Annual Results for the year ended 31 December 2010

28 March 2011

STERLING ENERGY PLC

ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

Sterling Energy Plc ("Sterling" or the "Company") is an upstream oil and gas company listed on AIM in London. Sterling is an experienced operator of international licences with a current focus on projects in Africa and the Middle East. Sterling has high potential projects in Kurdistan, Madagascar and Cameroon.

2010 SUMMARY

·; Sangaw North-1 exploration well testing the potential of the Sangaw North block.

·; Received $15.6 million of net cash flow from Chinguetti field operations during 2010 (2009: $13.3 million).

·; Cash resources as at 31 December 2010 $111.7 million including partner funds (2009: $113.9 million).

·; Company remains debt free.

CHAIRMAN'S STATEMENT

During 2010 Sterling's primary focus was the drilling activity at Sangaw North-1; an exploration well testing a large prospective structure in the Kurdistan autonomous region of Iraq. We have encountered many geological and mechanical challenges while drilling this well, however the expertise of our drilling team, with the support of our joint venture partners, has meant we could continue operations in a safe and controlled manner, albeit at a slower overall pace. The delay to the drilling program caused by the geological and mechanical events was further extended by the 'crowning incident' on the rig caused by the rig contractor. However frustrating these delays may be, the financial impact for Sterling has been mitigated as our drilling costs for Sangaw North-1 well are carried by Addax. I thank all the stakeholders in the Sangaw North project for their assistance and support during a very exciting and challenging drilling operation.

Financial

As a result of the re-structuring undertaken at the end of 2009, the Company remains in a very strong financial position with some $101.6 million of own funds at the end of 2010; our approved work programme for 2011 is fully funded and we have funds available for new venture activity. As an explorer without significant production we generally fund our day to day activities from our cash resource; our $15.6 million of net cash flow during 2010 from the Chinguetti field operation in Mauritania exceeded our general overhead costs and made a significant contribution towards our cost of operations.

Board and management changes

On 9 November 2010 Angus MacAskill was appointed as Sterling's Chief Executive Officer and a Director; Angus has some 30 years of hands-on experience covering many aspects of exploration, development and production activity and thus the management of Sterling's field operations is now one of his direct responsibilities. On 15 November 2010, Malcolm Pattinson was appointed a non-executive Director; Malcolm has spent most of his career as a geo-scientist and his experience will greatly assist in our new venture activity. On 31 December 2010, Richard Stabbins stepped down as a non-executive Director; we thank Richard for his contribution over the years and wish him well in his retirement.

Outlook for 2011 and beyond

There remain some further tasks to complete to fully evaluate the results seen at the Sangaw North-1 exploration well and we shall report on these when appropriate. Sterling also has other assets to move forward. Whilst we have little control over the resolution of the border dispute between Cameroon and Equatorial Guinea, the large prospects identified from 3D seismic are ready to drill when force majeure can be lifted; the Ntem block contains significant potential value waiting to be tested with the drill bit.

With the challenges at Sangaw North being overcome we have re-focused some of our skills and resources towards new ventures; the management of operations is now under Angus MacAskill and Andrew Grosse will lead our exploration and new venture activities. During 2011 one of our key objectives is to add to our portfolio of assets; additions will be sought to broaden our exposure to opportunities in Africa and the Middle East; however outstanding opportunities outside of these areas will also be considered.

I would like to thank all Sterling's staff for their diligent efforts during 2010 and hope the rewards for all stakeholders will come in 2011 and beyond.

Alastair Beardsall

Chairman

CHIEF EXECUTIVE'S REVIEW

The Company is focused in Africa and the Middle East and holds high potential interests in three areas, Kurdistan, Cameroon and Madagascar. During 2010, the Company made considerable progress in testing one of the very large exploration projects within its current portfolio, with drilling commencing on the Sangaw North-1 well in Kurdistan on 1 February 2010. Drilling operations have been very challenging but, by the end of the year, the well had been drilled to the base of the Cretaceous aged formations, two flow tests had been completed, and operations were being conducted to allow drilling to the deeper Jurassic targets.

