STERLING RESOURCES ANNOUNCES FIRST QUARTER OPERATING AND FINANCIAL RESULTS

Calgary, Alberta, Canada, May 19, 2016 - Sterling Resources Ltd. (TSX-V:SLG) ('Sterling' or the 'Company') an international oil and gas company with exploration and development assets in the United Kingdom and the Netherlands, announces interim operating and financial results for the quarter ended March 31, 2016. Unless otherwise noted all dollar figures contained in this report are denominated in U.S. dollars.

Financial Highlights

• For the three months ended March 31, 2016 the Company recorded a net loss of $17.4 million ($0.04 per common share) compared with a net loss of $44.5 million ($0.12 per common share) during the first quarter of 2015. The first quarter 2016 loss is principally attributable to lower revenues as a consequence of both lower commodity prices and production, while the first quarter 2015 loss was principally due to a reduction in the value of the deferred tax asset.
• Revenue from Breagh during the first quarter of 2016 of $9.7 million was generated from sales gas production of approximately 2.2 billion cubic feet at an average realized gas price of 30.6 pence per therm ($4.33 per thousand cubic feet) and condensate production of 890 tonnes (6,542 barrels) at an average price of $276 per tonne. In the first quarter of 2015, revenue was $25.8 million derived from the sale of 3.3 billion cubic feet of gas at an average price of 46.6 pence per therm ($7.25 per thousand cubic feet) and 1709 tonnes (14,271 barrels) of condensate at an average price of $444 per tonne.
• First sales from the Cladhan oil development occurred during the first quarter of 2016, totaling $0.4 million derived from the sale of 11,700 barrels of oil relating to the Company's two percent interest in the field at an average realized price of $35 per barrel. The Company also recognized $2.4 million of Cladhan revenues foregone relating to the sales of oil on the 11.8 percent of the Cladhan development which has been funded by TAQA Bratani ('TAQA') and which was used to reduce the amount funded by TAQA.
• Operating expenses during the first quarter of 2016 totaled $3.0 million compared to $5.2 million during the comparable quarter of 2015 reflecting the lower production volumes attributable to the Breagh field.
• A foreign exchange loss of $6.4 million was recognized during the first quarter of 2016 as a result of the strengthening of the US dollar (in which both the Bond issued by the UK subsidiary and the Cladhan funding arrangements are denominated) against the UK pound (which is the functional currency for the UK subsidiary). Similarly, during the first quarter of 2015 a foreign exchange loss of $10.5 million was recorded due to the strengthening of the US dollar in relation to the UK pound.
• Net employee expense for the first quarter of 2016 was $0.8 million compared to $1.8 million during the first quarter of 2015, reflecting reduced staffing levels and lower partner recoveries. Net general and administration costs for the quarter were $0.4 million a decrease of $0.6 million relative to the same period in 2015 as a consequence of cost savings and staff reductions.
• During the first quarter of 2016 the Company incurred $4.6 million of non-recurring costs related to the refinancing and strategic review composed mostly of advisor fees related to the recapitalization process. First quarter 2015 costs related to the refinancing and strategic review totaled $5.2 million of which $1.6 million was severance payments, $0.8 million of costs related to the sale of the Romanian business, and $2.8 million of costs for the amortization of the First Bond Amendment.
• Financing costs for the three-month period ended March 31, 2016 totaled $8.3 million consisting primarily of borrowing costs for the Bond of $5.5 million and the most of the remainder attributable to the Cladhan funding arrangement.
• Cash and cash equivalents totaled $12.0 million at March 31, 2016 compared to $10.9 million at December 31, 2015. With the bond becoming fully repayable in the absence of the completion of the recapitalization, the working capital deficit was $186.8 million as at March 31, 2016 with the current recapitalization process underway to address this shortfall.

