UK DECC Approves Breagh Gas Field Development Plan

Sterling Resources Ltd. (“Sterling” or the “Company”) announces that the Field Development Plan (“FDP”) for the Breagh gas field has received the unconditional approval of the UK Department of Energy and Climate Change (“DECC”).

FDP approval from DECC was formally granted at a ceremony that took place at RWE Dea UK’s London office earlier today, which was attended by Charles Hendry MP, UK Minister of State for Energy, as well as representatives of both Sterling and RWE Dea UK. RWE Dea UK is operator of the Breagh field holding a 70 percent working interest, with Sterling holding the remaining 30 percent. The Breagh field is one of the largest natural gas discoveries to be developed in the UK Southern North Sea in recent years. The gas field is a conventional Carboniferous reservoir and will be the first large scale production for Sterling.

“The approval of the FDP for the Breagh field is a major milestone for Sterling as we move from a pure exploration and appraisal company into a full cycle E&P organization,” noted Mike Azancot, Sterling’s CEO. “Sterling has been at the forefront of the project as operator of the Promote licenses awarded in 2004 and 2005 culminating in a major exploratory drilling campaign in 2007. We have maintained our belief in the value of the assets with a determination to develop the field with the current operator RWE Dea UK. Now, with initial gas production only about a year away, Breagh will be a cornerstone to our future growth plans,” added Mr. Azancot.

With the receipt of the FDP approval and the finalization of the debt facility announced last week the Breagh project is moving towards completion. Around 100 kilometres of 20 inch pipeline has been successfully installed offshore and the platform is due for installation in early September. The platform was constructed by Heerema Vlissingen in the Netherlands and consists of a jacket approximately 85 metres tall with a total weight of some 4,000 tonnes and topsides of approximately 1,400 tonnes. The platform will be installed by Heerema Marine Contractors.

Energy Minister Charles Hendry said, “This is welcome news, Breagh is one of the largest natural gas discoveries in the Southern North Sea in recent years, and developments like this play a vital role in ensuring we have secure energy supplies throughout the UK. It is also encouraging to see the success of initiatives such as the Promote license, developed through PILOT, which originally allowed Sterling Resources to gain access to this acreage and bring the development forward under the partnership and operatorship of RWE.”

The Breagh field is located in UKCS blocks 42/12a and 42/13a of the Southern North Sea in 62 metres water depth, approximately 100 kilometres east of Teesside. The field is being developed in two phases. Phase 1 entails gas to be exported via the 20 inch pipeline from the Breagh Alpha platform to Coatham Sands, Redcar on the UK mainland, and a 10 kilometre onshore pipeline for processing at the Teesside Gas Processing Plant (TGPP) at Seal Sands. The TGPP site is owned by Teesside Gas & Liquids Processing, and after processing at the TGPP, the gas will enter the UK National Transmission System. Phase 2, if approved, is currently expected to include additional wells in the east of the field drilled from a Breagh Bravo platform tied back to Alpha. The current estimate for capital expenditures for Phase 1, assuming Phase 2 follows on, remains at around £420 million (for 100 percent of the field) although there remains some scope for minor variances in the final level of expenditures. The FDP capital expenditure estimate for Phase 1 if a second platform is not installed is £485 million which includes £65 million for drilling three additional long reach wells out to the east during 2013-14 from Breagh Alpha platform.

Sterling Resources Ltd. 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 shares are listed and posted for trading on the TSX Venture Exchange under the symbol “SLG”.

Source: Sterling Resources, July 25, 2011;

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