New Madagascar Licenses

Sterling Energy PLC 21 July 2004 Sterling wins 2 new Exploration Licenses in Madagascar Sterling Energy plc has been awarded a 100 per cent interest in two new exploration licenses offshore northwest Madagascar, covering some 34,000 km2 of undrilled basin. In both blocks the initial commitment is to conduct geological studies with seismic acquisition expected to follow in 2005 at Sterling's option. Following this, Sterling has the option to extend each license by drilling an exploration well. The total license term in each case is 8 years. In the event of a commercial discovery, a 25 year production license will be granted. The Ambilobe Block covers an area of 20,800 sq kms of the Ambilobe Basin at the very northwest point of Madagascar. Water depths are mostly below 1,000 m. This area has been licensed twice in the past 15 years, once by Maxus and more recently by Triton. Accordingly a large 2D seismic data base exists and leads have already been identified. Both companies left following corporate restructuring. The new Madagascan government has worked hard to improve the investment climate over the past two years, and Madagascar now offers a much improved business environment. The Ampasindava Block covers an area of 13,147 sq kms in the northern Majunga Basin and lies immediately to the southwest of the Ambilobe Block. The southwest limit is immediately adjacent to the block held by Vanco which is the only other offshore license in the region, and which has recently been farmed out to ExxonMobil. Water depths range from shallow to around 3,000 m in depth. The block is covered by only a very small amount of 2D seismic close to the coast and is therefore almost virgin territory. Sterling's aim will be to demonstrate the potential for the extension of plays identified in both the Ambilobe and Majunga Basins on either side. Sterling's Exploration Manager, Andy Grosse said; 'We are delighted to have been awarded these two exploration licenses after many months work. These are very large unexplored areas in which all the necessary components for petroleum reserves are already established. Jurassic age source rocks are proven in the onshore Ambilobe Basin and good quality reservoirs are also exposed onshore. The existing seismic provides plenty of evidence of sizeable structures. We believe that Madagascar has been neglected mainly due to past concerns about the investment climate, rather than fundamental exploration potential. The recent farm-in of Exxon/Mobil to the Vanco block immediately next door to ours may signal a significant change in the industry view.' A map showing the location of the two new licenses can be found on Sterling's website. Sterling produces gas in the Gulf of Mexico and has a broad portfolio of license interests in West Africa where an extensive carried drilling programme is due to commence next month in Mauritania. For further information contact: Harry Wilson, Chief Executive, Sterling Energy plc: 01582 462 121 Nigel Quinton, Operations Director, Sterling Energy plc: 01582 462 121 Allan Piper, First City Financial Public Relations: 020 7436 7486 077 3606 4982 Rob Collins, Evolution Beeson Gregory: 020 7071 4311 www.sterlingenergyplc.com Stock Symbol: SEY This information is provided by RNS The company news service from the London Stock Exchange