Acquisition and Placing

Sterling Energy PLC
19 January 2007



 THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE
                   UNITED STATES, JAPAN, CANADA OR AUSTRALIA.

19 JANUARY 2007

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

                         US$145 MILLION ACQUISITION OF
                    WHITTIER ENERGY CORPORATION ('WHITTIER')

                      PLACING TO RAISE GBP £26.12 MILLION

Sterling, the AIM listed (symbol: SEY) independent oil & gas exploration and
production company operating in the Gulf of Mexico and Africa, today announces
that it has entered into a merger agreement to acquire Whittier Energy
Corporation, a NASDAQ listed onshore US Gulf Coast exploration and production
company (the 'Acquisition').


HIGHLIGHTS


*  The terms of the merger agreement value the entire issued and to be
issued share capital of Whittier at US$145 million (approximately £74 million),
plus the assumption of an estimated US$43 million (approximately £22 million) of
net liabilities.


*  The Acquisition represents:

     -   A 26.0% premium to the closing price of Whittier on 18 January 2007

     -   A value of US$15.8 per boe (US$2.6 per mcfge) of proven plus probable 
         reserves


*  The Acquisition is expected to complete in late April 2007, subject to 
receipt of Whittier shareholder approval.


*  The Acquisition is to be financed from approximately equal amounts
of existing cash plus new equity and debt. For these purposes, £26.12 million
(approximately US$50 million) gross has been raised through an institutional
placing of 163,250,000 new ordinary shares at 16p and a new US$100 million bank
debt facility has been arranged with Natixis.


The acquisition significantly strengthens Sterling's production business and
will allow it to fund a greater level of exploration activity. In particular,
following the Acquisition, Sterling's enlarged group will have:


*  A near doubling of reserves, production and cash flow:


    -   2P reserves estimated to increase from 12.9 mmboe to 24.8 mmboe

    -   Current production estimated to increase from 3,400 boepd to 6,500 boepd

    -   Annualised cash flow from operations is estimated to increase from US$35 
        million to US$80 million


*  A material and balanced US business with significant upside:


    -   Combined US net production over 28 mmcfged (4,700 boepd)

    -   Over 50% reserves operated

    -   Strengthened management and technical team


*   A portfolio of near term exploration projects with substantial upside:


    -   Over 40 low risk wells planned, complementing Sterling's 2007 
        exploration programme, which together with Whittier is  targeting 60 
        mmboe of net unrisked reserves


*  A stronger platform from which to pursue additional high impact 
opportunities:


    -   Increased US activities

    -   Africa / Middle East

    -   Sector consolidation


Commenting today, Harry Wilson, Chief Executive of Sterling Energy Plc, said:


'The acquisition of Whittier materially strengthens Sterling's position in the
sector and creates new opportunities for us to grow.  Adding significant onshore
US production and development assets to our existing offshore Gulf of Mexico
assets, Whittier both de-risks and significantly increases the scale of our cash
generation.  This will allow us to build on our existing portfolio of
exploration projects and provide us with greater flexibility to pursue new
opportunities on a bigger scale.'


Enquiries

Sterling Energy Plc (01582 462 121)          Web site: www.sterlingenergyplc.com

Harry Wilson

Graeme Thomson

Rothschild (020 7280 5000)

Neeve Billis

Evolution Securities (020 7071 4300)

Rob Collins

Citigate Dewe Rogerson (020 7638 9571)

Media enquiries: Martin Jackson / George Cazenove

Analyst enquiries: Nina Soon


An investor presentation regarding the Acquisition will be available on
Sterling's website: www.sterlingenergyplc.com


                                   DISCLAIMER


Evolution Securities Limited is acting as nominated adviser and broker to the
Company for the purpose of the AIM Rules. Evolution Securities Limited, which is
authorised and regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for the Company in relation to the Placing.
Evolution Securities Limited is not acting for any other person in connection
with the matters referred to in this announcement and will not be responsible to
anyone other than the Company for providing the protections afforded to clients
of Evolution Securities Limited or for giving advice in relation to the matters
referred to in this announcement.



Rothschild, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively as financial adviser for the
Company in relation to the Acquisition. Rothschild is not acting for any other
person in connection with the matters referred to in this announcement and will
not be responsible to anyone other than the Company for providing the
protections afforded to clients of Rothschild or for giving advice in relation
to the matters referred to in this announcement.



This announcement, including the appendix, has been issued by the Company and is
the sole responsibility of the Company.



