Acquisition

Sterling Energy PLC
27 February 2004


   Sterling Energy plc closes $39.5 million production deal in Gulf of Mexico

Further to the announcement made by the Company on 30th January 2004, Sterling
Energy plc ('Sterling' or 'the Company') is pleased to announce that it has
concluded the acquisition of five producing gas fields from Osprey Petroleum
Partners, LP for $39.5 million in cash. The fields are located in shallow water,
offshore Texas, in the Gulf of Mexico, and include the associated gas gathering
system and onshore facilities.

Harry Wilson, Chief Executive of Sterling Energy plc, said 'This acquisition,
following our successful £38 million bid for Fusion Oil & Gas Plc completed in
December 2003, marks another key step in our development as an independent oil &
gas company.'

The acquisition increases Sterling's gas production to around 12 million cubic
feet of gas equivalent per day and is expected to add operating cash flow after
direct costs, of about $1 million per month at recent gas prices. Based on an
independent engineering report, the transaction will more than double Sterling's
proven plus probable reserves in the Gulf of Mexico. Proven producing reserves
in the fields acquired are assessed to be 21.6 billion cubic feet equivalent
(bcfe) at 1st November 2003. In addition there are substantial undeveloped
reserves.

As a result of this transaction, Sterling becomes an operator for the first time
in the Gulf of Mexico. Sterling expects to be able to add considerably to the
existing production levels through a drilling and work-over programme of the
undeveloped reserves acquired.

The consideration for the acquisition was $39.5 million paid in cash with an
effective date of 1st November 2003. The consideration was funded from a further
$25 million loan facility from Hibernia Bank and existing cash resources. The
bank loan is repayable on 30th June 2006. It is subject to twice yearly
borrowing base reviews and other covenants which limit the use of the production
cash flow. Sterling believes that the facility will give it flexibility to
develop its US assets without the pressure of near-term loan repayments.

Sterling will provide an update on operations, and in particular the integration
of Fusion, early indications of which are encouraging, in early March.


For further information contact:

Harry Wilson, Chief Executive, Sterling Energy plc:                01582 462 121
Nigel Quinton, Operations & Technical Director, 
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
                                                                   07736 064 982
Rob Collins, Evolution Beeson Gregory:                             020 7071 4311



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