Sterling Resources announces 2008 operating and financial results and NI 51-101 reserves disclosure



    CALGARY, April 15 /CNW/ - Sterling Resources Ltd. (TSX-V:SLG) ("Sterling"
or the "Company"), an international oil and gas company with exploration and
development assets in the United Kingdom, Romania and France, is pleased to
announce operating and financial results for the year ended December 31, 2008.
Unless otherwise noted all figures contained in this release are denominated
in Canadian dollars.
    The net loss for the year ended December 31, 2008 was $2.3 million ($0.02
per common share) compared to a loss of $1.8 million ($0.02 per share) for the
year ended December 31, 2007. Capital expenditures on oil and gas properties
during 2008 totalled $87.0 million compared to $17.4 million during 2007.
Working capital as at December 31, 2008 was $14.0 million compared to $10.9
million as at December 31, 2007.
    The Company is pleased to report a significant increase in its Proved and
Probable reserves from 1.2 million barrels of oil equivalent ("MMboe") at
year-end 2007 to 40.3 MMboe at year-end 2008. In addition the net Best
Estimate (P50) Contingent Resources have increased from 40.5 MMboe at year-end
2007 to 61.2 MMboe at year-end 2008. In accordance with the provisions of
National Instrument 51-101, additional reserves disclosure is contained in
this release and can also be found on the SEDAR (System for Electronic
Document Analysis and Retrieval) website at www.sedar.com and on Sterling's
website at www.sterling-resources.com.
    "These significant reserve and resource additions are the result of the
most active and operationally successful year in the Company's history. We are
particularly pleased, given the high level of activity during 2008, that these
milestones were achieved without any safety or environmental incidents,"
stated Stewart Gibson, Sterling's Chief Executive Officer. "However, in spite
of these successes we continue to face many challenges as a result of the
deterioration of capital markets during the past year, most notably ongoing
access to capital to continue to develop the numerous attractive opportunities
we have identified. The Company is, however, actively applying alternative
methods to ensure the development of our key assets continues toward
production," added Mr. Gibson.

    
    Key operational milestones achieved during 2008 included the following:

    -   Six successful offshore wells added significant reserves and
        resources to existing discoveries in the Breagh area of the UK North
        Sea and the Doina and Ana area of the Romanian Black Sea. A farm-out
        agreement, first announced in December of 2008, was recently
        finalized under the terms of which Sterling will farm-out half of its
        65% interest in the Ana and Doina fields in the Romanian Black Sea in
        exchange for funding of the Company's share of certain expenditures
        for the development of the Doina and Ana fields in a range up to a
        maximum of US $90.0 million depending on prevailing gas prices at the
        time the field commences production.

    -   A successful exploratory offshore well was drilled at Cladhan in the
        Northern North Sea, adding further resources and potential
        development on an entirely new prospect.

    -   Additional licenses were obtained in the UK Offshore 25th License
        Round with the awarding of blocks 42/10 and 42/15. Given their
        proximity to the existing Breagh field and previous drilling activity
        confirming the presence of natural gas, these were the Company's
        primary targets for licenses.

    -   Two major seismic programs were completed during 2008 offshore United
        Kingdom and Romania totalling 4,500 line kilometres, designed to move
        forward several major prospects located adjacent to existing
        discoveries.

    -   Since the Grenade-4 well onshore France was drilled and suspended
        early in 2008 no further onshore drilling has taken place. At the
        large Craiova concession onshore Romania, a 50% farmout of Sterling's
        interest will result in a three well shallow gas program during the
        second quarter of 2009 and during early 2009 production commenced at
        the small onshore UK Avington oil discovery of which Sterling holds
        an 8.33% interest.

    During 2008 the following key corporate activities were completed:

    -   During January of 2008 Sterling completed a non-brokered private
        placement with a subsidiary of the Royal Bank of Scotland for
        7,109,900 common shares at a subscription price of $2.00 per share
        for net proceeds of $14.2 million.

    -   Later in the first quarter of 2008 Company completed a bought deal
        financing of 16,000,000 common shares at a price of $2.50 per share
        with a syndicate of underwriters for net proceeds of $37.4 million.

    -   During August of 2008 the Company completed a bought deal financing
        of 11,274,600 units at a price of $2.55 per unit, for aggregate net
        proceeds of $27 million. Each full warrant entitles the holder to
        purchase one common share at a price of $3.25 until August 6, 2009.

    Subsequent Events:

    -   During January of 2009 the Company announced the successful drilling
        of the West Breagh well in the Southern North Sea. Subsequent testing
        of the well during January indicated a flow rate of 26 million cubic
        feet per day.

    -   On March 10, 2009 the Company entered into a fully termed agreement
        with Melrose Resources PLC ("Melrose") under which Melrose would earn
        a 32.5% interest in the Midia and Pelican blocks offshore Romania in
        the Black Sea by funding the Company's share of certain expenditures
        for the development of the Doina and Ana fields in a range up to a
        maximum of US $90.0 million depending on prevailing gas prices at the
        time the field commences production. After completion of this
        arrangement the Company would retain a 32.5% interest in the field.
        In addition, Melrose will provide US $12.0 million of short-term
        financing at commercial rates which is repayable after one year.

