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South Texas Oil Company Announces Contract Operating Agreement

Posted on: Tuesday, 8 April 2008, 09:03 CDT

AUSTIN, Texas, April 8, 2008 /PRNewswire-FirstCall/ -- South Texas Oil Company today announced that it has signed a definitive contract operating agreement with Sonterra Resources, Inc. As of the effective date, April 1, 2008, Sonterra began overseeing daily operations, in the name of, on behalf of, and for the benefit of South Texas Oil, of both operating services and accounting services for the operated and non-operated properties as an independent contractor acting in the role of contract operator.

Under the terms of the agreement, South Texas Oil will lead the operation of its Colorado assets with the assistance of the contract operator. Under the terms of the agreement, the initial period shall be 90 days, with a month-to-month extension as approved by both parties, going forward. The contract operated services at a rate competitive to similar services provided as by industry standard. Senior management of the contract operator has experience providing similar services at predecessor companies.

Management Comment

Scott Zimmerman, President and CEO, said: "With the addition of the expertise provided by our contract operator, we can maintain a lean corporate structure, which is a principal management strategy. Their experience and expertise in our core Texas operating area provides South Texas Oil with a strong foundation for continued growth of production and reserves, thus enhancing shareholder value."

About South Texas Oil Company

Austin-based South Texas Oil Company acquires, explores and exploits predominantly oil-bearing formations in its core operating areas in south-central and southwest Texas, and in the DJ Basin of northeast Colorado. The Company has a high-working-interest inventory of drillable locations within its operating areas. The Company anticipates investing growth capital in both its Texas assets as well as its DJ Basin properties in Colorado. Two Company-owned rigs will be utilized to help develop the Company's successful Bastrop core operating area as well as other assets in the South Texas portfolio. The Company currently is evaluating existing wellbores in the Giddings Field for re-entry possibilities that can enhance production and estimated ultimate recoveries. The Company is also evaluating infill drilling locations in Kyote and Bigfoot Fields.

Forward-looking Statements

Certain statements made in this press release contain forward-looking statements that involve a number of risks and uncertainties. This forward-looking information is based on certain assumptions, including, among others, presently known physical data concerning size and character of reservoirs and economic recoverability. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, operations involve numerous risks and uncertainties, many of which are beyond South Texas Oil's control, which could result in expectations not being realized or otherwise materially affect the financial condition, results of operation and cash flows. Additional information regarding these and other risks are contained in South Texas Oil's filings with the Securities and Exchange Commission.

South Texas Oil Company

CONTACT: J. Scott Zimmerman, President and CEO of South Texas OilCompany, +1-512-772-2474, fax, +1-512-263-5046

Web site: http://www.southtexasoil.com/

Source: PRNewswire-FirstCall

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