Strategic Oil & Gas Ltd.

May 07, 2008 14:00 ET

Strategic Oil & Gas Ltd.: Operational Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 7, 2008) - Strategic Oil & Gas Ltd. ("Strategic" or the "Company") (TSX VENTURE:SOG) wishes to provide an operation update.

During 2007, a solid base of production was established to provide an underpinning for the Company to build upon. Relationships were established with two industry partners that will provide the Company with the ability to participate in active drilling programs in oil and natural gas prone areas in 2008 - 2009.

Highlights of the growth of the Company in 2007

Volumes were up significantly as a result of a full year's production. Oil and natural gas liquids ("Ngl") volumes increased by 128% to average 25.5 Bbls/d in 2007 compared to 11.1 Bbls/d in 2006. Natural gas volumes increased by 329% to average 339.2 Mcf/d in 2007 compared to 79.1 Mcf/d in 2006. On a boe basis volumes increased by 237% to average 82 boe/d in 2007 compared to 24 boe/d in 2006.

Revenues showed strong gains based on the significant increase in production. Oil and Ngl sales in 2007 totaled $656,493, an increase of 134% over 2006. Natural gas sales in 2007 totaled $774,830, an increase of 353% over 2006. Total revenues were $1,431,323 in 2007 compared to $450,851 in 2006, an increase of 218%.

Furthermore, operating and transportation costs showed a dramatic decrease on a per boe basis with the continued outlook for lower operating costs, given the Company now has a larger base of production. Operating and transportation costs decreased by 49% to $7.76 in 2007 compared to $15.10 in 2006.

Late in Q4 2007, the Company spudded a well in the Alberta foothills, operated by one of the Company's industry partners targeting multi-zone, long reserve life, liquids-rich natural gas horizons delineated with a recent 3-D seismic program The Company has an 18.5% working interest in the well, which encountered numerous gas bearing formations and was subsequently completed in three main productive horizons. One sandstone interval was tested and flowed at rates of 17.5 E3m3per day of sweet, high yield, condensate-rich natural gas at a tubing pressure of 8338 kPa and with a liquid rate of 6 m3 per day. The second sandstone interval was tested at 15.4 E3m3 per day of sweet gas at a tubing pressure of 9244 kPa and liquid rates of up to 31 m3/d. A third interval was perforated and flowed slightly sour natural gas (150 ppm H2S) at an un-stimulated rate of 9 E3m3 per day with increasing NGL rates, and is awaiting an acid stimulation. This third interval will be acidized shortly and is expected to flow at significantly higher rates post stimulation. Additional potentially productive zones in the wellbore are planned to be evaluated with a twin well, forecast to be drilled later in the year.

Outlook for 2008

A third well, targeting a separate anomaly interpreted from the 3-D seismic data, is planned to spud after break-up and is anticipated to again encounter multiple pay horizons. Adjacent lands have been acquired and additional follow-up drilling is planned for late 2008.

The Company anticipates significant increases in both revenue and net operating income in the remaining three quarters of 2008, based on the effects of the completion of the asset acquisition completed in January 2008, the tying in of its most recently completed well and from a drilling program that includes a minimum of eight new oil and gas wells this year, which will be funded out of current cash flow. The Company continues to explore participation in international opportunities.

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, including but not limited to the geological and engineering risks attendant on all exploration or development well, and the fact that the Company may need to raise additional capital to fund further exploration, 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.

Barrel of oil equivalent ("boe") amounts may be misleading particularly if used in isolation. All boe conversions in this release are calculated using a conversion of six thousand cubic feet on natural gas to one barrel of oil (6mcf=1bbl), and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

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
    (604) 685-1349 or Cell: (604) 780-9810