Operational Update

Sterling Energy PLC
07 December 2005



07 December 2005



                              STERLING ENERGY PLC

                               OPERATIONAL UPDATE


Sterling Energy plc ('Sterling'), the AIM listed energy company with activities
in the Gulf of Mexico and Africa, today provides an update on its activities
since the publication of its interims on 23 September 2005.



Commencement of Mauritanian oil production on-target for March 2006



The conversion of the floating production vessel for the Chinguetti field,
offshore Mauritania, has been completed. It is on location at the field and the
hook-up and installation is well underway. The project is over 95% completed,
including all drilling, well-completion and clean-up. First production is on
schedule for March 2006, building up to a 70-75,000 bpd peak within several
months.



Sterling has an approximate 8% economic interest in the field. It also has a
sliding scale royalty over 5.28% of the field which, at an oil price of $55/bbl,
is worth approximately $6.9 per attributable barrel.



The commencement of production in Mauritania will mark a transformation in the
level of Sterling's attributable production and cash flow.



In October, the adjacent Tevet-2 well discovered oil in its Miocene target. This
helps to reconfirm Sterling's estimates of a field of 50 million barrels. If
declared commercial, Sterling would benefit from its royalty interest and tariff
income as production is expected to be transported through a tie-back to the
Chinguetti facilities. The well also found a 6 metre oil column in the
Cretaceous interval, which is encouraging for the other numerous such prospects
as it proved a working hydrocarbon system and good quality sands.



The Labeidna well drilled in November was declared as a discovery and was
logged. Thin oil bearing sands were encountered.



A further exploration well is expected by the end of the year and 4 - 5 further
wells in 2006. Due to its royalty interest Sterling pays no costs for any of
these wells.



Gulf of Mexico



Independent consulting engineers have upgraded Sterling's proven and probable US
reserves by 5% to 58.3 bcfge as of 1st September.  Of these 60% are in the
proven category. There has also been an increase to $34 million in the borrowing
base for the US bank loan at the recent review date. The facility is now to be
extended by approximately 18 months to the end of 2009, subject to final
approvals.



In common with other Gulf of Mexico operators, Sterling's production has been
affected by Hurricane Rita although gas prices have since been markedly higher.
On balance, Sterling has experienced a limited and short-term net financial
impact.



Current production is approximately 7.5-8.0 mmcfged. Since Hurricane Rita in
late September, production from the Sterling operated fields in the western Gulf
has been maintained at approximately 5.0-5.5 mmcfged. Elsewhere, the High Island
/Eugene Island areas have been affected. Although the physical damage to
Sterling's platforms and its owned pipeline systems was very limited, the
widespread damage to third party transmission systems through which product
flows, has caused temporary production shut-in's. Production is expected to be
fully restored towards mid/end of December.



Prices have been much higher as a result of the regional shut-in's following the
hurricanes.  In the Henry Hub area they are currently over $11/mcf, having
peaked in excess of $13/mcf, although prices in the Western Gulf market have
recently been some $2.50/mcf lower than this. These compare with Sterling's
average realised prices in the first half of 2005 of $6.38/mcf.  The lower
priced forward sales for the July-December period covering approximately 3.3
mmcfgd at an average of $6.06/mcf have now all been closed-out. At present some
20% of current production is hedged for the January-March 2006 period at $8.84/
mcf. Further hedges are expected to be taken out in order to reduce pricing risk
into 2006.



Production from the Gryphon High Island 52 field (7.6% royalty interest) has, in
the last two weeks, increased to a rate of 2.6 mmcfgd. This has risen from 0.5
mmcfgd when it restarted in early November and from 1.3 mmcfgd in mid-November
as the production curtailments have gradually been reduced. During the downtime
the C-1 well was acidised to stimulate production.



A new well is expected to be drilled by Gryphon in the first quarter of 2006
which is intended to double production. This is to be drilled at no cost to
Sterling.