The prospectivity being tested by this well is highly material. Prior to drilling, the gross un-risked prospective resources within the Cretaceous formations were independently estimated to be some 800 million barrels in the case of oil, with gas at least as likely to be discovered. While it is disappointing that the two flow tests within the Cretaceous did not establish commercial amounts of hydrocarbons in the intervals tested, they did establish the presence of gas within the shallower horizons of the Cretaceous formations in the structure.

Following the two flow tests the well was deepened and gas has also been identified during drilling operations in the upper section of the Jurassic formations, but not yet evaluated. We remain encouraged that there may be a very material prospective resource yet to be tested in 2011 by this well. Sterling's in-house estimates are some 3.8 trillion cubic feet of gross un-risked prospective resources in the case of gas and 500 million barrels in the case of oil within the Jurassic and deeper Triassic formations. In addition, we believe, based on gas shows while drilling, that there may be potential for further flow testing in the deeper horizons of the Cretaceous formations.

Sterling's exploration portfolio contains additional potential of a similar material scale. Further technical studies in the Company's deep-water Ntem licence in Cameroon have increased our confidence in the four Cretaceous aged prospects previously mapped, each with gross un-risked prospective resources of several hundred million barrels. These exciting prospects are in similar geological plays to those that have emerged as highly successful discoveries in West Africa over the last few years. We look forward to progressing activity in this licence once the maritime border which forms part of its boundary has been agreed between the neighbouring governments.

In the East African region, the Company has a material interest in the giant Sifaka prospect in the deep-water Ampasindava licence in Madagascar. This prospect has been independently assessed as having 1.2 billion barrels of gross un-risked prospective resources. The drilling of this prospect, operated by ExxonMobil, awaits resolution of the political situation in the country, with elections due to take place in 2011.

The Company has built a portfolio with highly material interests in large scale exploration projects in three emerging exploration areas in Africa and the Middle East. During 2010, focus has been on execution of the Company's first operated well in Kurdistan. In 2011, we look forward to delivery of the results from this well and, through the Company's expertise and experience in these regions, adding to the portfolio of exciting and material exploration opportunities.

Angus MacAskill,

Chief Executive Officer

OPERATIONS REVIEW

KURDISTAN

Sangaw North PSC (WI 53.33% & Operator)

The Sangaw North-1 exploration well, the first to be drilled on the Sterling operated Sangaw North Block, spudded on 1 February 2010. The well, targeting Cretaceous and Jurassic aged reservoir intervals has a planned depth of 3,660m and the well design allows drilling to a total depth of 4,160m to test deeper Jurassic and Triassic aged reservoirs. The decision to drill the additional deeper section will be based on drilling results encountered up to the decision point.

Whilst drilling the upper part of the Cretaceous reservoir section from 1,450m to 2,395m, through the carbonates of the Shiranish and Kometan Formations, gas shows and drill cuttings with fluorescence were observed, indicating the presence of hydrocarbons in the wellbore. The analysis of open hole wireline and image log data further suggested potential hydrocarbon bearing zones and open hole drill stem tests ("DST") were undertaken over two prospective intervals.

DST-1 tested an open-hole interval within the Cretaceous age Kometan formation. During the 6 hour flow period, an initial recovery of gas was followed by flowing water with minor gas content.

DST-2 tested an open-hole interval of the Shiranish formation, initially producing gas at an estimated flow rate of 4 mmscf/d along with some drilling fluids. However the gas flow decreased and was replaced with water, believed to be formation water, flowing at an estimated rate of 4,300 bbl/d. During a second flow period, the well initially produced water followed by gas at an estimated flow rate of 1 mmscf/d. However again the gas flow decreased and was replaced with water at an estimated rate of 750 bbl/d.

