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Glossary of Terms

$

US Dollars

1985 Act

The Companies Act 1985, as amended

2006 Act

The Companies Act 2006, as amended

2007 LTIP

The 2007 Long Term Incentive Plan

1P

Proven reserves or in-place quantities depending on the context

2D

Two dimensional

2P

The sum of Proven and Probable reserves or in-place quantities depending on the context

3D

Three dimensional

3P

The sum of Proven, Probable and Possible reserves or in-place quantities depending on the context

AIM

Alternative Investment Market of the London Stock Exchange

All Staff LTIP

The All Staff Long Term Incentive Plan adopted in 2009

API gravity

An American Petroleum Institute scale for crude oil density

Articles

The Articles of Association of the Company

bbl

Barrel, equivalent to 42 US gallons of fluid

bbl/d

Barrel per day

bopd

Barrel of oil per day

boe

Barrel of oil equivalent, a measure of the gas component converted into its equivalence in barrels of oil

boepd

Barrel of oil equivalent per day

Bcf

Billion cubic feet of gas

Board

The Board of Directors of the Company

Borrowing Base Facility

The facility made available under the Senior Facility Agreement

C

Celsius

Capex

Capital expenditure

CGR

Condensate gas ratio

Code or City Code

The City Code on Takeovers and Mergers

Combined Code

The Combined Code on Corporate Governance

Company or Sterling

Sterling Energy Plc

Contingent Resources

Those quantities of petroleum estimated, as at a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies, Contingent Resources are a class of discovered recoverable resources

COS

Chance of success

CPF

Central production facility

Darcy

Unit of permeability

Deg

Degrees

Directors

The Directors of the Company

DST

Drill stem test, a method of flow testing a well

E&E

Exploration and evaluation assets

EBITDA

Earnings before interest, taxation, depreciation, depletion and amortisation, impairment and pre-licence expenditure

EMV

Expected monetary value

EPF

Early production facility

ESP

Electric submersible pump

EUR

Economic ultimate recovery

Farmin & Farmout

A transaction under which one party (farmout party) transfers part of its interest to a contract to another party (farmin party) in exchange for a consideration which may comprise the obligation to pay for some of the farmout party costs relating to the contract and a cash sum for past costs incurred by the farmout party

FDP

Field development plan

Firm Placing

The firm placing of shares pursuant to the prospectus dated 4 December 2009

FPSO

Floating, Production, Storage and Offloading vessel

FSA

The Financial Services Authority of the United Kingdom

G&G

Geological and geophysical

GIIP

Gas initially in place

GOC

Gas oil contact

GOR

Gas oil ratio

GWC

Gas water contact

Group

The Company and its subsidiary undertakings

H2S

Hydrogen sulphide

HMRC

Her Majesty's Revenue and Customs

HSES

Health, Safety, Environment and Security

Hydrocarbons

Organic compounds of carbon and hydrogen

km

Kilometre(s)

km2

Square kilometres

KRG

Kurdistan Regional Government of Iraq

Lead

Indication of a possible exploration prospect

London Stock Exchange or LSE

London Stock Exchange Plc

m

Metre(s)

mmbbl

Million barrels

mmstb

Million barrels of oil at stock tank conditions

mmboe

Million barrels of oil equivalent

mmcf

Million cubic feet of gas

mmcfg/d

Million cubic feet of gas per day

mmcfge/d

Million cubic feet of gas equivalent per day

mmscf/d

Million cubic feet at standard pressure and temperature per day

mss

Metres sub-sea

mTVDss

Metres true vertical depth sub-sea

NED LTIP

Non Executive Director Long Term Incentive Plan adopted in 2009

NPV

Net present value of a series of cash flows

Open Offer

The invitation to qualifying shareholders to subscribe for open offer shares pursuant to the prospectus dated 4 December 2009

Opex

Operating expenditure

Ordinary Shares

Sterling ordinary shares of 40 pence each

OWC

Oil water contact

P90, P50, P10

90%, 50% and 10% probabilities respectively that the stated quantities will be equalled or exceeded. The P90, P50 and P10 quantities correspond to the Proved (1P), Proved + Probable (2P) and Proved + Probable + Possible (3P) confidence levels respectively.

Panel or Takeover Panel

The Panel on Takeovers and Mergers

Petroleum

Oil, gas, condensate and natural gas liquids

Petronas

PC Mauritania I PTY Ltd

PP&E

Property, Plant & Equipment

PRMS

Petroleum resource Management System as issued in March 2007 by the Society of Petroleum Engineers et al

Prospect

A potential sub-surface accumulation of hydrocarbons which has been identified but not drilled

Prospective Resources

Those quantities of petroleum which are estimated, as at a given date, to be potentially recoverable from undiscovered accumulations

psi(a)

Pounds per square inch (absolute)

PSC

Production sharing contract

Reserves

Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must satisfy four criteria; they must be discovered, recoverable, commercial and remaining (as of the evaluation date) based on the development projects applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by development and production status

Reservoir

A porous and permeable rock capable of containing fluids

RF

Recovery factor

RI

Royalty interest

RISC

RISC (UK) Limited of Golden Cross House, 8 Duncannon Street, London WC2N 4JF

scf

Standard cubic feet of gas (measured at 60 degree Fahrenheit and 14.7 psia)

Seismic

Data, obtained using a sound source and receiver, that is processed to provide a representation of a vertical cross-section through the subsurface layers

Senior Facility Agreement

$125 million borrowing base facilty agreement dated 26th September 2007

September Placing

The placing of 4,807,315,000 ordinary 1 pence shares at a price of 1.3 pence per share to raise £62.5 million which was completed in September 2009

Shares

40p Ordinary Shares

Spud

To commence drilling a well

sq km

Square kilometre

sq mi

Square mile

stb

Stock tank barrel (measured at 60 degree Fahrenheit and 14.7 psia)

STOIIP

Stock tank oil initially in place

Subsidiary

A subsidiary undertaking as defined in the 2006 Act

Tcf

Trillion cubic feet of gas

TEA

Technical evaluation agreement

TVD

True vertical depth

United Kingdom or UK

The United Kingdom of Great Britain and Northern Ireland

United States or US

The United States of America

Water-cut

That percentage of total fluid production that is water

Working Interest or WI

A company’s equity interest in a project before reduction for royalties or production share owed to others under the applicable fiscal terms