This announcement, including the appendix, does not constitute a prospectus or
listing particulars relating to the Company and has not been approved by the UK
Listing Authority, nor does it constitute or form any part of any offer or
invitation to purchase, sell or subscribe for, or any solicitation of any such
offer to purchase, sell or subscribe for, any securities in the Company under
any circumstances, and in any jurisdiction, in which such offer or solicitation
is unlawful.  Accordingly, copies of this announcement, including the appendix,
are not being and must not be mailed or otherwise distributed or sent in or into
or from the United States, Canada, Australia or Japan or any other jurisdiction
if to do so would constitute a violation of the relevant laws of, or require
registration thereof in, such jurisdiction or to, or for the account or benefit
of, any United States, Canadian, Australian or Japanese person and any person
receiving this announcement, including the appendix, (including, without
limitation, custodians, nominees and trustees) must not distribute or send it,
in whole or in part, in or into or from the United States, Canada, Australia or
Japan.



In accordance with the guidelines of the AIM Market of the London Stock
Exchange, Harry Wilson, BSc (Hons) Physics (1973), Chief Executive Officer of
Sterling Energy Plc, who has been involved in the oil industry for over 33
years, is the qualified person that has reviewed the technical information
contained in this press release.



                              STERLING ENERGY PLC

                   Acquisition of Whittier Energy Corporation


1. Introduction


The Board of Sterling is pleased to announce that it has entered into a merger
agreement to acquire the entire issued and to be issued share capital of
Whittier.


2. Terms of the Acquisition and Valuation


The terms of the Acquisition are US$11 cash per Whittier share, valuing the
entire issued and to be issued share capital of Whittier at US$145 million with
Sterling additionally assuming US$43 million of net liabilities.



The Acquisition represents:



*   A 26.0% premium to the closing price of Whittier on 18 January 2007



*   A value of US$24.1 per boe (US$4.0 per mcfge) of proven reserves



*   A value of US$15.8 per boe (US$2.6 per mcfge) of proven plus probable 
reserves



*   An expected 2P payback of approximately four years



Irrevocable proxies have been received to vote in favour of the Acquisition in
respect of approximately 15% of Whittier shares from Whittier Ventures and
Whittier's Directors and senior management.



The Board of Whittier has undertaken to recommend that Whittier Stockholders
adopt the Acquisition, which is expected to be completed in late April 2007,
subject to receipt of Whittier Stockholder approval.



3. Information on Whittier



Whittier Energy Corporation is an independent oil and gas exploration and
production company listed on the NASDAQ stock exchange and headquartered in
Houston, Texas. Whittier acquires, develops and exploits producing properties in
three core areas consisting of the Permian Basin, South Texas and the Texas/
Louisiana Gulf Coast. It currently operates five properties in Texas and three
in Louisiana. It also owns significant non operated working interests in the
above areas as well as minor interests in Wyoming, Oklahoma and Alabama.
Whittier generates exploration and exploitation projects which are typically
drilled with industry partners and also participates in prospects generated by
others.



For the 9 months ended 30 September 2006, Whittier reported profits before tax
of US$9.2 million and net assets as at that date of US$74.0 million.



During Whittier's 2006 drilling campaign 40 wells were drilled with a success
rate of 85%.  By year end production is estimated to have reached 19 mmcfged.



Further information on Whittier is available on the company's website:
www.whittierenergy.com



4. Information on Sterling Energy Plc

Sterling has built a portfolio of production assets in the Gulf of Mexico (USA)
and West Africa, which helps underpin, through cash flow, the Company's
exploration programme focussed predominately on Africa.

Sterling's original US core area, the shelf waters of the Gulf of Mexico, has
been expanded to include the onshore Texas and Louisiana Gulf Coast.  In
addition to production from Mauritania, Sterling has built a portfolio of
African exploration interests including Madagascar, Gabon and Cameroon.

Sterling's stated strategy is to build a profitable oil and gas company which
has exciting exploration potential by:

*          Buying production with appraisal and development potential



*          Acquiring low cost exploration licences with substantial upside



*          Taking advantage of corporate opportunities which fit its profile

Sterling's business model has been to build a production portfolio generating
cash flow with which it can fund an exploration programme with significant
upside potential.

The objective for Sterling is to create maximum value for shareholders while
minimising the potential risks of the business.