Following the intermediate testing program, the well was drilled below 2,395m to evaluate the lower part of the Cretaceous reservoir section. Whilst drilling at 3,396m, approaching the planned depth for setting a liner prior to drilling into the Jurassic reservoir targets, the well encountered a zone of high formation pressure. As a result hydrocarbon gas, containing approximately 0.5% hydrogen sulphide, entered into the wellbore and pressure was observed at surface.

The gas influx was contained, removed from the wellbore and flared. The drilling fluid in the wellbore was also replaced with heavier fluid to control the higher formation pressure encountered at the base of the well. During these operations, the drill pipe was adversely affected by the hydrogen sulphide within the gas, leading to the drill pipe parting at a depth of approximately 850m. Operations to retrieve the parted drill pipe resulted in the recovery of 1,100m of drill pipe, with no further recovery being possible.

The well was then side tracked in the open hole from a depth of 1,750m. The side track has been drilled to approximately 3,360m, and a liner has been run and cemented in place. The well is preparing to drill ahead to evaluate the Jurassic formations to 3,660m and is expected to penetrate the same formations from which gas containing hydrocarbons and hydrogen sulphide entered the well in the previous wellbore. Operations are being conducted using drill pipe resistant to the effects of hydrogen sulphide.

Drilling of the Sangaw North-1 exploration well has taken longer than initially anticipated due to the difficult drilling conditions encountered in the well. While the presence of commercial hydrocarbons has not yet been demonstrated, the Company is encouraged by hydrocarbon shows observed in the deeper Cretaceous section and the hydrocarbon gas observed at 3,396m in the previous wellbore from below a thick sealing interval in the upper Jurassic.

Sterling's best estimate of gross un-risked prospective recoverable resources for the Jurassic and Triassic reservoir targets is 3.8 tcf in the case of gas, with the equivalent estimated to be 500 mmbbl in the case of oil. Following the influx of gas at 3,396m, Sterling considers the chance of finding hydrocarbons in the Jurassic formations to be materially higher than the independent estimate of around 10% prior to drilling, and that gas with condensate is the most likely hydrocarbon to be discovered. However, there is currently not sufficient information from the well to directly determine the volume or type of hydrocarbons present.

Exploration success experienced by other operators confirms the highly prospective nature of the Kurdistan region. Heritage recently announced a major gas and condensate discovery at Miran West, 45km to the north, with gas in-place of 9 tcf and well flow rates from individual Jurassic intervals of 26 mmscf/d. Western Zagros reported contingent resources in Tertiary formations of 850 bcf of gas and 33 mmbbl of condensate following flow testing of the Kurdamir-1 well, 20km to the southeast of Sangaw North-1, at rates of 27 mmscf/d and 1,170 bopd condensate.

The first sub-period of the exploration phase of the PSC has been extended by one year to allow for the completion of drilling operations in the Sangaw North-1 well and the evaluation of the results of this well. The first sub-period, including the one year extension, will now continue until November 2011. The second, and final, sub-period of the exploration phase of the PSC has duration of 2 years.

CAMEROON

Ntem (WI 100% & Operator)

The Ntem concession area is a deepwater block situated in the southern Douala/Rio Muni Basin and lies adjacent to the northern maritime border of the Rio Muni province of Equatorial Guinea. Water depths range from 400m to 2,000m across the block. During the first term of the concession over 2,100km of 2D and 1,500km2 of 3D seismic data were acquired, along with the purchase of additional seismic and gravity data.

Sterling's financial obligations and work programme for the Ntem concession area are currently suspended under the force majeure provisions of the licence owing to an overlapping maritime border claim between Cameroon and Equatorial Guinea. However, both countries are actively working to resolve this issue and Sterling understands the border dispute may be resolved soon.

