Strategic American Oil Gets OK to Drill in South Tx.

Strategic American Oil has received approval from the Lessor to enter into its new partnership with Chinn Exploration Company on Strategic American Oil's 3D seismic prospect in Kenedy County, South Texas. As a result of this approved partnership, Chinn Exploration has signed the drilling contract and submitted the drilling permit, advancing efforts to have the first test well drilled.

The test well will be located on the 1,043 net acre mineral lease obtained by Strategic American Oil in 2009. The Frio Sand targets in South Texas were identified through its acquired 303 sq. mile 3D seismic database. The Company's exploration team believes the multiple Frio sands identified in the seismic profile could contain substantial gas and proposes to drill one to two wells to test the Frio zones. The target depth is approximately 13,800 feet.

Bob Bennett, Strategic American Oil's contract seismic expert who has more than 20 economic oil and gas discoveries to his name, said of the prospect, "With more than two decades of experience exploring for oil and gas in South Texas with 3D seismic, I have never had the opportunity to discover or participate in a 4-way closure Frio structure such as this. These structures are usually cherry-picked by the major oil companies as drilling locations of choice. I believe this prospect has the potential to be a substantial new field discovery along this highly active trend."

"Approval from the Lessor allows us to move this project ahead expeditiously with our first test well for what we believe is a very attractive 3D seismic prospect," said Strategic American Oil Corporation President and CEO Jeremy Driver. "The sheer size of the structures and the multiple plays identified makes this prospect very worthwhile."

Strategic American Oil will assign operatorship to Chinn Exploration Company, a fully licensed and bonded Texas oil and gas operator. Chinn was assigned 81.25 percent of the working interest in return for paying all drilling costs, estimated at $3 million, and will pay $200,000 to Strategic American Oil for leasing, land and geophysical work. This means that Strategic American Oil Corporation will not be required to pay any costs for drilling the first test well and has recouped its hard costs to date. When the well is completed, Strategic American Oil will pay its share of the completion costs. This aligns with the Company's existing strategy of finding partners to assume all exploration risk, while retaining a carried interest in the project.


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