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CORPUS CHRISTI, Texas, Sept. 22, 2010 (GLOBE NEWSWIRE) -- Strategic American Oil Corporation (OTCBB:SGCA) (the "Company) is focusing its efforts on growing and developing its portfolio of oil projects in Illinois. Highlighted 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 due to numerous factors, including:
Lease Costs at $25.00 – 30.00/acre
Royalty Rate at 12.5 – 15%
Shallow Target Zones 2,000 – 4,000 feet
The Company has been working on the WF1 target 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.
Strategic American Oil's goal will be to retain as much of this and other 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 as a second waterflood target (WF2) which has already been identified, with preliminary work underway.