This large block is undrilled and is well placed with respect to both Tertiary and Upper Cretaceous plays. Many large leads and prospects have been identified following a detailed interpretation of the extensive 2D and 3D seismic database. Recent seismic attribute analysis and inversion studies reveal the presence of large and widespread submarine fans with good exploration potential. Sterling estimates that four of the Cretaceous prospects mapped so far have prospective recoverable resources of several hundred million barrels each. Sterling intends to farmout an interest in this licence.

Tertiary oil, gas and condensate discoveries made by Noble Energy to the north of the block are now under development, and further discoveries have been reported this year by Euroil (Bowleven); extending both the Tertiary and Cretaceous plays. These results highlight the prospectivity of these plays which are well developed in the Ntem block.

MADAGASCAR

Sterling's Ambilobe and Ampasindava blocks are located in the deepwater basin offshore north-west Madagascar. Progress of the exploration programmes has remained slow during 2010 due to the political situation in the country. Since the coup in March 2009, the government of Madagascar has not been recognised by its African neighbours or the United Nations. Government and presidential elections are planned to take place during 2011.

Prior to November 2010, discussions commenced with OMNIS, the state regulator, to prolong the current exploration period of both the Ambilobe and Ampasindava production sharing contracts. The outcome of these discussions is expected in 2011.

Ampasindava (WI 30%)

The production sharing contract (PSC) for Ampasindava is in the third phase of the exploration period with a minimum work commitment of one exploration well. The large Sifaka prospect is ready to drill and has been independently estimated to contain a gross un-risked best estimate prospective recoverable resources of 1.2 billion bbl (RISC Competent Persons Report, March 2008). ExxonMobil (WI 70%, Operator) and Sterling plan to drill this well once political stability is established.

Following the farm-in by ExxonMobil in 2005, Sterling's costs are carried up to a fixed amount. The cost to drill the Sifaka prospect is estimated to exceed the remaining carry and the Company intends to farm down the current working interest to cover these costs. It is currently unlikely that an exploration well will commence drilling before 2013.

Ambilobe (WI 100% & Operator)

The PSC for Ambilobe is in the second phase of the exploration period. All work commitments have been fulfilled by completing geological and geophysical studies and acquiring approximately 1,000km of 2D seismic. A number of leads of Cretaceous and Tertiary age have been identified, located in both shallow and deep waters. During 2010, further technical studies have been conducted and the planning of an environmental impact assessment for a 3D seismic survey has been initiated.

MAURITANIA

Chinguetti (Economic Interest via Funding and Royalty Agreements)

Gross production continued to decline during 2010, but at a reduced rate. Production declined from 8,600 bopd in January to 7,400 bopd in December. The average production net to Sterling during 2010 was 654 bopd.

As a result of the lower observed decline rate, Sterling estimates that at the end of 2010 Chinguetti held a remaining 6.1 mmbbl of gross 2P reserves that could be accessed with the existing wells. This is reflected in the upwards revision of Sterling's net reserves to 0.42 mmbbl.

No in-fill drilling or work-over activity took place on the Chinguetti field during 2010. The annual planned FPSO shutdown was postponed until 2011.

Petronas, the operator, continues to investigate the potential for a Phase 3 drilling campaign to access contingent resources from the Chinguetti field. However further development may not be economic and, in the absence of Phase 3, the field could be abandoned earlier than originally planned.

The joint venture partners in PSC A and PSC B are reportedly negotiating the extension of both contracts with the Mauritanian Government, as well as discussing potential development options and gas markets for the Banda gas field. In the event these are extended, Sterling would be entitled to revenue under its royalty interest agreements with Premier Oil from any commercial development of Banda or other discoveries within these contract areas.

GABON

Iris Marin (WI 32%)

The Iris Marin Production Sharing Contract (Sterling 32% WI) expired on 13 May 2010.

Ibekelia (WI 40% & Operator)

Sterling (40% WI, operator) and its joint venture partners have discontinued negotiations for a production sharing contract for the Ibekelia block.

