Sterling Resources Updates North Sea Operations

Sterling Resources says that offshore the United Kingdom, it has been increasing its involvement following its successful entry into this petroleum province last year. On Blocks 210/30 and 210/25b in the Northern North Sea, where Sterling holds a 60% working interest and is operator, geological and geophysical activities continue to enhance the prospectivity of the Blocks. Technical work completed to date, utilizing existing 2D seismic, has identified two play types, each with multiple leads. The first of these is the conventional Brent play that produces in the surrounding fields. The second is potential sand developments in an Upper Jurassic wedge, which thickens from the original 210/30-1 well, drilled in 1975, westwards against a major north - south trending fault. The well had thin sands in the Upper Jurassic with oil shows and the play is analogous to other producing provinces such as Brae. Recently, a 3D survey which covers the majority of 210/30, was reviewed using Schlumberger "Inside Reality" software. This review confirmed the presence of an elongated undrilled Brent closure next to the main fault. Several high amplitude bodies were also noted in the Upper Jurassic section trending NW - SE, as well as the potential for a shallower play type in the Paleocene. This 3D data has now been purchased and detailed mapping over the several play types and leads is scheduled to be completed by midyear. If the studies reveal drillable prospects, a well could be drilled late this year.

Sterling is also working to increase its acreage position in the UK North Sea. Access to a significant North Sea database has been obtained and an experienced North Sea explorationist, David Findlater, has been added to its team. Several areas and potential plays have been identified to date which will form the basis for making multiple applications for "Promote" Licenses in the UK 22nd Licensing Round which closes June 4, 2004.

Onshore UK, outside consultants have reviewed the results of a test over two intervals in the Bridport formation on the recently drilled Waddock Cross- 2 well, in which Sterling has an 18.75% interest. One of the recommendations is to complete the well for an extended production test on the lower (Unit 2) interval. Unit 2, after clean-up, demonstrated excellent productivity and the rate of oil production was increasing towards the end of the test. Results of the extended test on the Avington discovery in the Weald Basin (Sterling 8.33%) resulted in total fluid production averaging approximately 350 to 400 barrels per day but a higher than anticipated water cut of over 80%. However, this early well performance is similar to some of the lesser productive wells in the nearby producing oilfield. Plans for additional drilling to appraise the discovery are being considered.

The two gas prospects in the Cleveland Basin, Kirkleatham and Westerdale, have both received planning approval and are now planned to be drilled back to back in the fall, because operations at Westerdale are restricted to the October to March period. Both locations are based on fairly recent seismic and are targeting gas prospects in Permian Zechstein Carbonate reservoirs. Locations are updip from previous wells that had gas shows or discoveries. Sterling currently has an 80% working interest and, consistent with its strategy, will likely bring in industry partners to cover a portion of the drilling costs.

Onshore Romania, interpretation and mapping of portions of the recent seismic program have been completed. Additional processing is being undertaken over other portions and on apparent amplitude anomalies in the shallower sections. The seismic program, comprising 110 km of new data, covered an area previously identified as having positive surface geochemical anomalies along the western edge of the Bailesti Depression. This survey area lies in the northern focus area of the 1.5 million acre South Craiova concession in which Sterling currently holds a 100% working interest. The results show potential plays in the Triassic, sub base Tertiary unconformity, Miocene and shallower formations, all of which produce in fields to the north and east. Of particular significance are large structural noses, which culminate against the major fault, which forms the western edge of the Bailesti Depression. These noses are geologically similar to those that produce in the large Bradesti oilfield located on the eastern edge of the Depression, some 13 kilometers north of Sterling's block. This part of the concession is relatively unexplored below the Tertiary and only two wells have been drilled below the Upper Triassic in the area covered by the seismic program. The first drilling location is being selected which may test one of the larger structural noses in a position that will test two separate formations. Drilling is now expected to begin mid year. Work is also progressing on other areas of the concession.