Trading Update

Sterling Energy PLC 24 July 2006 24 JULY 2006 STERLING ENERGY PLC ('Sterling' or the 'Company') TRADING UPDATE Sterling Energy today published the following Trading Update. The Company's performance in the first six months of 2006 has been materially better than the comparable period in 2005. Average daily Group production rose from the corresponding period by in excess of 150% to more than 25 million cubic feet of gas equivalent per day ('mmcfged') Realised Gulf of Mexico prices were up over 12% to US$7.25/mcfge and average production was over 7.8 mmcfged in the period (year 2005: 9.7 mmcfged). US production levels have recently risen to over 10.1 mmcfged, 35% up on the first quarter, with new wells fully onstream and with greater equipment availability. The Company recently spudded an onshore well, Trehan1, in S Louisiana, the first of four exploration wells planned in the US in the second half which together could materially impact reserves and production. The start-up of the Chinguetti Field in late February 2006 also contributed strongly to cashflow, with US$32 million received from three first half cargo sales and royalties. The next lifting is expected in early August 2006. The Field operator continues to address the technical and operating issues in this first field to be developed offshore Mauritania. Lower than expected production was offset in the period by higher than expected oil prices. Current gross field production rates are 35-40,000 barrels of oil per day ('bpd'). Sterling expects that these issues will be progressively addressed and resolved over the course of 2006/early 2007, including with infill wells. Whilst the expectation of future production rates are lower than initially projected by the operator, the current studies and operations will help to clarify the optimum future production levels and will enable estimates of Chinguetti and other Mauritanian reserves to be updated later in the year. Currently, US$96 million of the US$130 million letter of credit provided under the Funding Agreement has been drawn. A declaration of commerciality is expected by year-end on the Tiof field, in which Sterling has a sliding scale royalty interest over 6% and for which it pays no development costs. An initial gross 50,000 bpd production level in 2009 is envisaged, with 40-60 million bbls being developed in the initial phase. There would then be scope to extend the development through satellite tie-backs. The Tevet, Labeidna and Banda oil discoveries are also being looked at for tie-back to Chinguetti, which would be at no cost to Sterling. Tevet is being 'fast tracked', with Sterling having a royalty interest over 6%. Drilling is also expected to commence shortly on the 150 million bbl Colin prospect, in which Sterling has a royalty interest over 3%. Further carried exploration wells are expected over the next year. Elsewhere, a largely carried exploration programme of up to 3 wells, offshore Gabon and Equatorial Guinea, is expected over the next year. In addition, interpretation of the recently acquired 4,000 km of 2-d seismic offshore Madagascar has commenced and initial results give cause for optimism. Work continues on the Kurdistan project. With the increased cash-flow, other high-impact projects are being actively sought in order to expand Sterling's upside potential. The interim results for the six months to 30 June 2006 will be announced on 22 September 2006. Enquiries Sterling Energy (01582 462 121) Web site: www.sterlingenergyplc.com Harry Wilson Graeme Thomson Citigate Dewe Rogerson (020 7638 9571) Media enquiries: Martin Jackson Analyst enquiries: Nina Soon This information is provided by RNS The company news service from the London Stock Exchange