Strategic Oil & Gas Ltd.
TSX VENTURE : SOG

May 31, 2006 13:18 ET

Strategic Oil & Gas Ltd.: Drilling and Financing Update

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 31, 2006) - Strategic Oil & Gas Ltd. ("Strategic" or the "Company") (TSX VENTURE:SOG) wishes to provide an update to its drilling and financing activities.

Strategic has now participated in the drilling of three wells in its current Alberta drill program. Two were in the foothills of central Alberta as previously announced and the most recent one is located in the Minnehik Buck Lake area of central Alberta. The Minnehik Buck Lake gas well encountered multiple gas zones and was cased on May 29, 2006 pending a completion program.

The Antelope 1 -16, Twp 29N, R107W was "spudded" on May 20, 2006 and is currently at approximately 6,000 feet in depth. The well is located in the Green River Basin of Sublette County in the state of Wyoming. This is the first well of a multiple well program on this property, with the operator, Jed Oil Inc. (AMEX - JDO). Strategic has a 22.5% working interest in this project. This location is on the Pinedale anticline which is the Pinedale gas field and adjacent to the prolific Jonah gas field. The same Upper Cretaceous Lance formation is the main producing formation and will be penetrated and evaluated at this location and is adjacent to offsetting Lance production. The U.S. government has indicated reserves of half a trillion cubic feet of natural gas in-place per 640 acre section in the Pinedale gas field.
The well will be drilled to 13,100 feet (+/-) to evaluate the Lance formation, and will take 6- 8 weeks to drill and evaluate.

Strategic continues to evaluate further prospects in the Western Canadian Sedimentary Basin and the Western United States.

Further to the Company's press release of March 31, 2006, the Company has had preliminary closings of its proposed $6,400,000 financing that have resulted in the issuance of 2,569,000 common share units for cash proceeds of $ 4,110,400 less cash commissions of $295,500 for net cash proceeds of $3,814,900. Each unit consists of one common share and 1/2 share purchase warrant. Each whole warrant will allow the holder to purchase one common share for each warrant owned at a price of $2.00 per share for one year from date of closing, provided that the warrants shall expire 30 days after the Corporation has notified the holder hereof by the issuance of a press release advising that the trading price of the shares of the Corporation has closed at or above $2.50 per share for 21 days on the TSX Venture Exchange. The calculation of this 21 day time period will include holidays and weekends and may include days during which there were no trades. The Corporation also issued 12,400 common share units for a consideration of $19,840 in payment of commissions. Funds from this private placement were used to repay the $1,985,600 note payable incurred on the acquisition of the oil and gas lands in Wyoming, USA and for additional drilling costs.

The Company has also issued 300,000 options to directors and officers at an exercise price of $1.60 that expire on May 2, 2011.

The Company has filed its unaudited quarterly statements for the period ending March 31, 2006on www.sedar.com. These statements reflect the fact that the Company has now started to receive revenue from production that started in late March, 2006.

Certain information regarding the Company contained herein may constitute forward looking statements. Forward looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward looking statements. The Company's forward looking statements are expressly qualified in their entirety by this cautionary statement.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the contents of this news release.

Contact Information

  • Strategic Oil & Gas Ltd.
    Arn Schoch
    President
    (604) 685-1349
    Cell: (604) 780-9810
    Email: arn@helix.net