STERLING RESOURCES

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OFFSHORE ROMANIA

Romania is one of the oldest hydrocarbon producing countries in the world with initial production recorded in 1858. At one time it was the largest petroleum producer in Eastern Europe.

Romania’s petroleum industry could benefit by the employment of additional capital and the utilization of modern exploration technology. The Romanian fiscal regime is attractive and there are ready markets and infrastructure onshore.

Sterling has interests in projects in both the onshore and offshore areas. In addition to several western companies exploring in Romania, the country has seen an influx of major companies such as OMV from Austria, Gas de France, Ruhr Gas, and Exxon, as well as a number of independents.

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PELICAN XIII & MIDIA XV

In late 2006 Sterling completed an arrangement with Talisman Energy Ltd. to acquire its 80% interest in the Black Sea blocks X111 Pelican and XV Midia. As a result Sterling increased its interest from 20% to 100% and operates the blocks.

The blocks cover 1.1 million acres and are comprised of the Pelican Block XIII to the north and the Midia Block XV to the south. These blocks contain several mapped prospects as well as the Doina and Ana gas discoveries in the southern Midia block.

Following its corporate strategy, Sterling farmed out 35% of its interest in both blocks to Petro Ventures and Gas Plus reducing its interest to 65%.

In late December 2007 Sterling drilled the Ana-1 (formerly Doina Sister) well and encountered gas. The well tested at stabilized rates up to 19.2 MMscf/d from perforations over a 29 meter interval. As with the discovery well on the neighbouring Doina well, the test results do not reflect the full production for a development well due to the limitations of the testing equipment. The well is now suspended for possible future re-entry.

During August 2008 Sterling completed the open-hole logging of the Doina-4 well after having reached a target depth of 1,250 metres approximately 17 days after the well was spudded. Initial results confirmed the northerly extension of the gas bearing Doina Main Sand reservoir, some 1.6 kilometres north of the previously drilled Doina wells. In addition, prospective gas bearing intervals were noted both above and below the main reservoir body.

The Doina Main Sand reservoir was encountered some 3 metres higher than anticipated, and had a significant gas show on drilling. Subsequent electric wireline logging has confirmed a reservoir section similar to previous Doina wells with excellent sand intermingled with more silty intervals. The top of the Doina Main Sand section was at 1,094 metres true vertical depth subsea (tvdss) with the base of the gas bearing reservoir picked at 1,125 metres tvdss, which is consistent with the gas water contact noted in the previous Doina wells. This interval contained an estimated gross 12 metres of high quality reservoir with porosities in excess of 30%, again similar to previous wells. Given the equivalent reservoir was tested in the Doina-2 well at 17.5 MMscf/d, and calculations for this well indicate similar productivity potential, the well has been suspended for possible re-entry as part of any future development program.

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