Sterling Resources Announces Filing of Final Short Form Prospectus and Operational and Financial Update

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

CALGARY, March 5, 2013 /CNW/ - Sterling Resources Ltd. (TSX-V: SLG) ("Sterling" or the "Company") is pleased to announce that it has filed the final short form prospectus (the "Prospectus") for part of the previously announced offering of 73,333,334 common shares in the capital of the Company ("Common Shares") on a bought deal basis.  The number of shares to be offered in all of the Provinces of Canada (excluding Quebec) under the Prospectus (the "Prospectus Offering") is 20,000,000, excluding any Common Shares to be issued pursuant to an over-allotment option (the "Over-Allotment Option") granted to the underwriters, exercisable by them, in whole or in part for a period of 30 days following closing of the Prospectus Offering, to purchase up to an additional 3,000,000 Common Shares.  This follows the announcement late yesterday of closing of the first tranche of 50,000,000 Common Shares of the previously announced private placement offering of 53,333,334 Common Shares (the "Private Placement").

The Prospectus Offering, along with the remainder of the Private Placement, is expected to close on or about March 8, 2013.  Sterling will use most of the net proceeds from the Prospectus Offering for certain exploration, appraisal and pre-development expenditures in Romania, the UK and the Netherlands with a small contingency for other corporate purposes.  The underwriting syndicate for the Prospectus Offering is led by Casimir Capital Ltd. and includes CIBC World Markets Inc., Dundee Securities Ltd., National Bank Financial Inc., RBC Dominion Securities Inc. and TD Securities Inc.

Operational Update - Breagh

The fourth development well on Breagh, A-04, has been completed and encountered 89 vertical feet of net pay (15 feet more than the expected thickness).  Drilling has recently commenced on the fifth well targeting a bottom-hole location approximately 2,000 metres northeast of the platform.  Three wells are expected to be available for production at first gas in May 2013 with the fourth and fifth wells contributing from June after hook-up of flowlines.  Average gross production for the second half of 2013 is expected to be approximately 150 million standard cubic feet per day.

The Company expects a decision regarding the second phase of the Breagh development (Phase 2) to be made late in the second quarter of 2013, for evidence of committed financial resources to be provided to the UK Department of Energy and Climate Change ("DECC") by the end of the third quarter of 2013 and for governmental approval to be obtained in the fourth quarter of 2013.

Operational Update - Cladhan

Following comments received from DECC, a final version of the Cladhan Field Development Plan ("FDP") was submitted to DECC at the beginning of February 2013.   Approval of the FDP is expected at the end of March 2013.  The planned development calls for 2 subsea producers and 1 subsea water injector tied back 18 kilometers to the Tern platform operated by TAQA Bratani Limited.  Export of oil is planned via the Brent Pipeline System and then onto Sullom Voe in the Shetland Islands with the timing of first oil expectations ranging from end fourth quarter 2014 to end first quarter 2015.

Christmas trees, wellheads and subsea controls have been procured.  Line pipe was committed to at the end of February 2013.  The remaining equipment and services (valves, umbilicals, flexibles, compressor rewheeling, installation, etc.) are planned to be committed upon project sanction at end of March 2013.  Drilling is due to commence utilizing the Transocean GSP, John Shaw drilling unit in late 2013.

Cost updates have continued with various front-end engineering and design tender responses received, which have improved confidence in the overall project capital expenditure estimate. The total development cost (excluding appraisal well costs) is estimated to be £100 million net to Sterling, which includes a £12 million contingency.

Financial Update

At the end of December 2012, the Sterling Group had total cash balances of approximately $27.3 million (excluding escrowed cash of approximately $4.1 million relating to the drilling of wells in the first half of 2012). Early in January 2013, this was supplemented by the receipt of US$12 million proceeds from the Vitol Loan and by US$4.3 million from TAQA Bratani Limited as the second installment of consideration for the sale of an interest in the UK Cladhan field.  On a pro forma basis, reflecting these receipts, the Company started 2013 with $43 million of available funds.

A number of changes have been made recently to the senior secured credit facility used in relation to the development of Phase 1 of the Breagh field in the UK (the "Credit Facility").  At the end of December 2012 a redetermination of the availability under the Credit Facility indicated a £15.0 million reduction of availability under the main tranche from £77.9 million to £62.9 million; availability under the cost overrun tranche remained the same at £10.0 million. The lenders to the Credit Facility (the "Lenders") have not yet required the partial loan repayment of £15.0 million (the "£15 Million Repayment") and as of March 1, 2013 the main tranche of the Credit Facility was £77.9 million drawn and the cost overrun tranche of the Credit Facility was £10.0 million drawn, with no further availability under either tranche.

In order to facilitate the completion of the Offering and the Private Placement, a number of waivers and amendments in relation to the Credit Facility were agreed with the Lenders on March 1st, in some cases extending earlier waivers or amendments.  The most important waivers and amendments were:

• A deferral of the requirement to make the £15 Million Repayment to the earlier of completion of the carve-out transaction involving part of the Midia block offshore Romania and June 30, 2013;
  
  
• Waiver of the Lenders' ability to seek a contribution of greater than US$22 million to the ECA from proceeds of the Private Placement or Offering;
  
  
• An amendment to apply any net proceeds from completion of the Offshore Romania Sales Process first to the £15 Million Repayment (if not already repaid) and thereafter to further repayment of the loans under the Credit Facility; and
  
  
• An amendment to remove the requirement to demonstrate £20 million minimum group liquidity in any forward-looking cash flow statements submitted to the Lenders before June 30, 2013.

The Corporation intends to transfer $22 million into the Equity Contribution Account ("ECA"), a restricted account under the Credit Facility to be used only for Breagh development costs, interest costs under the Credit Facility and certain related costs ("Breagh Costs") from the proceeds of the first tranche.  Together with the existing available ECA funds of $24 million, this would provide $46 million of funds for Breagh Costs which includes a contingency of $4.5 million for the first half of 2013 without including revenues expected to be received in June 2013 from any production in May 2013.  With the completion of the Offering and the Private Placement, the Company should have sufficient funds for all capital and other expenditures up to the end of June 2013.

Sterling is a Canadian-listed international oil and gas company headquartered in Calgary, Alberta with assets in the United Kingdom, Romania, France and the Netherlands. The Common Shares are listed and posted for trading on the TSX-V under the symbol "SLG".

Neither the TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accepts 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.  In particular, this document contains forward-looking information and statements regarding: (i) the completion of the Offering and the remainder of the Private Placement and the issuance of the Common Shares, including exercise of the Over-Allotment Option and the Underwriter's Option; (ii) the expected closing date of the Offering and the remainder of the Private Placement; (iii) the intended use of proceeds of the Offering and the Private Placement; and (iv) future capital expenditures and projects.

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 purposes other than for which it is disclosed herein.

SOURCE: Sterling Resources Ltd.

Visit www.sterling-resources.com or contact:

Mike Azancot, President and Chief Executive Officer, Phone: [phone], Mobile: [phone], [email protected]

David Blewden, Chief Financial Officer, Phone: [phone], Mobile: [phone], [email protected]

George Kesteven, Manager, Corporate and Investor Relations, Phone: [phone], Mobile: [phone], [email protected]