Tern Regulatory News (TERN)

AIM:SLME

28th September 2012

Silvermere Energy plc

("Silvermere" or the "Company")

Operations Update

Silvermere Energy plc, the independent oil and gas company focused principally on appraisal and production opportunities in the US, is pleased to announce further progress with the tie-in of the I-1 well in its Mustang Island 818-L Field. This is based on information provided by the Operator, Dominion Production Company LLC ("Dominion").

Production from the I-1 well was resumed on 29 August 2012 under supervised and choked (deliberately limited flow) conditions. Gas and condensate were produced along with quantities of drilling mud and other solid material during the clean-up phase. By 5 September, production consisted of clean gas and condensate, suggesting that the clean-up was substantially completed. It is too early to know what long term flow rates will be achieved, but reservoir and flowing tube pressures are encouraging and there are indications that condensate production may exceed internal projections. The completion of the tie-in and resumption of production on 29 August signaled the satisfaction of the Company's obligations to carry the residual working interest of the original asset vendors.

Initial production was used to charge the pipeline towards the shore facility on South Padre Island and increasing pipeline pressure recorded at the beach-head indicated that the pipeline condition was sound.

The well was shut in on the afternoon of 5 September after a small leak was detected on a neighbouring abandoned platform that is connected to the same pipeline. The authorities responsible for the abandoned platform were notified and an operation to seal off the pipeline connection from that platform was devised. The lift-boat required to perform the work was mobilised on 27 September and the work is expected to be completed within one week. The costs of the operation to seal off the abandoned platform will be borne by the pipeline owner and do not represent any additional burden on the Company.

Commenting on the developments, Andy Morrison, Chief Executive of Silvermere, said: "The completion of the tie-in and commencement of production at Mustang Island represent the achievement of important milestones. The early performance of the I-1 well is encouraging and while the temporary shut-in has been frustrating, it does not represent a significant set-back. Sealing off the abandoned platforms should provide a permanent solution and enable the well to proceed towards commercial production."

This statement has been approved by Mr Tom Gunningham CEng MEI, Director of Rockflow Resources Ltd, an independent oil and gas consultancy, who is a Chartered Petroleum Engineer with 24 years' experience in the Petroleum Industry, and who is a Qualified Person in accordance with the guidance note for Mining, Oil & Gas Companies issued by the London Stock Exchange in respect of AIM Companies.

Further updates will be provided as the work progresses.

--ENDS--

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About Silvermere Energy PLC

The Company acquired its interest in the Mustang Asset on 30 August 2011. This comprises a 33.33 per cent. working interest and 20.83 per cent. net entitlement interest in the Mustang Licence Area, an area within the southern half of the north west quarter and northern half of the south west quarter of the Block 818-L field as defined in State of Texas Oil and Gas Lease numbers 108873 and 108874. The Mustang Island 818-L field, located in Kleberg County waters of the Gulf of Mexico, is a field re-habilitation project targeting bypassed or only partially produced gas-condensate.

Early in 2011, the Hercules Offshore 205 jack-up rig was contracted to re-enter the I-1 Well on the Mustang Licence Area, which was considered to be the most likely of the historic well sites to provide 14 optimum re-entry conditions. The I-1Well re-entry and side-tracking operation was completed in March 2011 leaving it ready to complete in sand horizons I-1 to I-6. Production and flow testing was carried out during June 2011. The well re-entry programme was led by Dominion as the operator. Gas and oil produced from the I-1 Well is proposed to be connected to pipeline infrastructure and tied in via a subsea assembly, constructed for the purpose and then transported to the Six Pigs gas facility.

Silvermere's strategy is to acquire a portfolio of US oil and gas licence interests onshore and in shallow offshore waters, characterised by relatively low risk and low cost with the potential for near term production.

Silvermere is quoted on the AIM Market of the London Stock Exchange plc (AIM: SLME) with its offices in London.