Strategic American Oil Corp. (SGCA.OB) Moves to Acquire Large Producing Oil and Gas Asset with Serious Potential in Texas

QualityStocks would like to highlight Strategic American Oil Corporation (OTCBB: SGCA), 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.

In the company’s news today,

Strategic American Oil reported execution of a $9.9M purchase and sale agreement whereby SGCA will acquire a producing, private oil and gas company located in Galveston Bay, Texas.

CEO of SGCA, Jeremy G. Driver, spoke of the great future benefit to shareholders this acquisition entails and the extent to which the move solidifies the company’s asset footprint.

Driver emphasized the unique capabilities that the company brings to bear on such an acquisition, from in-house 3D seismic data capture and analysis to the world class expertise of SGCA’s field-hardened team of geologists, engineers and management personnel.

Production at the site is excellent; data for the five-month period ending Dec. 2010 indicates average output of 2.3M cubic feet of natural gas per day, or 378 barrels of oil equivalent per day.

Current estimated net proved reserves for the site stand at 3.6M barrels of oil equivalent, or 21.9B cubic feet of natural gas, 27% of which is in proved developed producing and shut-in categories, with natural gas accounting for some 69% of total reserves (as of Oct. 1, 2010, per an independent third party engineering report utilizing SPE standards and NYMEX pricing).

Major opportunities for continued development exist at the site and this is a perfect fit for SGCA, which eagerly anticipates upgrading output capability on what amounts to approximately $74M in reserves.

The company is in full-bore pursuit of a strategy defined by acquisition of currently producing assets, re-working of assets for increased production via implementation of innovative production technologies, developing secondary recovery projects and proven undeveloped zones, as well as drilling offset wells and holding onto a majority working interest.

The acquisition price is roughly $2.75 per proved barrel of oil ($0.45 per million cubic feet of gas); with a purchase date effective Jan. 1 of this year and an expected close by Jan.26, pending financing and customary closing conditions/adjustments.

Driver concluded by referencing SGCA’s plans to establish working relationships with parallel interests in order to maximize the upside of exploration and production while ameliorating risk factors.

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