UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 31, 2007
SOUTH TEXAS OIL COMPANY
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(Exact name of Registrant as specified in charter)
Nevada 0-50732 74-2949620
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification)
2802 Flintrock Trace, Suite 252, Austin, TX 78738
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(Address of principal executive offices) (Zip Code)
(512)371-4152 (Telephone) (512)263-5046 (Fax)
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(Issuer's telephone number)
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ] Written communication pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 40.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4 (c))
SECTION 7 - REGULATION FD
ITEM 7.01 Regulation FD Disclosure.
On July 31, 2007, South Texas Oil Company provided a Corporate update to the
shareholders of the Company. The purpose of this Regulation FD Disclosure, is
to provide the shareholders of South Texas Oil Company a comprehensive overview
of operations to date and provide disclosure on items the Company intends to
discuss with the investment community.
Corporate Update
A. Company Overview.
Effective June 18, 2007 the Company retained the services of Mr. Scott
Zimmerman as President and Mr. Bill Zeltwanger as Vice-President of South Texas
Oil Company.
Mr. Scott Zimmerman
Mr. Zimmerman, the former President and CEO of Storm Cat Energy (AMEX: SCU)
holds a Bachelor of Science in Petroleum Engineering. Mr. Zimmerman has an
extensive background in the oil and gas industry including working at Huber
Corporation for 20 years where he was instrumental in the sale of Huber's
Fruitland Coal CBM field for $100+ MM in profit. In 2002, he was Vice-
President of Operations and Engineering for Evergreen Resources and responsible
for over 1,000+ producing wells and 800,000 prospective acres. Evergreen was
acquired by Pioneer Resources for $2.1 billion in 2004. Mr. Zimmerman then
founded Storm Cat Energy which is currently traded on the American Stock
Exchange.
Mr. Bill Zeltwanger
Mr Zeltwanger has been involved in the industry since 1973. He started in
south Texas and was then later involved in parts of the Austin Chalk and has
been involved in several new Wilcox field discoveries in both Fayette and Lee
counties in Texas. For the past 6 years he has been a partner in Leexus Oil
and Gas which recently sold its assets to South Texas Oil Company for
approximately $26 million. Mr. Zeltwanger has extensive knowledge of the field
the Company is currently drilling.
B. Areas of Operations.
1. Southwest Texas
a.) Netherland, Sewell and Associates recently provided a
reserve report for these leases which indicated year end 2006
having a 197% increase in our proved developed reserves over
a previous study conducted in 2004. The Reserve report
indicated a PV-10 on the proved developed reserves of
$860,200. This increase is attributable to the successful
workover program which was initiated in early 2006.
b.) Our workover rig is scheduled to start the process of
putting over 27 wells back into production that have been
affected by the adverse weather in this area of operations.
2. Colorado
a.) The Company has drilled 3 wells in Colorado with a 75%
working interest in each well. These wells combined are
currently averaging approximately 40 bopd (barrels of oil pe
day) and 305 mcfd (thousand cubic feet per day)
b.) The Company has yet to close on the purchase of the 20,000
acres under consideration due to the complexities of the field
and reserve evaluation in order to have a fairness opinion
issued. Mr. Zimmerman is in the final stages of the
evaluation of this field and working on the independent
evaluation and issuance of a fairness opinion for the
transaction.
3. South Central Texas
a.) The Company previously announced the acquisition of leasehold
acreage, various working interests and related assets in
approximately 18,000 acres in south central Texas. Total gross
production reported with the Railroad Commission in Texas for
these leases in December 2006 was 341 bopd and 1,020,000 cubic
feet of gas per day. The Company paid $3 million in cash,
issued 2 million shares of restricted stock and provided a note
for $4 million as consideration for the acquisition.
The company makes the distinction of naming the existing
producing wells the Giddings properties and the new find is
named the Bastrop field. Within the Bastrop field there is
Bastrop 1 which the company owns an 18.25% working interest
and 17.4375% net royalty interest. In Bastrop 2, the company
owns a 100% working interest and a 79% - 83% net royalty
interest.
b.) A significant portion of the newly acquired acreage lies in the
Bastrop 1 and 2 fields which have the potential for
approximately 100 new wells at an average depth of 7,000 feet.
