In February, 2011, Strategic American Oil completed what CEO Jeremy Drive termed “a seminal event” for the company, the acquisition of Galveston Bay Energy, a Texas based owner and operator of oil and natural gas properties in Galveston Bay, southeast of Houston. The $9.9 million acquisition, funded with proceeds from a private placement, was immediately accretive to cash flow, production, and reserves, important to the company’s goal of growing production and cash flow through low risk development and workover projects. An independent engineering report from last year estimated net proved reserves of 3.6 million barrels of oil equivalent, together with important exploration opportunities for undiscovered deeper pools. The move gives Strategic American a multi-year inventory of diversified projects in a key producing hydrocarbon basin.
The recent acquisition included 4 fields:
• Trinity Bay
• Fisher’s Reef
• Red Fish Reef
• North Point Bolivar
Since completion of the Galveston Bay acquisition, Strategic American has been working to improve existing production infrastructure. As a result, gross production has steadily increased to over 260 barrels of oil per day and 420 Mcf of gas per day. The increased production is generating additional cash, which positions the company for continued growth.
With more than 120 wells, and only 20-30 wells currently producing, there is much room for low risk and low capital expansion, all in the shallow waters of Galveston Bay. Strategic American has already placed into production its initial post-acquisition well of Galveston Bay, the Fisher’s Reef G2-3A. The well is producing approximately 120 barrels of oil per day, plus 200 Mcf per day of natural gas. The PV-10 value of the acquisition was estimated at over $54 million for proved reserves alone. Multiple high-value targets have also been identified in Galveston Bay, and a full field study is underway to finalize a corresponding operational plan.
In addition, in September, Strategic American completed the acquisition of SPE Navigation I, which included certain oil and gas working interests equal to one third the working interests owned in the four producing oil and gas fields in Galveston Bay, further strengthening the company’s cash producing assets and balance sheet.
For additional information, visit www.StrategicAmericanOil.com
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