2011-02-18-2011-02-16-2011-02-16

Bought co. with 24,556 gross acres on TX Gulf Coast, gaining 2.3 MMcfe/d, 21.9 Bcfe proved.

Strategic American Oil Corp., Corpus Christi, Texas, (OTCBB:SGCA) has closed the purchase of Galveston Bay Energy LLC. Based on the cash price of $9.9 million, the imputed cost of proved producing reserves is $0.46 per thousand cubic feet equivalent (Mcfe), or $2.75 per barrel of oil equivalent (BOE).

Galveston Bay's assets are on the Texas Gulf Coast and consist of five fields encompassing 24,556 gross acres (22,950 net) in prolific producing areas. The company operates 100% of its production, and maintains an approximate 85% working interest in virtually all of its producing properties.

For the five months ended Dec. 31, 2010, Galveston Bay's production averaged 2.3 million cubic feet equivalent (MMcfe) per day, or 378 BOE per day. Estimated net proved reserves as of Oct. 1, 2010, totaled 3.6 million BOE, or 21.9 billion cubic feet of gas equivalent (Bcfe), of which 27% is represented by proved developed producing and shut-in categories.

The acquisition was funded with proceeds from a private placement of common stock.