Defence Document Publication

Fusion Oil & Gas PLC
13 October 2003



                              Fusion Oil & Gas plc

                          ('Fusion' or 'the Company')


Publication of Defence Document in relation to the offer from Sterling Energy
plc ('Sterling')

          Fusion actively pursuing a better deal for shareholders



The Board of Fusion is today posting to shareholders a circular (the 'Circular')
setting out the Board's formal response to the offer announced on 25 September
2003 (the 'Offer') by Sterling.



The Fusion Board believes that Sterling's offer significantly undervalues the
Company, is opportunistic and that a better deal can be achieved.  As a result,
the Board has recommended that Shareholders take no action in relation to
Sterling's Offer.



Factors which the Board has taken into account in assessing the Offer include:



  • Fusion has developed a large inventory of prospects in a high quality
    portfolio of assets in West Africa, an area that has become of considerable
    interest to the oil industry as a result, in part, of numerous significant
    oil discoveries.



  • Fusion is participating in a drilling programme which the Board believes
    will give Fusion Shareholders exposure to at least 6 and possibly more than
    15 wells in the next 2 years.



  • The Board does not expect Fusion to incur any material exploration
    expenditure in relation to its current interests during the next 2 years.



  • Fusion expects this drilling programme will result in the creation of
    material value to its Shareholders.



  • The Board believes, on the basis of the information available to it, that
    while there is no certainty that any part of either company's resource base
    will develop into reserves, the upside potential is significantly greater
    for Fusion than for Sterling.



  • Completion of the Offer from Sterling would result in Fusion Shareholders'
    interest in Fusion's exploration upside being substantially diluted.



  • A merger between Sterling and Fusion would create a mix of shallow water
    Gulf of Mexico assets and West African exploration acreage, mainly located
    in deep water. The Board does not believe these disparate portfolios are
    complementary or that combining them would enhance the value of either.



  • Sterling's producing assets do not generate sufficient free cash flow to
    have a material effect on the development of Fusion's assets.



  • Subject to a declaration of commerciality based on the outcome of the
    currently-drilling Chinguetti-4-5 well and, based on the estimates of
    Woodside, the project operator, Fusion expects to see the commencement of
    royalty income from the Chinguetti Field in the latter half of 2005.



In the light of the above, Fusion has commenced discussions with a number of
parties with the aim of securing alternative proposals that can be put to
Shareholders in the short term. These discussions, which are at various stages,
are all with companies larger than Sterling.



Chairman of Fusion, Peter Dolan, said:



'The Board of Fusion is of the view that Sterling's offer significantly
undervalues the Company.  We remain determined to maximise value for
Shareholders and are in discussions with several interested parties, which we
expect will develop rapidly.  In the meantime, we recommend shareholders to take
no action in relation to Sterling's Offer.'



This announcement should be read in conjunction with the Circular.  Definitions
contained within the Circular also apply to this announcement.



13 October 2003



Enquiries


Fusion Oil & Gas plc
Peter Dolan, Chairman                         Tel:       [phone]
                                              Email:   [e-mail]
Alan Stein, Managing Director                 Tel:      [phone]
                                              Email:  [e-mail]

College Hill Associates                       Tel:       [phone]
James Henderson                               Email:  [e-mail]
Phil Wilson-Brown                             Email:  [e-mail]

Canaccord Capital (Europe) Ltd
Toby Hayward                                  Tel:     [phone]
                                              Email:  [e-mail]





The Directors of Fusion (other than Mr Williams and Mr Levison, who have not
participated in these deliberations on the proposed offer) accept responsibility
for the information contained in this announcement and to the best of their
knowledge and belief (having taken all reasonable care to ensure that such is
the case), the information contained in this announcement is in accordance with
the facts and does not omit anything likely to affect the import of such
information.



Canaccord Capital (Europe) Limited ('Canaccord'), which is regulated in the
United Kingdom by the Financial Services Authority, is acting exclusively for
Fusion and is acting for no one else in connection with the Offer and  will not
be responsible to anyone other than Fusion for providing the protections
afforded to clients of Canaccord nor for giving advice in relation to the Offer.



Bases and sources of information:



1                The statement 'Sterling's producing assets do not generate
sufficient free cash flow to have a material effect on the development of
Fusion's assets' is taken from Investec Securities - Analyst Note 19 September
2003.

2                The reference to the 'estimate of Woodside' is taken from
Woodside Petroleum Ltd's Half Yearly Report for 30 June 2003.


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