Announcing solid financial results for the year to last December, the exploration and production group Sterling Energy today told shareholders it expects to participate in up to 20 wells offshore West Africa - at negligible cost.

Sterling Chairman Richard O’Toole said in the annual statement that the drilling campaign – over the next 18 - 24 months - “could have a material impact on the value of your company”. The wells, in Mauritania, Guinea Bissau and Gabon, are part of the “carried interest” exploration portfolio acquired through Sterling’s successful £40 million take-over of Fusion Oil & Gas late last year. In each case, Sterling’s partners are paying most of the cost of the wells.

Mr O’Toole added that the planned drilling programme followed a year during which Sterling “has exceeded all our expectations in terms of growth and future prospects”. Along with the acquisition of the West African exploration assets, achievements include a doubling of proven and probable reserves in the Gulf of Mexico since the year end, and a ten-fold increase in production revenues.

Preliminary results for the year to December 2003 show that Sterling has also solidly established itself on a firm financial footing. Shareholders funds during the year increased to £56.6 million from £14.9 million 12 months earlier, while the company booked pre-tax profits of £1.8 million, up from a £98,000 loss last time. Since the start of 2003, Sterling has seen its market capitalisation increase from little more than £25 million to around £110 million.

Mr O’Toole said: “We have put in place the foundations of an exciting exploration and production company with a clear strategy and focus. Our plan for the next couple of years is to grow the company to a size where the production revenues can support a meaningful exploration programme on an ongoing basis. We will reach this ‘critical mass’ through a combination of organic growth and further acquisitions.”

Although West Africa is the core area of Sterling’s exploration activity, Mr O’Toole said, the company would continue to review exploration projects in other parts of the world. He added: “2004 has started well and – given Sterling’s undoubted strengths – could deliver much more”.

For further information contact:

Harry Wilson, Chief Executive
Sterling Energy plc: 01582 462 121
Graeme Thomson, Finance Director
Sterling Energy plc: 01582 462 121
Allan Piper, First City Financial Public Relations: 020 7436 7486
Rob Collins, Evolution Beeson Gregory: 020 7071 4311

www.sterlingenergyplc.com
Ticker Symbol: SEY