Eugene Island 268 remains shut-in awaiting completion of limited platform and
third party pipeline repairs. Production is expected to restart in mid/late
December.



The North Mustang Island and Sherman fields production were shut-in for four
days in late November for recertification of the pipelines and also to complete
the hook-up of new equipment to enable the Mustang line to carry more third
party throughput and to reduce line pressure, thereby allowing the MU748-1 well
to be brought back on-stream at a net rate of 0.6 mmcfgd, after a two months
shut-in.



A liftboat has been provisionally secured to workover the MU904-5 well in
mid-December, work which has been delayed due to widespread equipment shortages.



Sterling has commenced drilling the non-operated TB-2 well on GA Bay ST251. It
has farmed into this for a 28% WI (20.5% NRI) with the target being a net 3-6
bcf prospect at 15,300 feet. Its net share of costs is estimated at $2.1
million. Drilling is estimated at 50 days.



Sterling was also successful in its 100% bid for the Mustang Island 749 S/2 NE/4
tract in its core area and on which it has identified a prospect at 9-10,000ft.
State confirmation is awaited before further work on this drilling prospect is
commenced. This is the first prospect to be derived from the 3D data acquired in
mid-year.



Africa



In Madagascar, where Sterling has a 30% carried interest and remains as operator
after farming-out to ExxonMobil, a 2,500+km 2-D seismic survey is expected to be
brought forward by a year into 2006. This follows encouraging early reviews of
the 34,000 sq km blocks.



In the Dome Flore licence in AGC, in which Sterling has a 30% interest, the
initial studies of the heavy oil prospect have identified the need for further
appraisal work. Accordingly, the joint venture has agreed to enter the First
Renewal Period on the permit. Under the terms of the farmout agreement signed
earlier in the year, Sterling will be carried for the costs of a firm commitment
well programme in excess of $10 million gross.  Whilst this is a large
accumulation the prospects of commerciality at this stage still remains to be
proven.



After detailed review of the prospectivity, a farmout programme and in view of
the likely extremely high drilling cost that Sterling would have to bear, notice
has been given to the licensing authorities that the deepwater Croix Du Sud
licence in AGC will be allowed to lapse.



Sterling has increased it interest in the Iris Marin PSC in Gabon to 38.57% from
20.57%. This licence, together with Ibekalia TEA and Themis Marin PSC areas are
of great interest. A well is scheduled to be drilled on Themis Marin in the
second half of 2006 with Sterling paying only 2.57% of the costs for its 20.57%
interest. Work continues on the evaluation of the Iris Marin licence following
the Iris Iboga Marin-1 well earlier in the year.



The closure of the Perth office remains on track for the end of January 2006 and
the offices have been sublet. An increasing emphasis is now being placed on new
venture efforts in Africa and a new ventures team has now been assembled with
the objective of increasing the pace of new licences, drilling opportunities and
of selective production opportunities following the upsurge in cash flow
expected with the major rise in production in the first half of 2006. Whilst
this has duplicated overhead costs in the short-term, financial and
administrative benefits are soon expected to arise.



Chief Executive, Harry Wilson, said



'The commencement of production from the offshore Chinguetti field in Mauritania
is on-target for March 2006 and will transform Sterling's prospects in the years
ahead.  Strong US gas prices and the increasing likelihood of these being
sustained, has, in value terms, dwarfed the short-term impact of downtime in the
Gulf of Mexico due to the effects of severe weather. We believe our rising cash
flows will provide increasing strength to Sterling and permit us to be bolder in
our exploration activities, as well as enable us to selectively add further
production assets to our portfolio.'



For further information contact:



Sterling Energy plc                                          [phone]
Harry Wilson, Chief Executive
Graeme Thomson, Finance Director



Citigate Dewe Rogerson                                       [phone]
Media: Martin Jackson / Rachel Lankester
Analysts: Nina Soon



www.sterlingenergyplc.com                                  Ticker Symbol: SEY




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