Sterling Energy Falls 5.7% on Results

DST-5 tested a 100m cased hole interval within the Cretaceous aged Kometan formation. The well flowed at a stabilised rate of approximately 0.4 million standard cubic feet of gas and 4,500 barrels of formation water per day during an 8 hour flow period through a 60/64ths inch choke with a wellhead pressure of 280 pounds per square inch. Analysis of gas samples, during the flow test, indicated approximately 83 per cent of the produced gas was hydrocarbon gas with the remainder comprising 10 per cent hydrogen sulphide and 7 per cent carbon dioxide

The Sangaw North-1 exploration well tested the main structure within the block and was, unfortunately, unsuccessful. The Company has integrated the results of this well, along with exploration results in surrounding areas, into its geological interpretation of the block and believes that smaller, but nonetheless interesting, potential remains in an exploration play along the flanks of the main structure.

Following the identification of the remaining exploration potential, the joint venture partners entered the second sub-period of the exploration phase of the PSC in November 2011, with a duration of 2

years to November 2013. The work commitment for this period has been fulfilled by the drilling of the Sangaw North-1 well.

The partnership plans to acquire 130km of 2D seismic data in 2012 to evaluate the identified exploration leads with the aim of preparing a prospect for drilling in 2013.

Company Chairman, Alastair Beardsall, stated:

The biggest disappointment for 2011 was the failure to discover commercial hydrocarbons in the Sangaw North-1 exploration well. However, our sub-surface specialists believe, based on all the available data, that there is potential for secondary objectives on the flanks of the main Sangaw structure. We plan to acquire 2D seismic this year to evaluate this potential.

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