Sterling (AIM: SEY), the independent oil and gas exploration and production company

with interests in the Middle East and Africa, provides the following update for the Sterling

operated Sangaw North block in Kurdistan (53.33% working interest).

A flow test has been completed across the open hole section of the Sangaw North-1 well

between 3,338 metres and 4,190 metres. This interval contains target horizons in the

Jurassic Mus and Butmah formations and the Triassic Kurra Chine formation.

The well flowed at a stabilised rate of approximately 4.6 million standard cubic feet of gas

and 7,280 barrels of formation water per day during a 12 hour flow period through a 1.5

inch choke with a wellhead pressure of 470 pounds per square inch. Approximately 74 per

cent of the produced gas was hydrocarbon gas with the remainder comprising 24 per cent

hydrogen sulphide and 2 per cent carbon dioxide.

A wireline logging operation was attempted to identify the contribution from individual

zones within the open hole section but was unsuccessful due to mechanical restrictions

within the flow testing equipment.

No further flow testing is planned in the open hole section of the well and this section is

being isolated with cement plugs.

The joint venture partnership has elected, based on gas shows while drilling, to conduct

two cased hole flow tests; the first across a 100 metre interval within the Jurassic aged

Sargelu formation and the second across a 100 metre interval within the Cretaceous aged

Kometan formation. Each flow test, including preparatory operations, is expected to take

approximately three weeks to complete.

“We are disappointed that the open hole flow test has not demonstrated commercial

hydrocarbon flow rates within the deeper horizons of the Sangaw North-1 well. The data

acquired during this test will be integrated with all the other data acquired in well

operations to determine the potential of these horizons. We look forward to the outcome of

the two cased hole flow tests to be conducted in shallower formations.”