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Press release from CNW Group

Sterling Resources Announces Potential Cost and Schedule Overrun on Breagh

Monday, May 21, 2012

Sterling Resources Announces Potential Cost and Schedule Overrun on Breagh02:00 EDT Monday, May 21, 2012CALGARY, May 21, 2012 /CNW/ - Sterling Resources Ltd. (TSX-V:  SLG) ("Sterling" or "the Company") has been informed by the Breagh field operator, RWE Dea UK ("RWE") of a probable cost and schedule overrun on its Breagh development project.  The probable cost and schedule overrun relates to modification works being carried out at the existing Teesside Gas Processing Plant ("TGPP") so that the Breagh production can be received and processed at TGPP.Sterling previously announced that such modifications at TGPP were anticipated to be completed during the second quarter of 2012 and that first gas from Breagh was anticipated in the third quarter 2012.  While the extent of delays at TGPP are not presently known, such modifications at TGPP are now not expected to be completed during second quarter 2012 and first gas from Breagh may be delayed into the fourth quarter 2012.  It is hoped that further information will be available in early June.Significant efforts are ongoing to evaluate the extent of the delay to start-up and the cost overruns associated therewith and identify and implement measures to mitigate any such delay and cost overrun.  If such mitigation cannot be achieved, overall development expenditure (100 percent) for the first phase of Breagh development could be in the range of £590 to £595 million, 4 to 5 percent over the estimate provided in the Company's 2011 Annual Report, subject to downward revision should remediation measures be successfully implemented.Drilling operations will continue unaffected by any onshore delays, and it is expected that four wells will be on-stream by the end of the year.Sterling holds a 30 percent interest in Breagh, with RWE, as operator, holding the remaining 70 percent.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".Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.Filer Profile No. 00002072Forward-Looking StatementsAll statements included in this press release that address activities, events or developments that Sterling expects, believes or anticipates will or may occur in the future are forward-looking statements. In addition, statements relating to reserves or resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources described can be profitably produced in the future.These forward-looking statements involve numerous assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.  In addition, these statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other-forward looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: the impact of general economic conditions in the areas in which Sterling operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations.  Readers should also carefully consider the matters discussed under the heading "Risk Factors" in the Company's Annual Information Form.Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur.  Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements.  These statements speak only as of the date of the press release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.Financial outlook information contained in this press release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available.  Readers are cautioned that such financial outlook information contained in this press release should not be used for purposes other than for which it is disclosed herein.For further information: visit www.sterling-resources.com or contact: Mike Azancot, President and Chief Executive Officer, Phone: 44-20-3008-8488, Mobile: 44-7740-432883, mike.azancot@sterling-resources.com David Blewden, Chief Financial Officer, Phone: 44-20-3008-8488, Mobile: 44-7771-740804, david.blewden@sterling-resources.com George Kesteven, Manager, Corporate and Investor Relations, Phone: (403) 215-9265, Mobile: (403) 519-3912, george.kesteven@sterling-resources.com