Sterling to Sidetrack Sangaw Well

Sterling provided the following update for the Sterling operated Sangaw North block in Kurdistan (53.33% working interest).

Since the update on January 6, 2011, a further 280 meters of drill pipe have been recovered from the Sangaw North No.1 well and, with the top of the remaining drill pipe now at approximately 1,950 meters, further progress in recovering drill pipe has not been possible.

The well will now be side-tracked and re-drilled to approximately 3,300 meters, the depth just above where the previous influx of gas was recorded. At this depth, casing will be run and cemented prior to drilling deeper into the potential reservoir section that is believed to contain hydrocarbons.

The Company estimates that re-drilling the remaining section to the planned casing point will take approximately 45 days.

Angus MacAskill, Sterling's Chief Executive said, "We are pleased to have recovered drill-pipe to almost 2,000 meters; this allows us to sidetrack in the open hole below the existing casing shoe and drill a new wellbore to the planned casing point with the same 8.5 inch hole size as the original wellbore. This configuration will permit the well to reach its original target depth and test the potential of the Jurassic formations."