    -   On March 11, 2009, Sterling announced that it had elected to take
        back operatorship of the Sheryl (Block 21/23 in the central North
        Sea) discovery in which Sterling holds a 35% interest.

    -   On March 24, 2009, the Company announced a US $5.0 million bought
        deal financing with an over allotment option for up to an additional
        US $7.5 million at an interest rate of 15%. Each unit of US $100,000
        of financing is repayable in 3 equal instalments 6, 9 and 12 months
        from closing and each unit will include one common share purchase
        warrant entitling the holder to acquire 20,000 common shares of the
        Company at $0.84. The warrants expire after 3 years from the closing
        of the transaction, subject to accelerated expiry in certain
        circumstances.

    Reserves Summary:

    -   The Company had a year over year increase of over 30 fold in its
        Proved and Probable reserves from 1.28 MMboe at year-end 2007 to
        40.34 MMboe at year-end 2008.

    -   Best Estimate (P50) Contingent Resources have increased over 50% year
        over year from 40.50 MMboe at year-end 2007 to 61.19 MMboe at year-
        end 2008.

    -   The reserves additions to the Breagh field in the Southern North Sea
        have been added at a finding cost of approximately $1.00 per boe.

    -   A further 13.24 MMboe of net Best Estimate (P50) Prospective
        Resources have been attributed in the year-end resources report.
        These Prospective Resources are located in the Cladhan (Block
        210/29a) and Crosgan (Block 42/10 and 42/15) areas of the UK North
        Sea where as at December 31, 2008, Sterling held 39.9% and 60%
        working interests respectively. These are classified as Resources
        rather than as Reserves primarily due to the requirement for final
        development plan approvals. Other factors requiring the
        classification of these as Resource volumes are the need for more
        delineation wells, detailed design estimates and near term
        development plans.

    -------------------------------------------------------------------------
                      Reserves (MMboe)        Net Present Value Before Tax(4)
    -------------------------------------------------------------------------
                                                      Company Share -
                      Company Share(1)               Millions of Cdn$
    -------------------------------------------------------------------------
                                      Proved +                       Proved +
                         Proved +   Probable +          Proved +   Probable +
                 Proved  Probable    Possible   Proved  Probable    Possible
    -------------------------------------------------------------------------
    Breagh(2)(8)  27.74     39.04       53.73   307.57    431.50      649.17
    -------------------------------------------------------------------------
    Kirklea-
     tham(2)       0.08      0.19        0.43     0.72      4.54       11.02
    -------------------------------------------------------------------------
    Avington(3)    0.01      0.01        0.01     0.10      0.24        0.24
    -------------------------------------------------------------------------
    Sheryl(3)         -      1.10        1.57        -     38.03       61.59
    -------------------------------------------------------------------------
    Total         27.83     40.34       55.74   308.40    474.31      722.02
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                         Prospective
                Contingent Resources(5) (MMboe)      Resources(6) (MMboe)
                         Company Share                  Company Share
    -------------------------------------------------------------------------
                P(90)(7)  P(50)(7)    P(10)(7)     Low       Mid        High
    -------------------------------------------------------------------------
    Breagh(2)(8)  12.35     18.42       26.98        -         -           -
    -------------------------------------------------------------------------
    Avington(3)       -      0.08           -        -         -           -
    -------------------------------------------------------------------------
    Doina &
     Ana(2)(8)    16.03     28.93       46.15        -         -           -
    -------------------------------------------------------------------------
    Cladhan(3)     0.55      3.18       12.64     1.04      6.31       26.26
    -------------------------------------------------------------------------
    Crosgan(2)     4.30     10.59       26.42     2.25      6.93       24.77
    -------------------------------------------------------------------------
    Total         33.30     61.19      112.19     3.29     13.24       51.10
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Notes:
    -------------------------------------------------------------------------
    (1) Gross before royalties
    -------------------------------------------------------------------------
    (2) Gas converted to Boe at 6 Mcf = 1 Boe
    -------------------------------------------------------------------------
    (3) Oil
    -------------------------------------------------------------------------
    (4) Discounted at 10% per annum
    -------------------------------------------------------------------------
    (5) Contingent Resources are those quantities of petroleum estimated as
        of a given date to be potentially recoverable from known
        accumulations using established technology or technology under
        development, but which are not currently considered to be
        commercially recoverable due to one or more contingencies.
        There is no certainty that it will be commercially viable to produce
        any portion of the Contingent Resources.
    -------------------------------------------------------------------------
    (6) Prospective Resources are those quantities of petroleum estimated as
        of a given date to be potentially recoverable from undiscovered
        accumulations by application of future development projects. There is
        no certainty that any portion of the Prospective Resources will be
        discovered or, if discovered, that it will be commercially viable to
        produce any portion of the resources. For Company assets, Prospective
        Resources are only associated with fields in which Contingent
        Resources are discovered. These Prospective Resources are in areas of
        the field or geological horizons, in which the presence of
        hydrocarbons require confirmation by drilling.
    -------------------------------------------------------------------------
    (7) P(50) is considered to be the best estimate of the quantity that will
        actually be recovered. If probalistic methods are used there should
        be at least a 50 percent probability (P50) that the quantities
        actually recovered will equal or exceed the estimate. Similarly,
        (P10) and P(90) represent the high and low estimates respectively.
    -------------------------------------------------------------------------
    (8) Under our funding agreement with Gemini Oil & Gas II, LLP ("Gemini"),
        Gemini is entitled to payments equivalent to a share of production
        from the fields.
    -------------------------------------------------------------------------
    

