Strategic Oil & Gas Ltd. announced that in order to better utilize the skills and experience of its senior management, Sean Hayes will now lead the technical exploration and development team as Executive Vice-President Geoscience and Cody Smith will assume the role of Chief Operating Officer. Dr. Hayes has been the Chief Operating Officer of the Company since 2009. The company will now benefit from his years of experience in subsurface reservoir modeling and characterization as the asset portfolio has now grown and subsurface work becomes increasingly important to the success of the Muskeg Stack play. Mr. Smith joined the company as Vice President, Operations in 2012. Mr. Smith had worked the previous 25 years of his professional career with EnCana Corporation. Mr. Smith led teams in drilling, completions, facilities, production engineering and operations and safety in British Columbia and Alberta. He was involved during new play development in the Jean Marie, Horn River, Montney, Alberta Cretaceous stacked plays, and Duvernay.

The company announced operational results for fourth quarter of 2013. The company announced fourth quarter drilling program, which included two horizontal Muskeg Stack wells and one horizontal Keg River well. Muskeg Stack horizontal well (15-24) has averaged 220 BOED (92% oil) over the first 31 days while still cleaning up, the well is currently producing 240 BOED. Muskeg Stack horizontal well (5-33) drilled in December 2013 and completed early in January flowed up the 114.3 mm frac string post fracture stimulation at rates in excess of 400 BOED (95% oil) during the first four days of production, and is still cleaning up. The well is expected to be equipped and tied in shortly. The six Muskeg Stack wells have delineated 35 sections of land, and have produced oil in commercial quantities. Strategic has de-risked an inventory of over 100 Muskeg Stack horizontal wells directly offsetting current production on the north western portion of the rim at Marlowe. Strategic conducted post drill out operations on four of the Muskeg horizontal wells drilled during the third and fourth quarters of 2013. This program was necessary to identify whether or not drill outs would enhance production from the wells prior to embarking on a major development campaign. The drill out program indicated that the original completion operation was effective in stimulating the formation and that this would not be required on future locations. Drilling fluid lost in the wellbores during the drill out operations caused some damage in the fractures resulting in reduced oil rates from the wells during the fourth quarter of 2013. This damage was short-lived and the wells have cleaned up over the past 4 weeks and are producing close to the pre-drill oil rates. The Muskeg Stack horizontal wells now contribute approximately 25% of the company's production capability which positions the Company for a major exploitation program yielding significant growth opportunity. Production at Steen River was constrained for 26 days at Marlowe during the fourth quarter. The Steen plant was down 19 days for the expansion and the Company experienced additional 7 days downtime with the facilities during the month of November due to new equipment commissioning which has since been resolved. As a result of the operational issues experienced over the past quarter, production volumes have been affected. Strategic's corporate production is estimated to average 2,800 BOED for the fourth quarter of 2013. Strategic estimates 2013 annual average production of 3,200 Boed (70% oil) and year end net debt of CAD 79 MM. Strategic exited 2013 with a production capability of 4,600 Boed, while still awaiting completion of the 5-33 well. The Muskeg Stack horizontal well 5-33 has been producing into a test facility at a rate of 400 BOED. The well is expected to be tied in shortly. Due to the ongoing Bistcho pipeline project, Strategic has approximately 500 BOED of production shut in at West Marlowe. Further, the company plans to shut-in 1,000 BOED from Larne, Bistcho and Cameron Hills for 2 weeks during the Bistcho plant turnaround in February. Downtime during the first quarter of 2014 would result in average corporate production of 3,700 BOED. With the plant expansion completed and the sales oil pipeline project on schedule, Strategic expects to have all production on stream in the second quarter of 2014.

The company board of directors has approved a capital spending budget of CAD 80 million for 2014 with a focus on Muskeg Stack horizontal wells at Marlowe and related infrastructure. Strategic has completed the 5-33 Muskeg horizontal well which was drilled in 2013 and plans to drill an additional 13 wells in 2014. The company announced annual average production volumes are expected to be 4,400-4600 Boed (70% oil), a 40% increase from 2013 levels. Using realized prices of CAD 81/bbl for oil including hedging and CAD 3.70/mcf for natural gas, Strategic expects a cash flow of CAD 35 to 40 million for 2014, which represents an increase of over 100% from projected 2013 cash flows. The 2014 capital budget will be funded by a combination of cash flow from operations, drawings on the company's credit facility and other financing sources, as required. Strategic is currently evaluating several financing alternatives.