Sterling Energy plc today announced it is making an offer to acquire the entire share capital of Fusion Oil & Gas plc. The offer values Fusion at 40.25p per share or approximately £40 million.

Sterling is offering 3.5 Sterling shares for each Fusion share. Alternatively, Fusion shareholders can accept a partial cash offer of 2.5 Sterling shares plus 10p for each Fusion share.

In addition to the 20.4% of Fusion already owned by Sterling, a further 21.1% of Fusion shareholders have indicated their support for the bid.

Sterling Chief Executive Harry Wilson said: “We believe the combination of Sterling’s primarily production portfolio and Fusion’s exploration potential will create a well balanced upstream company with excellent prospects. The stronger balance sheet will enable it to extract greater value from the assets and increase its ability to exploit new opportunities.” Mr Wilson added: “The support we have already received from Fusion shareholders confirms they want a change, and we are excited by the opportunities the enlarged company will have. The increased market capitalisation should result in greater liquidity for the benefit of both sets of shareholders.”

In conjunction with the offer, Sterling also announced a placing of 90.9 million new Sterling shares at 11p per share to raise £10 million to provide funding for the partial cash alternative. The placing is fully underwritten by Evolution Beeson Gregory.

Last week Sterling became the largest single shareholder in Fusion after acquiring a 20.4% stake from Westmount Energy Ltd. Derek Williams, Westmount chairman and a director of Fusion, said the decision to sell to Sterling followed “mounting disappointment in the performance of our investment in Fusion since the flotation,and our strong belief in the merits of combining Sterling's strengths with Fusion's exploration portfolio."

Sterling’s unaudited interim results for the six-month period to June 30, 2003, also published today, show a continued strong improvement as the company returned pre-tax profits of £1.1 million, on revenues of £2.6 million.

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
Chris Callaway, Evolution Beeson Gregory: 020 7071 4309

www.sterlingenergyplc.com
Stock Symbol SEY