Financial review

Selected financial data

(1) EBITDA is calculated as earnings before interest, taxation, depreciation, amortisation, impairment, pre-licence expenditure and share-based payments on continuing operations.

(2) Excludes discontinued operations.

HIGHLIGHTS

·; Net profit of $5.8 million in 2010;

·; Cash balances at year end were $111.7 million (2009: $113.9 million);

·; Average 2010 Chinguetti production 654 bopd (2009: 906 bopd);

·; Debt free throughout 2010.

REVENUE AND COST OF SALES

2010 production averaged 654 bopd, including Royalty barrels, a decrease of 28% from the 906 bopd averaged in 2009. Currently, all of the Group's production is from the Chinguetti field and the Group's net production is approximately 623 bopd.

Group turnover from continuing operations was $25.3 million (2009: $22.7 million) based on 315,000 barrels sold. This was primarily as a result of an increased average realised oil price from the Chinguetti liftings during the year to $80.44 per bbl (2009: $68.62 per bbl). Volumes lifted were down 7% compared to 2009.

PROFIT FROM OPERATIONS

The 2010 profit from operations amounted to $7.3 million (2009 loss from continuing operations: $18.0 million).

Chinguetti cost of sales amounted to $13.6 million (2009: $13.5 million) averaging $43.11/bbl (2009: $40.79/bbl).

A $0.2 million (2009: $22.0 million) impairment charge was made in relation to African exploration assets.

Pre-licence exploration costs of $0.7 million (2009: $0.5 million) were written off as required under IFRS.

Administrative costs for continuing operations, after capitalised costs and partner recharges, fell by $1.0 million to $3.7 million in 2010 (2009: $4.7 million). This was due to an increase in costs recovered from joint venture partners, and reduced head office costs. This was after a non-cash share option charge of $1.9 million (2009: $0.7 million). The non-cash share option charge has increased compared to the 2009 charge due to the increased number of options under the All Staff LTIP and an increase in the share price volatility used to calculate the option value.

EBITDA AND NET PROFIT

EBITDA for continuing operations totalled $11.3 million (2009: $10.5 million).

Net profit after tax totalled $5.8 million (2009: $202.5 million loss). The basic profit per share was $0.03 per share (2009: US$2.10 loss per share).

Interest revenue and finance costs were a net expense of $1.4 million (2009: net expense $13.6 million) reflecting foreign exchange losses of $0.6 million on GBP cash balances held at 31 December 2010 which are reported in US Dollars. Non-cash finance costs of $1.0 million relate to the unwinding of the decommissioning discount on the Chinguetti abandonment provision. Interest revenue was $0.2 million.

No dividend is proposed to be paid for the year ended 31 December 2010.

CASH FLOW

Net Group cash inflow generated from operating activities was $10.5 million (2009: $33.9 million, including discontinued North America segment).

Net cash investments in oil and gas assets totalled $12.2 million (2009: $31.7 million) primarily comprising of $9.0 million invested in Kurdistan relating to testing costs on the Sangaw North-1 well, $1.8 million invested in Cameroon, and $1.0 million invested in Madagascar. The Group's exploration drilling expenditure for Sangaw North-1 is carried by Addax, with Sterling paying its share of testing costs.

STATEMENT OF FINANCIAL POSITION

Cash and cash equivalents were $111.7 million at the year end (2009: $113.9 million) of which $10.1 million was held on behalf of partners, leaving a cash balance of $101.6 million available for Sterling's own use at 31 December 2010. At the end of 2010, net assets/total equity stood at $95.8 million (2009: $88.1 million), and non-current assets were $21.8 million (2009: $11.1 million). This increase was primarily as a result of investment in the Kurdistan and Cameroon assets. Net current assets decreased to $96.3 million (2009: $98.3 million).

The Group's Chinguetti decommissioning provision increased during the year by $1.0 million to $22.0 million (2009: $21.0 million).

