CALGARY, June 20, 2011 /CNW/ - Sterling Resources Ltd. (TSX-V:SLG) ("Sterling" or the "Company") has filed a Notice of Dispute with the State of Romania under the Treaty for the Promotion and Reciprocal Protection of Investments between Romania and Canada (the "Treaty"). The Notice of Dispute was filed on June 20th, 2011 as a result of deliberate and discriminatory actions taken against the Company's investments on its Midia and Pelican Blocks in the Black Sea (the "Concession"). These actions include media attacks and various actions to block the progress of the Company's activities in its offshore license blocks.
The actions that have been taken by the State of Romania date back to early 2009. Sterling had a highly successful exploration campaign in 2008, and in February 2009 a territorial dispute with Ukraine affecting portions of the Concession area was resolved in Romania's favour. Immediately after this, an intense media campaign was initiated by Romanian public officials in the Romanian press including prejudicial and unfounded speculation regarding the legality of the Concession Agreement. There were also unfair and biased enquiries conducted by the Investigation Commission of the House of Deputies and by other Romanian State bodies. Later this gave way to sustained blockages on a number of fronts including the refusal to grant assignments to prospective assignees and the inability to obtain environmental and construction permits. In general, there also exists an inability to receive market prices for domestically-produced gas and an inability to export gas or receive equitable access to the National Transmission System. In addition, the Romanian authorities instructed the Prosecutor's Office Department for Investigation of Organized Crime and Terrorism ("DIICOT") to undertake an inquiry into the process followed by the government authorities when issuing the Concession agreement. Although we understand that the ongoing investigation is not directed against Sterling, its continued existence and slow pace have given rise to rumours and innuendo which tarnishes Sterling's reputation and have a severely detrimental effect on Sterling's ability to obtain timely and unbiased treatment from governmental authorities.
The Company has used quiet diplomacy in order to defend and protect its lawful rights under the Concession agreement. Sterling has shown openness and has been willing to co-operate fully with all Romanian authorities involved in order to bring necessary clarification so that its planned investments in the Concession can move forward unhindered. Unfortunately, these efforts have not been successful. More recently, the Company has attempted to force resolution by using specific provisions under the Concession agreement, such as declaration of Force Majeure and issuance of a notice of default. To date these further steps have not unlocked the impasse.
The Company's next recourse is to initiate the procedures for international arbitration under the Treaty. In the Treaty, Romania undertook obligations with respect to the protection of investments of Canadian investors into Romania. The Notice of Dispute allows for a six month period of negotiations in which to resolve the issues amicably. If Sterling is unable to obtain satisfactory resolution on all the issues within this period, the Company can then submit the matter to arbitration, if it so desires. Under the arbitration process, Sterling would claim monetary damages that reflect the entire and significant ultimate value of its offshore assets.
Mike Azancot, Sterling's Chief Executive Officer, said: "It is with much reluctance that the Company has had to take this step in our efforts to continue the exploration and development of oil and gas resources in our offshore license blocks. We have always been of the opinion that Romania's Black Sea offers the country the potential to reduce gas imports dramatically, provide for high levels of investment and tax receipts while providing significant employment opportunities. Sterling has until recently been the only non-Romanian operator to have achieved exploration success in the offshore arena. This success has, we believe, had a knock-on effect in encouraging other companies, including majors, to take offshore licenses with potentially significant future benefit for the country. Sterling intends to be at the forefront of creating the infrastructure and business development to help realize this great potential for Romania. Our actions now are focused on taking a proactive approach in assisting in the resolution of the current impasse. As a long-standing, loyal and patient investor in the country we continue to reiterate that our intention is to follow through on our business activities and we remain optimistic that, with prompt actions from the government, an amicable resolution can be reached without resorting to arbitration."
Sterling Resources Ltd. is a Canadian-listed international oil and gas company headquartered in Calgary, Alberta with assets in the United Kingdom, Romania, France and the Netherlands. The shares are listed and posted for trading on the TSX Venture Exchange under the symbol "SLG".
Neither 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.
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Forward-Looking Statements
All statements included in this press 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 addition, statements relating to reserves or resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources described can be profitably produced in the future.
These forward-looking statements involve numerous assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. In addition, these statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other-forward looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: the impact of general economic conditions in the areas in which Sterling operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations. Readers should also carefully consider the matters 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 press release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.
Financial outlook information contained in this press release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this press release should not be used for purpose other than for which it is disclosed herein.
The timing and results of any such arbitral process in respect of the Romanian assets is uncertain and the ultimate success of Sterling's potential arbitration process cannot be assured.
