Galveston Bay Energy

Strategic American Oil announced in February 2011 that it acquired Galveston Bay Energy and has already re-completed and placed on production its initial well, the Fisher's Reef G2-3A, located in Chambers County, Texas. This represents the first post-acquisition project of Galveston Bay Energy ("GBE"). The Fisher's Reef G2-3A well is producing approximately120 b/d of oil, plus 200 Mcf/d of natural gas. The PV-10 value of this acquisition was over $54 million for proved reserves alone.

Multiple high-value drilling targets have been identified in the fields of Galveston Bay. A full field study is currently underway to finalize the operational plan including infrastructure improvements, reworks, recompletions, and drilling. With more than 120 wells and only 20-30 wells producing, there remains a significant amount of “low hanging fruit”. The Company expects to ramp up production in the near term with minimal capital investment. While simultaneously exploiting these non-drilling opportunities, a formal drilling program is also being designed and implemented.

The recent acquisition included 4 fields: Trinity Bay, Fisher’s Reef, Red Fish Reef, and North Point Bolivar. All of which are located in the shallow waters of Galveston Bay. These fields are maintained and operated by the hard-working field crews which operate in two teams, working seven days on and seven days off, reminiscent of offshore rig rotations. This arrangement allows for almost constant monitoring and real-time data back to management.