Strategic Executes Koliba Drilling Contract

Strategic American Oil announced that the drilling contract for the Company's Victoria, Texas "Koliba" Prospect has been executed with expectations to commence drilling operations this month, depending on favorable weather conditions and rig availability. The Company will retain a 16.33% carried working interest to casing point, 25% working interest after casing point, putting the Company in a low risk/high reward scenario. The combined leased acreage (Koliba-Linville) consists of 143 acres covering an anticipated anticlinal structure (target) with offsetting production. The Company plans to drill a direct offset to the Murphy Baxter, Koliba #1 well which produced from the 5,880 feet (target) zone.

The Koliba Prospect lies in the North McFaddin Field, which, according to Texas Railroad Commission maps and records, hosts 87 productive oil and gas zones. There are numerous key points that make the Koliba Prospect particularly attractive to SGCA including:

Multi-Pay Zones

The Company has identified three potential target zones at 5,880 feet, 5,350 feet and 4,930 feet under the Koliba lease.

Historic Production

Texas Railroad Commission records state seven wells from these three target zones produced 390,426 barrels of oil and 2,472,481 MCF (thousand cubic feet) of gas.

Strong Well Control

The Koliba Prospect was evaluated by means of surrounding well control, adding confidence and lowering risk to the geologic interpretation. A minimum of 50 surrounding well bores and their associated well logs were used in developing the geologic interpretation. The prospect interpretation is both a structural and strategraphic trap that includes a four-way closure.

The Company has identified three Frio Sand target zones at 5,880 feet, 5,350 feet and 4,930 feet under the Koliba-Linville leases.

Company Vice President of Operations Steven Carter, who has over 25 years engineering experience in oil and gas exploration, production operations, reservoir management and drilling, will operate the well through Carter E&P, LLC, a licensed and bonded operator in the State of Texas.

Company President and CEO Jeremy Driver stated, "Entering into the drilling contract moves us closer to drilling and further developing the Koliba Prospect. With a 16.33 percent carried working interest, the Company is in a low risk/high reward scenario, which, if the Koliba Well is economically feasible, will be of significant benefit to the Company and its shareholders. The Koliba is our first in-house developed prospect which is an exciting step for Strategic American Oil. It demonstrates we can execute our business model of finding, acquiring, and developing what we believe are low risk/high reward development projects. As our Chairman, Randall Reneau, has previously stated, the Koliba Prospect offers a relatively low-risk offset development well in an area we have experience in with our nearby producing Welder (Barge Canal) lease."


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