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FOR IMMEDIATE RELEASE

19 January 2010

SOVEREIGN OILFIELD GROUP Plc

("Sovereign" or "the Company" or "the Group")

Trading Update

And

Board Change

As previously announced on 24 December 2009, the Company remains in discussions with its lending consortium relating to the covenant breaches on its existing facilities and relating to the continued support required from the lending consortium in order that the Group can continue to trade. Negotiations continue with the lending consortium and support is continuing to be provided. 

The Board is also continuing its aggressive cost reduction plan and has closed its loss making subsidiaries, Fingolden Limited and its trading subsidiary RDT precision Engineers Limited. The Company has entered into a heads of agreement (subject to contract) for the disposal of Maxwell Downhole Technology Limited.  The Board is in discussions for the disposal of Serco S.A.  

The Fabrication Division continues to trade profitably and generate cash. 

Despite profitable trading within the Fabrication Division, the Board is uncertain that the Group's future trading performance will be able to support the current levels of debt. As a result the Board is reviewing its strategic options, which include a debt for equity swap, a capital injection, and measured disposals of some or all of its operating subsidiaries. 

The Board will update shareholders in due course.

The Board of Sovereign announces the immediate resignation of Christopher McGeehan as a non-executive director.  The Board thanks him for his substantial contribution to the Company and its Group.

Further information:

Sovereign Oilfield Group Plc                                         Tel: 01224 261900

John Robert Strachan, Group CEO

Buchanan Communications                                         Tel: 0207 466 5000

Tim Thompson/Catherine Breen

Charles Stanley Securities - Nominated Advisor            Tel: 0207 149 6000

Mark Taylor/Freddy Crossley

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