HEDGING

At the end of 2010 the Group did not have any oil and gas price derivatives in place.

CAUTIONARY STATEMENT

This financial report contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst the Directors believe the expectation reflected herein to be reasonable in light of the information available up to the time of their approval of this report, the actual outcome may be materially different owing to factors either beyond the Group's control or otherwise within the Group's control but, for example, owing to a change of plan or strategy. Accordingly, no reliance may be placed on the forward-looking statements.

For further information contact:

Sterling Energy plc +44 (0)20 7405 4133

Alastair Beardsall, Chairman

Angus MacAskill, Chief Executive

Jonathan Cooper, Chief Financial Officer

Evolution Securities +44 (0)20 7071 4300

Rob Collins / Chris Sim

www.sterlingenergyplc.com Ticker Symbol: SEY

Sterling Energy Plc

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2010

Sterling Energy Plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2010

Sterling Energy Plc

Consolidated Statement of Changes in Equity

31 December 2010

* The share option reserve has been included within the retained deficit reserve.

Sterling Energy Plc

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2010

Notes to the consolidated Financial Statements

1. GENERAL INFORMATION

The preliminary results announcement is for the year ended 31 December 2010.

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company has today published its Annual Report and Accounts on its website, www.sterlingenergyplc.com, these contain the full financial statements for the year ended 31 December 2010 that comply with the IFRSs. The Annual Report and Accounts will be posted to Shareholders on or about 31 March 2011. The Annual Report and Accounts contains the notice for the Company's Annual General meeting which is to be held at 11.00 a.m on 28 April 2011.

2. GOING CONCERN

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the operations review. The financial position of the Company, its cash flows and liquidity position are described in the financial review.

The Company has sufficient cash resources for its working capital needs and its committed capital expenditure programme at least for the next 12 months. As a consequence, the Directors believe the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

3. OPERATING SEGMENTS

4. PROFIT/(LOSS) PER SHARE

The calculation of basic profit per share is based on the Group consolidated profit for the financial year of $5,845,000 (2009: loss $202,483,000) and on 219,332,806 (2009: 96,577,765) ordinary shares, being the weighted average number of ordinary shares in issue. For the year ended 31 December 2010, the basic earnings per share were 2.66 US¢ per share (2009: loss 209.66 US¢ per share).

For the year ended 31 December 2010, the fully diluted earnings per share were 2.65 US¢ per share (2009: n/a). This is computed based on 220,865,039 (2009: 96,577,765) ordinary shares, being the total used for the computation of the basic earnings per share as adjusted in assuming the exercise of 1,532,233 of the 7,745,726 options granted or approved for grant as at 31 December 2010.

For the year ended 31 December 2010, the basic and diluted earnings per share from discontinued operations were nil US¢ per share (2009: loss 176.91 US¢ per share). The calculation of basic and diluted loss per share from discontinued operations for the financial year is based on a discontinued profit for the year of $nil (2009: loss $170,851,000) and on 219,332,806 (2009: 96,577,765) ordinary shares, being the weighted average number of ordinary shares in issue.

5. INTANGIBLE ROYALTY ASSETS

Group net book value at 31 December 2010 comprises the value of rights to future royalties in respect of the Group's agreements covering licences PSC A and PSC B in Mauritania. The value of these royalty interests is dependent upon future oil and gas prices and the development and production of the underlying oil and gas reserves.

An impairment assessment and any subsequent charge are calculated on an individual royalty interest basis. Future recoverable amounts are estimated by management based on the present value of future cash flows expected to be derived from the production of commercial reserves in these licences and are compared against the carrying value of these assets.

