• $147 million cash acquisition of US onshore Whittier Energy Corp (“WEC”) completed at the end of March 2007 and successfully integrated

• WEC increased Group 2P reserves by over 85% (c.11 million boe) and added  approximately 8 million boe to contingent resources

• 20 wells drilled in USA in H1 2007 with a success rate of 85%, adding to proven reserves and production

• Revenues in the first half of $45.1 million (H1 2006: $45.3 million)

• Group production averaged 4,910 boepd in the first half (H1 2006: 4,671 boepd)

• Profit for the first half of $1.4 million (H1 profit 2006: $8.2 million, year 2006 loss $38.6 million) reduced by impact on non-cash depletion of the end 2006 Mauritanian reserve downgrade and deferred tax added to the WEC cost

• Earnings before interest, tax, depletion and amortisation (“EBITDA”) of $27.1 million  in the first half  (H1 2006: $27.6 million)

• 30 June 2007 unrestricted cash balance of $26 million and 25 September 2007 balance of $21 million with $14 million of undrawn facilities

Prospects and Outlook

• Revenues set to grow in the second half

• Group production estimated at over 6,100 boepd for the third quarter, an increase of 25% over H1

• Bank funding being re-financed by new 6 year $265 million Group facilities, with initial borrowing base expected to total c. $160-5 million

• A further 20 USA wells expected in the second half and c.40 planned for 2008 aiming to  materially increase US reserves

• These wells are expected to take USA production to over 5,000 boepd by end 2007, an increase of over 20% since WEC was purchased. Further growth planned for 2008

• Mauritania second development phase to commence in early 2008 with 2-3 wells and 2-3 workovers.  The Operator forecasts that production will double from its current level

• Two exploration wells offshore Gabon by mid 2008

• Madagascar offshore seismic identifies significant prospects. Early drilling anticipated.

Dick Stabbins, Sterling’s newly appointed Chairman, said: 

 “I am confident that we are well positioned to add value from our drilling programme. This will be achieved through exploration in Gabon, Madagascar and the AGC, from further exploration, appraisal and development work in the USA, from a second development phase in Mauritania and by adding further licence interests in our core areas of USA, Africa and the Middle East. We have a healthy cash flow to invest and I am confident about Sterling’s outlook.”

For further information contact:

Sterling Energy plc (+44 207 405 4133)
Harry Wilson, Chief Executive
Graeme Thomson, Finance Director

Evolution Securities (+44 207 071 4311)
Rob Collins

Citigate Dewe Rogerson (+44 207 638 9571)
Media enquiries: Martin Jackson
Analyst enquiries: Kate Delahunty