U.S. OIL and GAS plc's (Ticker: USOP) core activities are in the USA, with ongoing exploration activity in Nevada where the company holds a large lease acreage.

Progress to Date

Preparations for drilling

U.S. Oil has identified all of its Eblana Phase 1 prospect area drilling targets.   The company  has staked the access road and drill pad, and has filed an Application for Permit to Drill (APD) with the US Authorities in Nevada in preparation for the drilling of its first target well.

Expanded Lease Area

On December 12th, 2011, the Company successfully bid for additional exploration acreage in the Nevada Bureau of Land management's lease auction.  The additional leases are two lots abutting US Oil's existing lease area.  The Company's total holding has now doubled to 10,738acres (43 sq. km. approx.). 

Oil in Place

A preliminary estimate of 'Original Oil In Place' (“OOIP”) has been confirmed for Eblana Phase 1. Based on a report from Akrawi et al prepared in February 2011, the analysis to estimate Oil In Place uses a probabilistic approach incorporating structural volumetric capacity yielded by Infrasonic Passive Differential Spectroscopy (IPDS) and supported by other survey methods.

Results show total Prospective Resources (Maximum Possible OOIP Estimates) of 187 million barrels with a maximum value of Recoverable Possible Resources of 113 million barrels.  Expected Probable Recoverable oil for USOIL's Eblana Phase 1 survey and catchment area, covering less than 25% of the lease area, is 47 million barrels.

Geochemical surveys

Final analysis of the latest geochemical results for US Oil's pre-December 2011 lease area confirms five precisely defined hydrocarbon reservoirs, larger than previously reported, and some subsuming more than one previously reported anomaly.   Two of the anomalies are analogous to trends found in the adjacent oil-producing Railroad Valley.  Final anomaly sizes, extracted from the latest data, yield a current estimated size of up to 400 acres per anomaly, indicating that, on average, 30% of the lease area shows signs of hydrocarbon alteration.

Passive Seismic (IPDS) survey

A 3-D Infrasonic Passive Differential Spectroscopy (IPDS) survey was recently completed over the whole of the pre-December 2011 lease area. A report prepared by Geodynamics Research confirms a large hydrocarbon anomaly consistent with previously reported 2-D IPDS, geochemical survey results and other data sets. The anomaly covers more than 10 sq.km and shows consistently high Reservoir Hydrocarbon Indicator (RHI) readings. The hydrocarbon pool sits updip and is wholly contained within the lease area, while the source kitchen is underneath or just down-dip nearby. US Oil has identified up to ten drilling targets over the studied lease area.

Competent Person's Report

The Company has engaged the services Forrest A. Garb & Associates, International Petroleum Consultants, to prepare a Competent Person's Report to review all data and prospective resources estimates for its pre-December 2011 lease acreage in Hot Creek Valley, Nevada. The company anticipates working with Forrest Garb as independent processes and data auditors throughout the forthcoming drilling campaign. Their role will also include devising and maintaining the Company's data room.