Issue of Equity

Sterling Energy PLC
09 November 2004


               Sterling Energy plc ('Sterling' or the 'Company')

         £97 million Placing underwritten at 17p per New Ordinary Share

On 26 October 2004, the Company sent a circular to Shareholders which set out
details of the Funding Agreement which the Company had entered into with the
Mauritanian Government and the requirement that the Company raise sufficient
funds to meet its obligations under the Funding Agreement.

The Company is delighted to announce that following an intense schedule of
meetings with potential investors, it yesterday entered into an underwriting
agreement with Evolution Securities Limited to raise approximately £97 million
(the 'Underwriting Agreement') at a price of 17p per Ordinary Share ('the
Placing Price').

The Underwriting Agreement is conditional, inter alia, upon Admission of the New
Ordinary Shares to trading on AIM and the Funding Agreement becoming
unconditional in all respects, save for Admission.  The Company has previously
convened an extraordinary general meeting for 10.00 a.m. on Thursday 18 November
2004 at which Shareholders will be asked to approve the Proposed Placing.

Application will be made for the 570,588,235 New Ordinary Shares to be admitted
to trading on AIM and it is expected that dealings in the new Ordinary Shares
will commence on 19 November 2004. Following Admission there will be
1,393,300,558 Ordinary Shares in issue, of which the New Ordinary Shares will
comprise approximately 41%.

The Company has been delighted by the response that the proposed investment in
Mauritania and the Placing has received both from new and existing shareholders
of the Company.

The Directors look forward to seeing those Shareholders that are able to attend
the EGM on 18 November 2004 and to announcing a successful completion to the
Transaction shortly thereafter.

9 November 2004



Enquiries:

Harry Wilson, Chief Executive, Sterling Energy plc            01582 461 121
Graeme Thomson. Finance Director, Sterling Energy plc         01582 461 121
Rob Collins, Henry Turcan, Evolution Securities Limited       020 7071 4300
Allan Piper, First City Financial Public Relations            020 7436 7486

Note:

Words and expressions where defined in the circular issued by the Company and
dated 26 October 2004 shall, unless the context requires otherwise, have the
same meaning in this announcement.

Part II of the circular contained a printing error in that paragraph 2 of
section 3, headed Economics, should have contained the words 'as advised by
Sterling' and footnote 5 should have been deleted.

The correct paragraph, as set out in the actual report prepared by RISC, reads
as follows:

'We conclude that the economic model is a reasonable representation of the PSC
terms and of the key terms of Sterling's agreement with the Government of
Mauritania as advised by Sterling.'

For clarity, Sterling confirms that it provided RISC with the details of the
terms of its Funding Agreement with the Government of Mauritania (which were not
independently verified by RISC) for use in the economic model.




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