any obligation to update or revise them to reflect new
events or circumstances except as required under applicable
securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses
production and reserve volumes on a barrel of oil equivalent (Boe)
basis whereby natural gas volumes are converted at the ratio of six
thousand cubic feet of natural gas to one barrel of oil. Boe may be
misleading particularly if used in isolation. A Boe conversion
ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
About Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based
emerging oil and gas production, development and exploration
company focused on the re-activation and re-development of three
oilfields and a gas/condensate field in Albania. The Company's strategy is to use
proven technology, incremental and enhanced oil recovery techniques
to significantly increase production and reserves.
Neither 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 release.
SOURCE Stream Oil & Gas Ltd.