Further information on Sterling is available on the company's website:
www.sterlingenergyuk.com



5. Reason and Benefits of the Acquisition



The Board of Sterling believes that the acquisition of Whittier significantly
strengthens Sterling's business and provides a strong platform for future
growth.



Following the Acquisition the enlarged group will have:



*   A near doubling of reserves, production and cash flow from operations



*   A material and balanced US business with significant upside



*   An exciting portfolio of near term exploration projects



*   A stronger platform from which to pursue additional high impact
growth opportunities



Sterling estimates that the Acquisition will add 46.9 bcfe (7.8 mmboe) of proven
reserves, based upon independent reports.  Furthermore Sterling's:



*   2P reserves are expected to increase by over 90% from 77.4 bcfe (12.9 mmboe) 
to 148.6 bcfe (24.8 mmboe)



*   Current production is expected to increase over 90% from 3,400 boepd to 
6,500 boepd



*   Annualised cash flow from operations is expected to more than double to 
US$80 million



Whittier provides an attractive portfolio complementing Sterling's existing
assets in the region and experienced personnel with a demonstrable track record
of growth, strengthening Sterling's existing management and technical team.  The
enlarged group's combined US business will have:


*   Current net production of 28 mmcfged (4,700 boepd)



*   Reserves/production ratio of 11 years



*   Over 50% of its reserves operated



*   77% of reserves in gas



Over 50% of Whittier's production through to Q4 2008 has been hedged with an
estimated current mark to market value of US$4.4m.



In addition to the 2P reserves, Sterling estimates there to be approximately a
further 48 bcfge (8.0 mmboe) in possible reserves and identified exploration
prospects.  The Whittier portfolio offers 95 exploration and development
drilling locations (of which 38 new wells, including 16 as operator, will be
targeted in 2007), together with extensive undeveloped land and seismic data
from which to generate new drilling locations.  With this background, Sterling
believes Whittier will provide significant potential for production growth over
the next two years.



The acquisition of Whittier will increase the US contribution to Sterling's
production and cash flow from approximately 50% to around 75% whilst also
spreading overall portfolio risk.  This secure cash flow base provides a strong
platform from which to:



*   Exploit Sterling and Whittier's existing exploration portfolio,
with a 2007 drilling programme offering 60 mmboe of unrisked reserve potential
and significant medium term programme in Madagascar and other interests.



*   Pursue additional high impact exploration, asset acquisition and
sector consolidation opportunities in the US, Africa and Middle East.



6. Financing of the Acquisition



The all cash Acquisition will be funded by a combination of:


*          Internal cash resources



*          Debt financing commitment from Natixis



*          Equity cash placing



Sterling has agreed to pay a consideration of US$145 million plus the assumption
of US$43 million of net liabilities. The Company has agreed a US$100 million
acquisition bridge facility with Natixis (the 'New Facility') of which US$23.5
million is to be used to repay Sterling's existing debt facility.  Sterling has
also completed a placing of 163,250,000 new ordinary shares of 1p each in the
Company ('New Ordinary Shares'), at a placing price of 16p each, to raise £26.12
million ('the Placing').  The Directors of Sterling have subscribed for, in
aggregate, 600,000 New Ordinary Shares as part of the Placing. However, the
placing is not contingent on the completion of the proposed acquisition of
Whittier.  The additional funds required over and above the Placing and the New
Facility will be provided from the Company's existing cash resources.



The New Ordinary Shares represent approximately 11.6 per cent. of the Company's
previously existing issued share capital and approximately 10.4 per cent. of the
Company's issued share capital immediately following the Placing.  The New
Ordinary Shares will rank pari passu in all respects with the existing Ordinary
Shares. The Placing has been fully underwritten by Evolution Securities and is
conditional upon, inter alia, the admission of the New Ordinary Shares to
trading on AIM ('Admission'). Accordingly, application has been made to the
London Stock Exchange for the New Ordinary Shares to be admitted to trading on
AIM. It is expected that Admission will become effective and dealings in the New
Ordinary Shares will commence on AIM on 22 January 2007.



Following the Acquisition, Sterling will have total debt of approximately US$120
million.  In addition the company will have access to US$25 million undrawn debt
facility and after deducting the estimated cash portion of the Acquisition, will
currently have approximately US$30 million cash for working capital and further
investment purposes.



7. Sterling Trading update



Current Sterling cash balances are approximately US$80 million and its drawn
down bank debt is US$23.5 million.



