Strategic Oil & Gas Ltd. Announces Successful Start to Summer Drilling Program

CALGARY, ALBERTA--(Marketwired - July 28, 2014) - Strategic Oil & Gas Ltd. ("Strategic" or the "Company") (TSX VENTURE:SOG) today announced its first horizontal Muskeg well post spring break-up. The Muskeg well 11-24 produced at an average test rate of 545 boe/d (77% oil) over the first seven days. Costs to drill and complete the well were $3.9 million, representing a 25% decrease when compared to the Company's average well costs in the play.

Gurpreet Sawhney, Strategic's President and Chief Executive Officer, commented: "We remain focused on proving up the Muskeg at Marlowe. With more than 100 sections with Muskeg potential identified to date, the Company is positioned with a multi-year drilling inventory of more than 400 economic prospects. As with any new resource play, we continue to move along the learning curve identifying opportunities to drive efficiencies, grow returns, and increase well performance. We have built the necessary production infrastructure to handle our expanding drilling program enabling us to connect a well within days of completion, which results in shorter payback on our Invested capital."

Muskeg Production

The Muskeg 11-24 well was drilled and completed with a 13 stage frac and was the first well drilled on the western rim at Marlowe post break-up. Over the first seven days the well produced an average of 420 bbls/d of 37 API oil and 0.75 MMcf/d of raw solution gas, or an oil equivalent rate of 545 boe/d. The well was tied in after a five-day test period into Strategic's production infrastructure.

For comparison, the previous Muskeg 10-24 well was drilled and completed with a 15 stage frac prior to spring break-up. Average production rates over the first 30 and 90 days were 560 and 420 boe/d, respectively. This well has produced 38,600 boe (60% oil) in three months and continues to outperform the Company's pre drill estimates.

Reduced Drilling Cost

The Company has significantly decreased drilling days and other associated well costs. The Muskeg horizontal well 11-24 was drilled in 22 days, a decrease of 7 days from the wells drilled in the first quarter of 2014. The Company drilled the 11-24 well for $3.9 million, a reduction of over $1.0 million from the average cost of the wells drilled during the first quarter of 2014. A shift change in the overall well plan has been the first step in Strategic's continued focus on cost reductions.