Sterling Energy Enjoys Success with Two Gulf of Mexico Wells

Sterling Energy reports the successful outcome from the operations of two offshore wells in the Gulf of Mexico. A work-over of a third well has commenced.

Eugene Island 268 - Sterling has successfully entered and recompleted the A-1 well at Eugene Island 268. The well was recompleted in the Lower Pleistocene EO and EK sands with a sliding collar production assembly. The well tested gross gas flows of 3.9 million cubic feet per day (mmcfd) from the deeper EO Sand. The rig is in the process of moving off location following which the well will be hooked up to the sales line. The upper recompletion in the shallower EK Sand will be opened for production upon depletion of the EO Sand.

Sterling has a 60% working interest and 45% net revenue interest in the A-1 well.

Mustang Island 749 - Sterling has successfully drilled and completed the MU 749 GU No. 2 well adjacent to existing Sterling production at Mustang Island. The well encountered 30 feet of net pay sand approximately 30 feet high structurally to the other productive wells which have been drilled in this Cib Haz Sand reservoir. Although Sterling encountered operational problems and delays in drilling the No. 2 well, the well has now been completed and shut in following positive pressure tests on the reservoir. Fabrication of the production facilities has now commenced following which the No. 2 well will be connected to Sterling's Mustang Island 747 Platform for production. The rig has now moved off location to Matagorda Island.

After completing a farmout during drilling, Sterling owns a 75% working interest and 56.4% net revenue interest in the No. 2 well.

Matagorda Island 520 – work-over operations have now commenced on the No. 16 well in the El Gordo field where Sterling has a 57.3% working interest and 45.8% net revenue interest.

Sterling Finance Director, Graeme Thomson said;

"We are delighted with the results from these two wells which represent a significant step towards our target of doubling production from the Gulf of Mexico by the year end. With forward gas prices averaging over $7.50 /mmbtu for the next year we are looking forward to strong cash flow from these assets."

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