Sterling Energy Acquires Permian Basin Assets

Permian Basin
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Sterling Energy Resources has acquired several oil and gas development projects in the Permian Basin of west Texas. In addition, numerous other projects are under review in the Permian Basin and will be reported as they are finalized.

Sterling has selected the Permian Basin of west Texas as a new core oil and gas exploration, exploitation and production area. The Permian Basin is one of the oldest and most prolific oil and gas producing regions of the United States. Sterling intends to develop strategic partnerships and joint ventures with Permian Basin based operating companies in order to explore for and develop oil and gas reserves. Sterling anticipates commencing oil and gas operations in the Permian Basin during the late summer of 2004.

Sterling is also pleased to announce several items relating to its other core oil and gas operational area, the McLouth field in northeast Kansas. Sterling has initiated a comprehensive study relating to the potential of Coal Bed Methane (CBM) gas on existing company leases in and around the McLouth field. CBM production has recently been discovered in northeast Kansas by other unaffiliated oil and gas companies and Sterling feels that such CBM potential may exist in the McLouth field.

In addition, Sterling continues to seek a strategic partner for the construction and operation of the 14-mile McLouth gas gathering pipeline. Southern Star Energy (formerly Williams Pipeline) has recently completed the pipeline tap connection that should facilitate the search for an operating partner.

Sterling Energy is also initiating an open market share buy-back program for up to 100,000 shares. There is no assurance as to the timing or the number of shares that the Company will actually repurchase in its open market share buy-back program.

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