Sterling Energy plc has exercised an option to take a 5% working interest in a block containing the unappraised Sinapa oil discovery, offshore Guinea Bissau in West Africa.

It follows the completion last April by Premier Oil as Operator of the Sinapa 2 well on Offshore Block 2. Sinapa 2 found oil in reservoir sands but, due to the design of the well, flow rates were not tested. The option over the Sinapa permit is one of two held by Sterling offshore Guinea Bissau as a result of an agreement in May 2003 that Premier Oil reached with Fusion Oil & Gas. Fusion was subsequently acquired by Sterling late last year. The other option covers the undrilled Esperanca permit nearby. In each case, Sterling's option to participate follows completion of the first well at Premier's expense.

Sterling Chief Executive, Harry Wilson, said: “Although Premier announced that reservoir quality was only moderate, we believe the Sinapa 2 well was highly significant in proving the presence of a light oil petroleum system with very positive implications. The well also proved the presence of good quality reservoir sands, although in this instance they were not oil bearing. There are a number of similar features to be tested, and we also believe the same promise extends beyond Sinapa and Esperanca into our Dome Flore permit in the AGC Zone between Guinea Bissau and Senegal.”

Along with Premier Oil (55%), Occidental Petroleum also holds an interest in the Sinapa permit (40%). The state company of Guinea Bissau, Petroguin has a back-in right for 30% of any development, which would reduce Sterling’s interest to 3.5%.

Sterling looks forward to the Operator’s forward work programme on Sinapa and Esperanca once the evaluation of Sinapa 2 is completed.

For further information contact:

Harry Wilson, Chief Executive
Sterling Energy plc: 01582 462 121
Allan Piper, First City Financial Public Relations: 020 7436 7486
Rob Collins, Evolution Beeson Gregory: 020 7071 4311

www.sterlingenergyplc.com
Stock symbol: SEY