    In addition, a Senergy (GB) team working on behalf of Sterling, and
independently peer reviewed, assessed the potential of the remaining undrilled
prospects in the Quad 42 area at a further 1 Tcf of gas on a net unrisked
basis.
    Additional reserve information and definitions can be obtained from our
Form 51-101F1 containing the Statement of Reserves and Other Oil and Gas
Information which can be found on www.sedar.com or by contacting the Company.
    The Company's hydrocarbon resources were independently evaluated by RPS
Energy in accordance with the Canadian Oil and Gas Evaluation Handbook
("COGEH") reserves definitions and evaluation practices and procedures, as
specified by National Instrument 51-101. ("NI 51-101"). The definitions for
each of the categories, including the conditions around Contingent Resources
can be found on page 11 of Sterling's 2008 Annual Report. These reserves and
future net revenues assume that the development of each property occurs
without regard to the certainty of procuring the funding required to proceed
with development. There is no certainty that it will be commercially viable to
produce any portion of the reserves.
    The evaluation is as at December 31, 2008 and uses the RPS Energy
forecast prices and costs as at December 31, 2008. Complete details regarding
Sterling's Resources for the year ended December 31, 2008 and in a format
specified by NI 51-101 can be found in Sterling's forthcoming Annual
Information Form which will be filed on SEDAR at www.sedar.com or on the
Company's website www.sterling-resources.com. Audited consolidated financial
statements and associated notes, and the Management Discussion and Analysis
can also be found on SEDAR and at Sterling's website.

    Sterling Resources Ltd. is a Canadian-listed international oil and gas
company headquartered in Calgary, Alberta with assets in the United Kingdom,
Romania and France. The shares are listed and posted for trading on the TSX
Venture Exchange under the symbol "SLG".

    
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.
    

    Filer Profile No. 00002072

    Forward-Looking Statements

    All statements included in this press release that address activities,
events or developments that Sterling expects, believes or anticipates will or
may occur in the future are forward-looking statements. In addition,
statements relating to reserves or resources are deemed to be forward-looking
statements as they involve the implied assessment, based on certain estimates
and assumptions that the reserves and resources described can be profitably
produced in the future.
    These forward-looking statements involve numerous assumptions made by
Sterling based on its experience, perception of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate in the circumstances. In addition, these statements involve
substantial known and unknown risks and uncertainties that contribute to the
possibility that the predictions, forecasts, projections and other-forward
looking statements will prove inaccurate, certain of which are beyond
Sterling's control, including: the impact of general economic conditions in
the areas in which Sterling operates, civil unrest, industry conditions,
changes in laws and regulations including the adoption of new environmental
laws and regulations and changes in how they are interpreted and enforced,
increased competition, the lack of availability of qualified personnel or
management, fluctuations in commodity prices, foreign exchange or interest
rates, stock market volatility and obtaining required approvals of regulatory
authorities. In addition there are risks and uncertainties associated with oil
and gas operations. Readers should also carefully consider the matters
discussed under the heading "Risk Factors" in the Company's Annual Information
Form.
    Undue reliance should not be placed on these forward-looking statements,
as there can be no assurance that the plans, intentions or expectations upon
which they are based will occur. Sterling's actual results, performance or
achievements could differ materially from those expressed in, or implied by,
these forward-looking statements. These statements speak only as of the date
of the press release. Sterling does not intend and does not assume any
obligation to update these forward-looking statements except as required by
law.
    Financial outlook information contained in this press release about
prospective results of operations, financial position or cash flows is based
on assumptions about future events, including economic conditions and proposed
courses of action, based on management's assessment of the relevant
information currently available. Readers are cautioned that such financial
outlook information contained in this press release should not be used for
purpose other than for which it is disclosed herein.

    %SEDAR: 00002072E




For further information:

For further information: visit www.sterling-resources.com or contact:
Stewart G. Gibson, Chief Executive Officer, Phone: 44-133082-6717, Mobile:
44-7768-042219, stewart@sterling-resources.co.uk; Ian Hornby-Smith, Chief
Financial Officer, Phone: (403) 215-9264, Fax (403) 215-9279,
ian@sterling-resources.com; George Kesteven, Manager, Corporate and Investor
Relations, Phone: (403) 215-9265, Fax: (403) 215-9279,
george@sterling-resources.com


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