The Bastrop fields have production potential from both the
Austin Chalk and lower Buda formation. To date the only
formation that has been produced from these wells in the
Bastrop 1 field is the Buda.
Bastrop 1 Drilling Results.
Well #1
This first well brought into production in late December 2006 and was
put on choke and flowed approximately 200 bopd, cumulative production
through June 30 is at 29,757 BBls of oil.
Well #2
This well was completed and put into production in June and began to
produce oil. The well then began producing oil along with water. The
well has been shut in as of mid-July so Mr. Zimmerman and Mr.
Zeltwanger can review the completion methods used on the well and
recomplete this well to prevent the communication of water.
Well #3
This well was completed in June 2007 and tested using 10/64, 11/64 and
12/64 chokes for 4-5 hours each, the well flowed an average of 21 boph
(barrels of oil per hour), the equivalent gross production of 504 bopd
and 188 mcfd. Wellhead pressure was recorded at an average of 900lbs.
This well was produced for 17 days in June with cumulative production
through June 30 at 2,793 barrels of oil.
Well #4
This well has been drilled to a depth of approximately 7,000 feet and
will be put into production within the next 14 days. Mr. Zimmerman is
currently evaluating the completion methods to use for this well.
Well #5
This well has been drilled to a depth of approximately 7,000 feet and
will be put into production within the next 14 days. Mr. Zimmerman is
currently evaluating the completion methods to use for this well.
c.) South Texas Oil Company is due to commence drilling of the
sixth well in Bastrop field in the next 14 days. The sixth
well is scheduled to be drilled in the Bastrop 2 acreage where
the company owns a 100% working interest and between a 79% -
83% net royalty interest on the leases.
d.) South Texas Oil Company recently acquired additional oil and
gas interests related to the existing working interests
currently held in the Giddings field for $1.8 million in cash
utilizing the Company's credit facility. The interests
acquired approximately double South Texas Oil's current
ownership in these leases which South Texas Oil currently
operates to almost 100% working interest and approximate 75%
net revenue interest. Based on 2006 production numbers, the
return from revenue for this investment which includes 26
producing wells will be just over 12 months.
4. Drilling Operations
a.) The Company recently purchased a drilling rig to provide cost
savings and flexibility in the drilling of its own wells.
b.) The Company recently completed the drilling of its third well
using this rig with the fourth well to commence within the next
14 days. This fourth well is to be our first well in the
Bastrop 2 acreage.
The initial well drilled with our rig was to a depth of 4,000 feet and
was not part of our Bastrop fields. The subsequent two wells which were
drilled are part of an initial 10 well drilling program in the Bastrop 1
and 2 fields and were drilled to a depth of approximately 7,000 feet.
C. Operations Summary
In February 2007, the Company was provided a secured $15 million credit
facility in order to further the business strategy. This credit facility is a
three year revolving credit line with interest at prime plus 4 percent.
The most recent production reports submitted to the Rail Road Commission in
Texas are for the month of May 2007 and show gross production of 540 bopd and
1,033 mcfd for the wells operated. Combined with our Colorado wells, the gross
production for May was 576 bopd and 1,338 mcfd. This shows month over month
production increases from the December 2006 production number reported with the
Rail Road Commission.
The Company continues to make progress in its drilling and operations with
gross production increasing on a monthly basis. The Company now employs over
27 people with an additional office recently opened in Bastrop, Texas.
The information in this report being furnished pursuant to Item 7.01 of form 8-
K and shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities and Exchange Act of 1934 (the "Exchange Act") or otherwise subject
to the liability of that section, nor shall it be deemed incorporated by
reference in any filing under the Exchange Act or the Securities Act of 1933,
except as expressly stated by specific reference in such a filing.
Except for historical information contained in this disclosure document, the
disclosure contains forward-looking statements, which involve certain risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by these statements.
These statements are based on our beliefs and the assurances we made using
information currently available to us. Because these statements reflect our
current views concerning future events, these statements involve risks,
uncertainties and assumptions. Our actual results could differ materially from
the results discussed in the forward-looking statements. You should not place
undue reliance on these forward-looking statements. You should also remember
that these statements are made only as of the date of this report and future
events may cause them to be less likely to prove to be true.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 Financial Statements and Exhibits.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: July 31, 2007
South Texas Oil Company
By: /s/ Murray N. Conradie
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Murray N. Conradie, Chief Executive Officer