Mr. Jacob Ulrich reports

STERLING RESOURCES ANNOUNCES SUCCESSFUL BREAGH WELL A08 FRACTURE STIMULATION AND WELL TEST

Sterling Resources Ltd. has successfully completed hydraulic stimulation, perforation and production testing of Breagh well A08. After several days of flowing the well to clean it up, the well was production tested at a stabilized rate of 44 million standard cubic feet per day (100 per cent) at the planned initial operating conditions of the well. The well is expected to be on-line mid-November at production conditions which should deliver 42 million standard cubic feet per day of sales gas and 140 barrels per day of condensate.

The A08 well was drilled during the third quarter of 2014 to a location approximately 1.8 kilometres to the northeast of the Alpha platform, encountering 112 feet of net pay in four separate zones. Using the Schlumberger well-stimulation vessel "Big Orange XVIII" in conjunction with the Ensco 70 jack-up drilling rig, hydraulic stimulations were performed over two of the four sands encountered within the main productive zone and reserves base in the Breagh field. These two zones were previously identified as having lower reservoir quality than the other two zones and were seen as attractive candidates for stimulation as this could add significantly to the production potential of the well and potentially add to field reserves. A total of 300,000 pounds weight of proppant was pumped. Following the treatment, the well was flow tested at a rate of 25 million standard cubic feet per day (100 per cent) at flowing conditions approximately 500 pounds per square inch higher than the current platform export pressure. In comparison, one of these intervals flowed at four million standard cubic feet per day in the offset A05 well (the other interval had not been encountered in any previous well).

Further perforations were then made over these stimulated intervals and the remaining two sands which had not been stimulated. A final combined flow rate of 44 million standard cubic feet per day (100 per cent, raw gas) was then achieved at flowing conditions about 400 pounds per square inch higher than the current platform export pressure. The well is expected to be brought into production at this rate, which is constrained to minimize proppant production as is normal practice for hydraulically stimulated wells. The unconstrained rate has been estimated to be 55 million to 60 million standard cubic feet per day.

Following the final well operations, the Ensco 70 rig is now preparing to move to the Crosgan appraisal location in block 42/15, about 25 kilometres northeast of Breagh. The well at Crosgan is expected to spud during early October.

"We have achieved another very successful hydraulic stimulation in this well, achieving rates from the middle two zones which are at least three times what would have been expected from a normal completion and with a much higher producing pressure. This higher pressure has, to some degree, limited the production from the unstimulated sands," stated John Rapach, chief operating officer for Sterling Resources. "Our expectation is that we will be able to sustain production at the tested rate for an extended period, as the well is opened up to lower the back pressure on the reservoir. In addition, the hydraulic stimulation should lead to incremental reserves from these stimulated intervals. We are in the process of revising production profiles for the field to reflect the results of the A07 and A08 wells, and hope to provide revised guidance in the next few weeks," added Mr. Rapach.

Jake Ulrich, Sterling's chief executive officer, also commented: "We are very pleased with the A08 well results which continue to demonstrate the potential improvements that can be achieved in the ongoing development of the Breagh field. We look forward to returning to the Breagh Alpha platform for further drilling and stimulations during 2015."

Sterling Resources has a 30-per-cent interest in the Breagh and Crosgan licence areas. RWE Dea U.K. Ltd. holds the remaining 70 per cent and operates these licences.

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