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Strategic American Oil Corp. (SGCA) Positioned for Solid 2012 with Further Gains

Last week, Strategic American Oil, a growth oriented oil and gas production and exploration company, announced its fiscal first quarter financial and operational results, reflecting significant gains in both areas.

• Revenue for the quarter was up 1,400% over the same quarter last year, to $1.56 million.
• Assets grew in the first quarter by $7.86 million, without adding any debt.
• Cash used in operations was reduced from $250,000 in the previous quarter to $83,710.
• The net loss of $4.2 million included non-cash acquisition charges of $4.37 million.
• Average reported production for the quarter was 290 gross barrels of oil per day (230 net).
• Current production, as of Nov. 30, 2011, was estimated at 445 gross barrels of oil per day (350 net).
• Strategic’s current leasehold position at approximately 20,099 net acres in Texas and Illinois.

In addition, the company reported a total cash balance of $4.74 million, which, together with their available bank line, the company considers more than sufficient to meet budgeted capital requirements for 2012, including plans for drilling, recompletion, and infrastructure improvements.

Strategic targets domestic oil and gas, focusing on known resources and existing wells, as well as strong exploration opportunities, in Texas, Louisiana, and Illinois. The company actively acquires production, reserves, or other companies that will provide significant growth potential.

Recent operational developments include:

• Initial preparations for a drilling program in Galveston Bay, with the first well expected the first quarter of 2012.
• Acquisition of SPE Navigation I, LLC, a private company with over $4 million in liquid assets, including 25% working interest and $18.8 million in net discounted proved reserves in Galveston Bay.
• Removal of “going concern” qualification from SEC filings, by independent auditors, due to strong and stable financial and operational performance, as well as significantly improved balance sheet.
• Proved Reserves of $77.7 million, as calculated by independent engineering firm.
• Initiation, through its partner, Core Energy, of a multi-well drilling program in Strategic’s Illinois project, with secondary recovery (waterflood) operations to commence soon.
• Initiation of multi-well recompletion program, with first well already adding approximately $22,000 in net monthly cash flow.

Upcoming operational developments include:

• Completion of initial secondary recovery (waterflood) pilot project in Illinois.
• Continuing capital infrastructure improvements and updates in Galveston Bay to increase production, decrease down-time, and improve safety and efficiency.
• Drilling first of Galveston Bay targets in first calendar quarter of 2012.
• Drilling several wells in South Texas to increase production and reserves.
• Continuing recompletion program to increase daily production from existing wells.

Strategic’s President and CEO, Jeremy Driver, summarized the company’s plan for 2012: “Our aim is to continue the rapid growth we have experienced over the last 12 months. We plan to accomplish this through proficient management and development of our existing assets, as well as making prudent acquisitions. We currently have years of projects that can multiply our production and revenues.”

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