US production boost

Sterling Energy PLC 27 March 2003 Sterling Energy plc is pleased to announce a significant increase in gas revenues thanks to better-than-expected production from the Gryphon #2 well in the Gulf of Mexico. The well is expected to produce royalty income for Sterling of around $300,000 in March, with gross production flows of some 25 million cubic feet per day (mmcf/d). Sterling has a 7.58% royalty interest in the area. The stabilised production flow from Gryphon #2 is substantially higher than expected and the reservoir interval is about 3 times thicker than that encountered by the Gryphon #1 well. Sterling is currently evaluating further drilling targets in the area. Harry Wilson, Chief Executive of Sterling Energy, said: 'The success of Gryphon #2 underscores our ability to identify unexploited potential in existing fields. The revenue from Gryphon #2 is royalty income achieved at no additional cost to us following a successful farm-out. An additional bonus is that gas prices are now over $5 per mcf. We are currently evaluating the impact on the reserves of the field of the thicker than expected reservoir interval. We are optimistic that this will result in a significant upgrading of reserves.' Sterling's strategy is to acquire proven reserves in fields overlooked by previous owners, using its technical and commercial expertise to unlock upside value. Sterling has recently opened an office in Houston where its Gulf of Mexico operations are being managed by Bob Munn, who has been appointed Vice President of Sterling Energy, Inc. Mr Munn has extensive experience in the Gulf of Mexico, and spent more than 10 years as a senior exploration geologist with Amerada Hess before joining Sterling from F-W Oil Exploration. Sterling, quoted on London's Alternative Investment Market, plans a programme of recompletions, workovers and drilling of up to 6 wells in the Gulf of Mexico in 2003. This is expected to add further to production and operating cash flow from the company's six producing properties there. The company also owns a 100% working interest in a large exploration license offshore Philippines. 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 07050 203 304 Chris Callaway, Evolution Beeson Gregory: 020 7071 4324 This information is provided by RNS The company news service from the London Stock Exchange