6. INTANGIBLE EXPLORATION AND EVALUATION ASSETS

The amount for intangible exploration and evaluation assets represents investments in respect of exploration licences. Impairment tests on E&E assets are conducted on an individual cost pool basis when facts and circumstances suggest that the carrying amount in the pool may exceed its recoverable amount. The impairment recorded above relates to assets held in the Africa pool of $0.2 million (2009: $3.3 million), and in the US of $nil (2009: $69.9 million) where the estimated recoverable amount of the property, plant and equipment and E&E in the pool was insufficient to cover the carrying amount.

7. PROPERTY, PLANT AND EQUIPMENT

8. CASH FLOWS FROM OPERATING ACTIVITIES

Definitions and Glossary of Technical Terms

$ US dollars

2006 Act The Companies Act 2006, as amended

2D two dimensional

2P the sum of Proven and Probable reserves or in-place quantities depending on the context

3D three dimensional

AIM Alternative Investment Market of the London Stock Exchange

All Staff LTIP the All Staff Long-Term Incentive Plan adopted in 2009

bbl barrel, equivalent to 42 US gallons of fluid

bbl/d barrel per day

bopd barrel of oil per day

boe barrel of oil equivalent, a measure of the gas component converted into its equivalence in barrels of oil

boepd barrel of oil equivalent per day

bcf billion cubic feet of gas

Board the Board of Directors of the Company

Company or Sterling Sterling Energy Plc

Contingent Resources those quantities of petroleum estimated, as at a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies, Contingent Resources are a class of discovered recoverable resources.

Directors the Directors of the Company

DST drill stem test, a method of flow testing a well

E&E exploration and evaluation assets

EBITDA earnings before interest, taxation, depreciation, depletion and amortisation, impairment, share-based payments and pre-licence expenditure

farmin & farmout a transaction under which one party (farmout party) transfers part of its interest to a contract to another party (farmin party) in exchange for a consideration which may comprise the obligation to pay for some of the farmout party costs relating to the contract and a cash sum for past costs incurred by the farmout party

FPSO Floating, Production, Storage and Offloading vessel

GBP pounds sterling

Group the Company and its subsidiary undertakings

H2S hydrogen sulphide

hydrocarbons organic compounds of carbon and hydrogen

km kilometre(s)

km2 square kilometre(s)

lead indication of a possible exploration prospect

m metre(s)

mmbbl million barrels

mmscf/d million cubic feet at standard pressure and temperature per day

Ordinary Shares Sterling ordinary shares of 40 pence each

P90, P50, P10 90%, 50% and 10% probabilities respectively that the stated quantities will be equalled or exceeded. The P90, P50 and P10 quantities correspond to the Proved (1P), Proved + Probable (2P) and Proved + Probable + Possible (3P) confidence levels respectively

Petroleum oil, gas, condensate and natural gas liquids

Petronas PC Mauritania I PTY LTD

PP&E Property, Plant & Equipment

Prospect a potential sub-surface accumulation of hydrocarbons which has been identified but not drilled

Prospective Resources those quantities of petroleum which are estimated, as at a given date, to be potentially recoverable from undiscovered accumulations

PSC production sharing contract

Reserves reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must satisfy four criteria; they must be discovered, recoverable, commercial and remaining based on the development projects applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by development and production status

Reservoir a porous and permeable rock capable of containing fluids

RI royalty interest

RISC RISC (UK) Limited of Golden Cross House, 8 Duncannon Street, London WC2N 4JF

Scf standard cubic feet of gas (measured at 60 degree Fahrenheit and 14.7 psia)

Seismic data, obtained using a sound source and receiver, that is processed to provide a representation of a vertical cross-section through the subsurface layers

Shares 40p Ordinary Shares

Shareholders Ordinary shareholders of 40p each in the Company

spud to commence drilling a well

Subsidiary a subsidiary undertaking as defined in the 2006 Act

Working Interest or WI a Company's equity interest in a project before reduction for royalties or production share owed to others under the applicable fiscal terms

Tcf trillion cubic feet of gas

United Kingdom or UK the United Kingdom of Great Britain and Northern Ireland