Illinois

THE ILLINOIS AGENDA: DEVELOPING THE ABUNDANT OIL RESOURCES IN THE ILLINOIS BASIN

Strategic American Oil Corporation is focusing on growing and developing its portfolio of oil projects in the Illinois Basin.  Headed by the Waterflood #1 (WF1) prospect, the Company has recently leased over 2,900 acres in the Illinois Basin.  New projects are being identified and leasing programs are in effect to acquire these prospects. 

Identifying and leasing in the Basin is a part of a broader effort by the Company to institute a drilling program with prospects of mixed risk profiles, ranging from waterflood opportunities, direct offsets, step-out wells, and pinnacle reef prospects. This portfolio of prospects will provide Strategic American Oil a relatively low-cost/high-reward portfolio of drilling locations in the heart of the oil-rich Illinois Basin. Updates will be given as key leasing and operational milestones occur.

The Illinois Basin, which the Illinois State Geological Survey (ISGS) estimates has over 4.1 billion barrels of oil remaining to be produced, is a key area for development by the Company.  To date, the Company has completed leasing efforts on the Waterflood #1, The DST, and the Oakdale NE.   

Strategic American Oil has been working on the WF1 Prospect in the Illinois Basin for many months and is now finalizing its designs for the pilot program. The Company has received an independent engineering report and has identified potential reserves which indicate production can be achieved through primary and secondary recovery. There are at least two additional zones that have not been fully exploited in this field which may hold significant primary reserves over and above the waterflood (secondary) recovery.

The DST Prospect covers approximately 1,000 acres and according to the Illinois State Geological Survey (ISGS) is on trend with and offsets fields that have produced from 764,600 to 3,570,500 barrels of oil from depths of 3,000 to 4,000 feet. The Company will now work to secure additional working interest partners in an effort to implement our development of this field beginning with the drilling of an offset well on the DST acreage. This prospect was identified from geologic and historic well information provided by the ISGS.

The Oakdale NE Prospect is sitting to the northeast and on strike with the Oakdale North Field which is situated in an area of structural flattening of regional dip.  Numerous fields, most being stratigraphic traps, produce around the Oakdale NE area.  The stratigraphic setting at Oakdale North may be repeated under our prospect acreage. According to the ISGS, the original Oakdale North Field produced 761,000 barrels of oil.

Strategic American Oil’s goal will be to retain as much of these and future Illinois Basin projects as possible since the economics are so favorable: high NRI leases, low lease bonuses, solid well-control, multiple target zones, low competition (due to good relations with mineral and land owners) and low drilling/operating costs. All of these factors have led the Company to push forward on this particular WF1, as well a second waterflood target (WF2) which has already been identified, with preliminary work underway.

“Allocating significant resources to the Illinois Basin is an integral part of the future growth for Strategic American Oil,” said President and CEO, Jeremy Driver. “We believe strongly that our development of these projects will reap great economic rewards for the Company and its shareholders. The efficacy of waterflooding is evidenced by the success of dozens of companies, both public and private. Most, if not all, of the majors have been or are currently engaged in secondary or tertiary recovery projects. It is a proven technique that has been used for over half a century and our knowledge base and technology continue to enhance the recovery rates.”

The Illinois Basin

A quote from the ISGS website states, “Oil and gas have been commercially produced in Illinois for over 100 years. Existing commercial production is from more than 52 named pay horizons in Paleozoic rocks ranging in age from the middle Ordovician to Pennsylvanian. Over 3.2 billion barrels of oil have been produced. Recent calculations indicate that remaining mobile resources in the Illinois Basin may be as much as 4.1 billion barrels. Thus, large quantities of oil, potentially recoverable using current technology, remain in Illinois oil fields despite a century of development.”

About Strategic American Oil

Strategic American Oil Corporation (OTCBB: SGCA) is a growth stage oil and natural gas exploration and production company with operations in Texas, Louisiana and Illinois.  The Company’s team of geologists, engineers, and executives leverage 3D seismic data and other proven exploration and production technologies to locate and produce oil and natural gas in new and underexplored areas. The Company seeks accretive acquisitions of production, reserves or other companies that will provide significant growth potential. Further information can be found on the Company’s website at www.strategicamericanoil.com