Strategic Buys Steen River Properties

100% working interest in 16,731 net acres near Steen River producing 340 BOE per day, 83% of which is light oil.

Strategic Oil & Gas Ltd. (Toronto Venture: SOG) has closed on its purchase of assets in the Steen River area of Alberta from an undisclosed seller for $23.6 million in cash.

The purchase is for a 100% working interest in properties which produce 340 barrels of oil equivalent (BOE) per day, 83% of which is light oil. Strategic has also purchased 26 net sections of highly prospective land contiguous to its position on the Steen River. In addition, it gets strategic roads and gathering lines that give it access to the region.

The assets produce 280 barrels of light oil and 240 thousand cubic feet (Mcf) of natural gas per day. Proved plus probable reserves are about 1.7 million BOE, 83% of which is light oil. The net acreage available to Strategic is 16,731 acres, with about 1,300 acres of undeveloped acreage.

The purchase price represents about $69,411 per flowing BOE and $13.59 per proved plus probable reserves. The infrastructure assets in the transaction include a pipeline and off-loading station at the Mackenzie Highway, pipeline and water disposal capabilities at the West Marlow Field, and 16 kilometers of an all-weather road.

The acquired infrastructure and facilities between Strategic's plant and the existing rail line will allow for an accelerated development of a private rail terminal. Furthermore, the acquired facility synergies within the field will reduce Strategic's anticipated 2013 capital spending allocated to infrastructure and facilities by over $12 million.

Strategic’s bankers have advised them that its borrowing base has been increased to $100 million. This increase will allow Strategic to continue to develop its asset base at Steen River. Strategic expects to exit 2012 with net debt of approximately $34 million.

The effective date of the transaction is Dec. 1.