Sterling currently has six exploration wells and at least four appraisal/
development wells planned for 2007. It believes that this diverse programme
offers substantial upside to its reserve base.  The first well in the programme
of approximately 45 wells (including those of Whittier), on the North Theall
prospect, reached target depth and has been logged in the last few days. Gas was
encountered in several horizons but unfortunately in tight reservoirs, yielding
uncommercial quantities. Despite this, the company has net unrisked potential
from the remaining 2007 drilling programme of over 60 mmboe, which has the
potential to add significantly to Sterling's year end net 2P reserves of
approximately 12.9 mmboe. Drilling is due to commence on the significant Thunder
Stud prospect in late January.  In addition, following completion of the AKG
farm-in, announced in November 2006, the 25 well Austin Chalk infill programme
is due to start shortly.  The West African drilling programme is expected to
commence in Guinea Bissau in February, with two wells, one fully carried. A
mainly carried well in Gabon is planned for July and a fully carried well is
anticipated in AGC later in the year.



In the fourth quarter of 2006, US production was an estimated 8.6 mmcfged (1,400
boepd), lower than the third quarter's 9.3 mmcfged (1,600 boepd), due to planned
pipeline shut-ins for replacement and extension. Recent production has returned
to previous levels, averaging 9.4 mmcfged (1,600 boepd). Based on reports by
independent consulting engineers, year-end 2P USA reserves were estimated at 54
bcfge, including the recent successful GA303 well.



There were a further three attributable cargoes of Chinguetti production sold in
the second half of 2006. This brought Sterling's share for the second half to
US$26 million and a total for the year to US$57 million. In addition, a total of
US$4 million of income has arisen in the year from Premier Oil through
Sterling's royalty interest.



Sterling commissioned an independent review of its Mauritanian interests by RISC
(UK) Limited, as of the end of 2006. This valued the Company's Mauritanian
interests at US$87-121 million (NPV10).  RISC estimate ultimate Chinguetti 2P
field reserves of 51 mmbbl (NPV10 net to Sterling of US$50-71 million), lower
than the 80 mmbbl used in the interim results. At the end of June 2006, the
tangible net book value of these producing interests was US$143 million,
together with US$27 million for the related intangibles. An infill well is
currently being drilled at a net cost to Sterling of US$8 million and a
programme of 4-D seismic and other work is planned for 2007.  A review of the
carrying value of these interests will be performed in connection with the
preparation of the annual results. An update on plans for the further
development of the Chinguetti field, as well as other discoveries such as Tiof,
is expected from the operator in the coming months.



Recent gross field production has been approximately 22,000 bopd and net
remaining reserves estimated at 3.9 mmbbl.



The Company intends to adopt International Financial Reporting Standards ('IFRS
') for its accounts for the year ended 31 December 2006. This will, inevitably,
result in revisions to prior period financial statements.



8. Board Appointment



In addition, Sterling is pleased to announce that Dr. Richard Stabbins has been
appointed a non-executive director of Sterling.



Dr. Stabbins, aged 63, is a geologist and former chairman of the Petroleum
Exploration Society of Great Britain. He has over 30 years' experience in the
international hydrocarbon industry and has held senior positions with Murphy Oil
and Ranger Oil. He was formerly exploration director of Goal Petroleum plc and a
non-executive director of AIM-quoted Fusion Oil & Gas plc until its acquisition
by Sterling in late 2003.



9. Summary



In summary, Whittier will provide Sterling with a strong platform for further
growth, with:



*   A near doubling of reserves, production and cash flow from operations



*   A material and balanced US business with significant upside



*   An enlarged portfolio of near term exploration projects with significant 
upside



*   A stronger platform to pursue additional high impact growth opportunities


The acquisition of Whittier materially strengthens Sterling's position in the
sector and creates exciting new opportunities for growth.


Appendix



Terms and Conditions of the Acquisition



Under the terms of the merger agreement, an indirect, wholly-owned subsidiary of
Sterling will merge with and into Whittier, whereby each outstanding share of
Whittier common stock will be converted into the right to receive US$11 in cash.
Whittier will be the surviving entity in the merger and, as a result of the
merger, will become an indirect, wholly-owned subsidiary of Sterling.



The merger agreement sets out the conditions to closing of the transaction.  It
also contains certain termination rights, mutual representations and warranties
and various covenants, including certain limitations on the operation of the
business of Whittier in the period prior to closing and non-solicitation
obligations of Whittier.