On March 11, 2016, the Company announced the entrance into a recapitalization agreement (as amended) with Sterling Resources (UK) Ltd. and Nordic Trustee ASA pursuant to which the Sterling group would undertake a recapitalization process (the 'Recapitalization'). Pursuant to the Recapitalization, the Company has undertaken a rights offering (the 'Rights Offering') of 441,572,956 rights ('Rights') to acquire common shares of the Company ('Common Shares') at a subscription price of C$0.015398 per common share (for aggregate proceeds of up to C$219.8 million). The Rights Offering will expire at 5:00 pm (EST) May 19, 2016. The gross proceeds of the Rights Offering, if any and after conversion to US dollars, will be used solely to satisfy a portion of the liabilities associated with the senior secured bonds issued by Sterling Resources (UK) Ltd. (the 'Bonds'). Any Common Shares not acquired by shareholders pursuant to the Rights Offering will be acquired by Bondholders in exchange for the release and cancellation, as applicable, of Bond liabilities equal to the subscription price of the unsubscribed common shares under the Rights Offering (after conversion to US dollars) (the 'Bond Exchange'). The Bondholders will pay the same subscription price per common share as shareholders who exercised Rights. Following the Rights Offering and the Bond Exchange, no less than $40 million of Bond debt will remain. A super senior credit facility of up to $40 million (in two $20 million tranches) is being provided as part of the Recapitalization. Closing of the Rights Offering and the Bond Exchange is anticipated to occur on May 27, at which point the Bondholders will hold up to 97 percent of the Common Shares outstanding.

'We look forward to the imminent completion of the recapitalization,' stated Jake Ulrich, Sterling's Chief Executive Officer. 'With the materially reduced bond debt and access to additional funding, our financial position will be significantly strengthened, allowing the Company to maximize the economic potential of Breagh and to weather low gas prices,' added Mr. Ulrich.

Operational Update

United Kingdom

At Breagh strong production performance continued through the first quarter of 2016 with high facilities uptimes and with production levels exceeding management forecasts. First quarter average gross sales gas rates reached 80 million standard cubic feet per day ('MMscf/d'), net 24 MMscf/d to Sterling. Gross condensate sales during the quarter averaged 300 barrels per day ('bbls/d'), net 90 bbls/d to Sterling. During the quarter the planned infill drilling campaign and onshore compression project were both deferred by the new operator of the Breagh field, as a result of significant market volatility. Both of these initiatives are expected to re-start in 2017. The front-end engineering and design work for the onshore compression at the Teesside Gas Processing Plant ('TGPP') was completed at the end of February 2016 and sanctioning is now expected during the first quarter of 2017. Drilling of at least two further Phase 1 wells and the re-entry and hydraulic stimulation of at least one existing well is expected to commence in the second quarter of 2017.

With the deferral of the infill drilling campaign, gas production for the field during 2016 is forecast to average 71 MMscf/d, net 21.3 MMscf/d to Sterling due to the natural decline from the existing wells. This forecast assumes uptime of 92 percent and a one-week maintenance shutdown in June. Phase 2 development at Breagh remains on hold to allow for the assimilation of results from the 2014 3D seismic interpretation, including reservoir characterization of the south-eastern area of the field. Given the current low UK gas price environment, developing an economically viable means to proceed with Phase 2 will be challenging.

Initial production from the Cladhan field occurred late in 2015 with production rates as expected from two wells. Stable production was achieved during the first quarter of 2016 and water injection via well W1 has been started. Oil production during the first quarter averaged 10,082 barrels per day gross (202 barrels per day net to Sterling's 2 percent interest). Final project completion at Cladhan development is anticipated to occur in mid-2016 with minimal further cash expenditure.

Following the drilling and abandonment of appraisal well 42/15a-3, completed in February 2015 at Crosgan (blocks 42/10a and 42/15a, where Sterling holds a 30 percent interest) approximately half of the licence was relinquished during February 2016. The Company continues to pursue a farm-down of blocks 42/2a, 42/3a, 42/4, 42/5 and 36/30 (Sterling 100 percent interest) containing the Darach and Ossian prospects. The UK Oil & Gas Authority ('OGA') has agreed to extend the licence expiry date to December 2018, by which time a commitment well needs to be drilled. A farm-down process also continues for block 49/19b (Sterling 100 percent) which contains the Niadar prospect and the OGA has extended this licence to December 2017. The licence covering blocks 42/13b, 42/17a and 42/18a which contains the Lochran prospect was relinquished effective March 15, 2016.

Netherlands

In the Netherlands seismic processing was completed in September 2015 with the seismic acquired over the oil discoveries and prospects in the Jurassic and Early Cretaceous horizons to assist in evaluating new exploration potential in the area and to aid in the evaluation of development options including a potential tieback to a Wintershall oil development.

Annual General and Special Meeting

The Sterling Resources Annual General and Special Meeting of Shareholders will be held on Tuesday, July 5, 2016 at 10:00 AM Mountain Daylight Time at The Metropolitan Conference Centre (Royal Room), 333 - Fourth Avenue S.W., Calgary, Alberta.