New Madagascar Licenses

Sterling Energy PLC
21 July 2004



             Sterling wins 2 new Exploration Licenses in Madagascar



Sterling Energy plc has been awarded a 100 per cent interest in two new
exploration licenses offshore northwest Madagascar, covering some 34,000 km2 of
undrilled basin. In both blocks the initial commitment is to conduct geological
studies with seismic acquisition expected to follow in 2005 at Sterling's
option.  Following this, Sterling has the option to extend each license by
drilling an exploration well.  The total license term in each case is 8 years.
In the event of a commercial discovery, a 25 year production license will be
granted.



The Ambilobe Block covers an area of 20,800 sq kms of the Ambilobe Basin at the
very northwest point of Madagascar. Water depths are mostly below 1,000 m. This
area has been licensed twice in the past 15 years, once by Maxus and more
recently by Triton.  Accordingly a large 2D seismic data base exists and leads
have already been identified.  Both companies left following corporate
restructuring. The new Madagascan government has worked hard to improve the
investment climate over the past two years, and Madagascar now offers a much
improved business environment.



The Ampasindava Block covers an area of 13,147 sq kms in the northern Majunga
Basin and lies immediately to the southwest of the Ambilobe Block. The southwest
limit is immediately adjacent to the block held by Vanco which is the only other
offshore license in the region, and which has recently been farmed out to
ExxonMobil. Water depths range from shallow to around 3,000 m in depth. The
block is covered by only a very small amount of 2D seismic close to the coast
and is therefore almost virgin territory.  Sterling's aim will be to demonstrate
the potential for the extension of plays identified in both the Ambilobe and
Majunga Basins on either side.



Sterling's Exploration Manager, Andy Grosse said; 'We are delighted to have been
awarded these two exploration licenses after many months work. These are very
large unexplored areas in which all the necessary components for petroleum
reserves are already established.  Jurassic age source rocks are proven in the
onshore Ambilobe Basin and good quality reservoirs are also exposed onshore. The
existing seismic provides plenty of evidence of sizeable structures.  We believe
that Madagascar has been neglected mainly due to past concerns about the
investment climate, rather than fundamental exploration potential.  The recent
farm-in of Exxon/Mobil to the Vanco block immediately next door to ours may
signal a significant change in the industry view.'



A map showing the location of the two new licenses can be found on Sterling's
website.



Sterling produces gas in the Gulf of Mexico and has a broad portfolio of license
interests in West Africa where an extensive carried drilling programme is due to
commence next month in Mauritania.



For further information contact:



Harry Wilson, Chief Executive, Sterling Energy plc:                01582 462 121

Nigel Quinton, Operations Director, Sterling Energy plc:           01582 462 121

Allan Piper, First City Financial Public Relations:                020 7436 7486
                                                                   077 3606 4982

Rob Collins, Evolution Beeson Gregory:                             020 7071 4311

www.sterlingenergyplc.com                                      Stock Symbol: SEY




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