Strategic American Oil Leases Frio Gas Target in South Texas

Strategic American Oil has leased a 1,043 net acre (m/l) Frio Sand (gas) target in South Texas 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 significant gas and condensate reserves and proposes to drill one to two wells to test the Frio zones.

Bob Bennett, the Company's contract seismic expert who has more than 20 economic oil and gas discoveries to his name, said of the prospect, "With more than 2 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 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."

Company President and CEO, Jeremy Driver, stated, "This leasing effort is a major development in the Company's ongoing exploration and development program. We have been working on this project for some time aided by the 3D seismic survey purchased last year. We believe this structure, in the prolific South Texas Frio Sand trend, has the potential to be a significant gas and condensate producer. Successfully developing prospects of this magnitude increases our ability to grow our revenue and core reserves. The Company will continue to review and evaluate its four additional 3D seismic databases with the goal of developing additional prospects."

The Frio formation, a sandstone interval, is one of the most prolific producers in South Texas. The Company's prospect lies directly on trend with many other major gas/condensate producing fields according to Texas Railroad Commission records, many of them accumulating production exceeding 200BCF (200 million MCF) and 300MBO. In general, these fields possess numerous faults creating fractured "pools" of gas and oil. A desirable general characteristic of Frio zones is the relatively higher permeability and porosity leading to higher flow rates. Additionally, with the multiple zones to be encountered the Company expects to achieve these higher flow rates and significant oil and gas reserves.

3D seismic is a key tool in Strategic American Oil's exploration plans for discovering new oil and gas reserves along the gulf coast. 3D seismic surveys allow the company to better define prospective oil/gas structures and pinpoint drilling locations thus increasing chances for successful wells. 3D seismic has become an invaluable tool for developing drilling prospects and has become the prospecting tool of choice in today's oil and gas exploration industry. The technique is utilized by major oil and gas companies throughout the world.



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