Trading Update

Sterling Energy PLC
24 July 2006


24 JULY 2006


                              STERLING ENERGY PLC
                         ('Sterling' or the 'Company')



                                 TRADING UPDATE



Sterling Energy today published the following Trading Update.

The Company's performance in the first six months of 2006 has been materially
better than the comparable period in 2005.

Average daily Group production rose from the corresponding period by in excess
of 150% to more than 25 million cubic feet of gas equivalent per day ('mmcfged')

Realised Gulf of Mexico prices were up over 12% to US$7.25/mcfge and average
production was over 7.8 mmcfged in the period (year 2005: 9.7 mmcfged). US
production levels have recently risen to over 10.1 mmcfged, 35% up on the first
quarter, with new wells fully onstream and with greater equipment availability.
The Company recently spudded an onshore well, Trehan1, in S Louisiana, the first
of four exploration wells planned in the US in the second half which together
could materially impact reserves and production.

The start-up of the Chinguetti Field in late February 2006 also contributed
strongly to cashflow, with US$32 million received from three first half cargo
sales and royalties.  The next lifting is expected in early August 2006.  The
Field operator continues to address the technical and operating issues in this
first field to be developed offshore Mauritania. Lower than expected production
was offset in the period by higher than expected oil prices. Current gross field
production rates are 35-40,000 barrels of oil per day ('bpd'). Sterling expects
that these issues will be progressively addressed and resolved over the course
of 2006/early 2007, including with infill wells. Whilst the expectation of
future production rates are lower than initially projected by the operator, the
current studies and operations will help to clarify the optimum future
production levels and will enable estimates of Chinguetti and other Mauritanian
reserves to be updated later in the year. Currently, US$96 million of the US$130
million letter of credit provided under the Funding Agreement has been drawn.

A declaration of commerciality is expected by year-end on the Tiof field, in
which Sterling has a sliding scale royalty interest over 6% and for which it
pays no development costs. An initial gross 50,000 bpd production level in 2009
is envisaged, with 40-60 million bbls being developed in the initial phase.
There would then be scope to extend the development through satellite tie-backs.
The Tevet, Labeidna and Banda oil discoveries are also being looked at for
tie-back to Chinguetti, which would be at no cost to Sterling. Tevet is being 
'fast tracked', with Sterling having a royalty interest over 6%.

Drilling is also expected to commence shortly on the 150 million bbl Colin
prospect, in which Sterling has a royalty interest over 3%.  Further carried
exploration wells are expected over the next year.

Elsewhere, a largely carried exploration programme of up to 3 wells, offshore
Gabon and Equatorial Guinea, is expected over the next year. In addition,
interpretation of the recently acquired 4,000 km of 2-d seismic offshore
Madagascar has commenced and initial results give cause for optimism. Work
continues on the Kurdistan project.

With the increased cash-flow, other high-impact projects are being actively
sought in order to expand Sterling's upside potential.

The interim results for the six months to 30 June 2006 will be announced on 22
September 2006.




Enquiries

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

Citigate Dewe Rogerson (020 7638 9571)
Media enquiries: Martin Jackson
Analyst enquiries: Nina Soon





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