The Acquisition is subject to the fulfillment of several customary conditions,
including receipt of the approval of a majority of Whittier's stockholders,
making certain federal regulatory filings, and there having been no material
adverse effect on Whittier since the date of the merger agreement. The
Acquisition is being recommended by the Board of Directors of Whittier, who will
recommend that Whittier stockholders vote in favour of the Acquisition, subject
to certain limitations in the event Whittier receives a superior takeover
proposal meeting certain conditions.



The Acquisition requires clearance under US foreign investment laws. Each of
Sterling and Whittier must use their 'reasonable best efforts' to make the
required filings and to obtain the required regulatory approvals if necessary.



Whittier will immediately begin the preparation of the US proxy material, which
will be sent to the US Securities and Exchange Commission (SEC) for review.
Once Whittier receives clearance from the SEC, it will mail the proxy material
to Whittier stockholders and announce the date of the shareholder meeting, which
is anticipated to occur approximately 30 days subsequent to the mailing of the
proxy materials.



The merger agreement may be terminated by mutual agreement of Sterling and
Whittier.  It also may be terminated by either party if a final judgment, order,
decree, ruling or regulation restrains the Acquisition, if the other party
breaches the agreement such that the closing conditions cannot be satisfied (or
cured within 60 days), if Whittier's stockholders do not approve the
Acquisition, or if the Acquisition has not been consummated by 19 July 2007, the
end date.  Additionally, Sterling may terminate the agreement if the Board of
Directors of Whittier recommends or accepts a superior takeover proposal meeting
certain conditions or by Whittier if, prior to its shareholder meeting, it
accepts a superior takeover proposal meeting certain conditions and pays
Sterling the required termination fee.



Whittier is required to make an immediate payment to Sterling of US$5.5 million
under the following circumstances:



*          if Whittier terminates because it determined to accept a superior
takeover proposal meeting certain conditions prior to its stockholders meeting
and Sterling did not adequately improve its offer; or



*          if Sterling terminates because the Board of Directors of Whittier
recommends a superior takeover proposal meeting certain conditions prior to its
stockholders meeting and Sterling did not adequately improve its offer; or



*          if Sterling terminates because Whittier breaches or fails to
perform in any material respect its non-solicitation covenants or agreements.



Whittier is also required to make a payment to Sterling of US$5.5 million under
the following circumstances if Whittier consummates an alternative transaction
for the sale of 20% or more of the outstanding voting securities or assets of
Whittier within 12 months following the termination of the merger agreement:



*          if either Sterling or Whittier terminates because the Acquisition
is not consummated by the end date;



*          if either Sterling or Whittier terminates because any final
judgment, order, decree, ruling or regulation restrains the Acquisition;



*          if either Sterling or Whittier terminates because the Whittier
shareholder vote was not obtained; or



*          if Sterling terminates because Whittier breaches or fails to
perform in any material respect any of its representations, warranties,
covenants or other agreements.



Voting agreements have been executed with approximately 15% of the Whittier
stockholders, with the result that these stockholders have agreed to vote in
favour of the transaction.



Definitions and glossary of terms



Definitions



'Acquisition'                    the acquisition of Whittier by Sterling;

'Board' or 'Directors'           the directors of the named company;

'Evolution Securities'           Evolution Securities Limited;

'NASDAQ'                         National Association of Securities Dealers Automated Quotations

'Rothschild'                     N M Rothschild & Sons Limited;

'Sterling' or the 'Company'      Sterling Energy PLC;

'United Kingdom' or 'UK'         the United Kingdom of Great Britain and Northern Ireland;

'United States' or 'US'          the United States of America, its territories and possessions;

'Whittier'                       Whittier Energy Corporation;

'Whittier Stockholders'          holders of Whittier Stock.


Glossary


bbls                 - barrels of oil

bcf                  - billion cubic feet of gas

bcfge                - billions of cubic feet gas equivalent

boe                  - barrels of oil equivalent

bopd                 - barrels of oil per day

boepd                - barrels of oil equivalent per day
                  
GBP                  - British Pound Sterling

H1                   - period from 1 January to 30 June

mcf                  - thousand cubic feet of gas

mcfged               - thousand cubic feet of gas equivalent per day

mmbbl                - millions of barrels

mmboe                - millions of barrels of oil equivalent

mmcfgd               - million cubic feet of gas per day

mmcfged              - millions of cubic feet of gas equivalent per day

US$                  - US Dollar

WI                   - working interest

2P                   - proven and probable

3P                   - proven, probable and possible


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