Drilling Report

Sterling Energy PLC
02 July 2004



Drilling campaign starts in Gulf of Mexico



Sterling Energy plc ('Sterling') has commenced drilling the A5 ST (Sidetrack)
well on its High Island A-68 lease in the Gulf of Mexico offshore Texas.



The well is the first in a drilling programme planned to more than double
production over the next 12 months from recent levels of around 11 million cubic
feet of gas equivalent per day. It is targeting 'attic' gas reserves updip from
existing productive wells.



Sterling Operations and Technical Director Nigel Quinton said: 'This well marks
the start of an extensive drilling campaign in the Gulf of Mexico in which we
expect to drill at least 6 new wells and undertake the work-over of a number of
existing wells.'



The A5 ST well is located in shallow waters (less than 100 ft) approximately 75
miles south east of Houston, Texas. It is immediately north of Sterling's High
Island A-94 lease acquired in August 2003. Drilling is expected to take up to 3
weeks.



The High Island A-68 lease covers 5,760 acres, and the field, which was
discovered in 1987, has produced a total of 135 billion cubic feet of gas to
date. Participants in the lease are Sterling Energy Inc (Operator) 50% and
Endeavour Oil & Gas Inc (a subsidiary of Pan Andean Resources plc) 50%.





For further information contact:



Harry Wilson, Chief Executive, Sterling Energy plc:          01582 462 121
Nigel Quinton, Operations and Technical Director, 
Sterling Energy plc:                                         01582 462 121
Allan Piper, First City Financial Public Relations:          020 7436 7486
                                                             07736 064 982
Rob Collins, Evolution Beeson Gregory:                       020 7071 4311



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