SEY.L Regulatory News (SEY)

28 October 2014

STERLING ENERGY PLC

Grant of Options under Long Term Incentive Plan

Sterling Energy Plc ("Sterling" or the "Company") (AIM:SEY), the independent oil and gas exploration and production company advises of the following grant of options over ordinary shares in the Company of 40p nominal value ("Ordinary Shares") to certain executive directors under the Sterling Energy Plc All Staff Long Term Incentive Plan ("All Staff LTIP").

The options are granted with a 5 year term; after 3 years the Performance Conditions (see below) are used to determine the proportion of options that vest; vested options may be exercised during the following 2 year period. The options are granted as nominal cost options with an exercise price of 40p per share.

Under the 2014 awards, the following directors have been awarded options over 40p Ordinary Shares in the Company.

During 2009 the Panel on Takeovers and Mergers (the "Panel") deemed that Alastair Beardsall was acting in concert with Waterford Finance and Investments Limited who hold 29.9 per cent. of the issued shares in Sterling; therefore any grant of options to Alastair Beardsall is made subject to a Rule 9 waiver being granted by the Panel, and being approved by shareholders of the Company at a general meeting. The Company expects to post a circular to its shareholders during Q1 2015 setting out details of a waiver for the 2013 and 2014 Awards and seeking such approval with the notice for the next annual general meeting which is likely to be held in April 2015.

In addition to the options listed above, a further 2,897,900 options have been issued to Sterling's staff under the All Staff LTIP scheme. In total, there are currently 12,786,433 options over Ordinary Shares in issue representing 5.8% of the issued share capital of the Company.

The Performance Conditions for the options recently granted under the All Staff LTIP are as follows

1. The quantity of options that vest is based on the change of the Company's share price ("SESP") and FTSE350 index ("Index") over 3 years; the performance period runs from 1 October 2014 to 30 September 2017. The reference values for 1 October 2014 are based on the average share price and index during September of SESP of 26.6 pence and the Index of 3,679.

2. If the SESP performance matches the Index performance, then 25% of the share options will be earned.

3. If the SESP performance is between matching the Index and out-performing by 50%, the amount of the share options that will be earned will be determined by extrapolating on a straight line basis.

4. If the SESP out performs the Index performance by 50% or more, then 100% of the share options will be earned.

5. If the SESP under-performs the Index performance by 10% or more, then no share options will be earned and the share options will lapse.

6. If the SESP performance is between matching the Index and under-performing by 10%, the amount of the share options that will be earned will be determined by extrapolating on a straight line basis.