Sterling Energy plc is delighted to announce it has successfully raised approximately £97 million principally for investment in the development of the Chinquetti Field, offshore Mauritania in West Africa.

The successful fund-raising follows Sterling’s announcement two weeks ago that it has secured an agreement to work in partnership with the Mauritanian Government on Chinguetti, which is operated by Woodside Petroleum and is due to produce 75,000 barrels of oil per day from early 2006.

Sterling Chief Executive Harry Wilson said: “We are truly delighted by the level of response from new and existing institutional shareholders. The new funds will underpin our future growth as an oil producer, and our agreement with the Mauritanian Government positions us well to assist them with future developments.”

Sterling will use the bulk of the new funds to pay a $15.5 million signature bonus, and provide a $130 million letter of credit to cover the Government’s 12% share of the Chinguetti field development costs. In return, Sterling will receive income from a sliding scale share of the field’s production.

Sterling is issuing 570,588,235 new ordinary shares at 17p per share. Application is being made for the new shares to begin trading on the Alternative Investment Market on November 19, 2004. Following admission, there will be 1,393,300,558 ordinary shares in issue, of which the new ordinary shares will comprise approximately 41%.

Shareholders have been asked to approve the placing at an Extraordinary General Meeting on November 18, 2004.

Development work has already started on Chinguetti. This lies close to the recent Tevet discovery. A 20-well drilling programme using two rigs is currently under way in Blocks A and B offshore Mauritania in which Sterling already has a royalty interest.

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
Rob Collins, Evolution Securities Ltd: 020 7071 4311

www.sterlingenergyplc.com/ Ticker Symbol: SEY
Issued by First City Financial Ltd