Madagascar Farm-Out Deal

Sterling Energy PLC
19 July 2005



19 July 2005



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



                       Madagascar farm-out to ExxonMobil



Sterling, the AIM listed (symbol: SEY) independent oil & gas exploration and
production company, announced today that it has signed a farm-out deal with
ExxonMobil for the Ambilobe and Ampasindava  offshore licences in Madagascar.



Sterling was granted a 100% interest and operatorship of the two licences which
were signed in July 2004 and formally ratified in November 2004. The licences
cover approximately 20,800 sq km and 13,147 sq km, respectively of the Ambilobe
and the Majunga Basins. The total exploration licence term in each licence is 8
years and in the event of a commercial discovery a 25 year production licence
will be granted.



Under the terms of the deal with Sterling, ExxonMobil will pay for a significant
exploration work programme in return for a 70% interest in the licences.  The
agreement is subject to certain milestones being achieved with the initial
ExxonMobil commitment for the first two exploration phases under the licence
covering technical studies and 2D seismic.  Assuming a positive outcome of this
initial work, which could take up to a further 3 years, ExxonMobil will then
finance 3D seismic and up to two wells per licence. The transaction remains
subject to approval of the Government of Madagascar.



The Ambilobe and Ampasindava licences cover a large under-explored area offshore
Madagascar in which all of the geological elements for a working petroleum
system are believed to be present. Madagascar has seen an increase in
exploration activity - in 2004 ExxonMobil and Norsk Hydro farmed-in to Vanco's
exploration licence in the Majunga basin, adjacent to Sterling's Ampasindava
licence.



Sterling Chief Executive, Harry Wilson, said:



'The signing of this deal with a partner such as ExxonMobil, with their
extensive existing interests in Madagascar, reflects the potential of this
acreage.  Sterling will benefit from its residual 30% carried interest in the
licences without the financial risks of an exploration work programme.'





For further information contact:



Sterling Energy plc (01582 462 121)      Web site: www.sterlingenergyplc.com
Harry Wilson
Graeme Thomson


Citigate Dewe Rogerson (0207 638 9571)
Martin Jackson
Rachel Lankester



Evolution Securities (020 7071 4300)
Rob Collins
Henry Turcan



                      This information is provided by RNS
            The company news service from the London Stock Exchange