23 May, 2013 – U.S. Oil & Gas Plc – Competent Person’s Report (CPR) of Contingent and Prospective Resources

U.S. Oil & Gas Plc. (“U.S. Oil” or the “Company”)Competent Person’s Report (CPR) of Contingent and Prospective Resources

U.S. Oil & Gas Plc (GXG London: USOP, OTC New York: USOPY), the oil and gas exploration company with exploration assets in Nevada, is pleased to announce the results of the updated independent Competent Person’s Report (CPR) by Forrest Garb & Associates (FGA) on its Hot Creek Valley property in Nevada, USA. The Company, through its wholly owned subsidiary Major Oil International LLC (‘Major Oil’), holds a 100% working interest in the Hot Creek Valley property.

The FGA covering letter and report is available on the Company website at www.usoil.us. Certain survey data in the CPR have been redacted on grounds of commercial confidentiality. No other changes have been made.


* The area updip to Eblana #1 has been reclassified to contingent resources from prospective resources
* On a 50% probability (‘P50’) on the Tertiary Volcanics for the Eblana #1 lease area, FGA estimate:
o Net recoverable contingent resources at 19 million barrels (‘MMBbl’)
o Prospective original oil-in-place (OOIP) resources of 107 million barrels (‘MMBbl’)
* On a 50% probability (‘P50’) on the Tertiary Volcanics for the entire 88 square kilometre lease, FGA estimate:
o Net recoverable prospective resources at 57 million barrels (‘MMBbl’)
o Prospective original oil-in-place (OOIP) resources of 283 million barrels (‘MMBbl’)
* On a 50% probability (‘P50’) on the Paleozoic Dolomites FGA estimate the net recoverable prospective resources at 22 million barrels (‘MMBbl’)
* FGA found that ‘the ongoing exploration activities undertaken and proposed in the program are consistent with current practices in the oil and gas exploration. Major Oil used a thorough, rigorous process to identify possible oil and gas accumulations, mitigate risk and determine the location of Eblana #1’
* $588 million net present value is estimated based on a 50 well project with 15 year cash
flows discounted at 10%

Independent CPR

FGA’s independent, third-party assessment of the exploration project in Hot Creek Valley, Nye County, Nevada was produced following the completion of the Eblana #1 exploratory well testing programme, as announced on 8 May 2013. The Eblana #1 well drilled through the Tertiary Volcanics formation, but did not penetrate the Paleozoic dolomites, which are also prospective in this area. FGA reviewed mud logs, cased-hole logs, drilling reports, flow test data, lab testing results from the Eblana #1, and 3-D geologic modeling provided by Major
Oil, along with information FGA found in the public domain. Major Oil also provided FGA with a technical report detailing their assessment of the well results, hydrocarbon estimates, and financial model.

The objective of the latest CPR was to update the resource categorization, hydrocarbon volume estimates, and financial model, and to make recommendations for future exploration of the Hot Creek Valley concession incorporating the results from Eblana #1.

FGA considers that Railroad Valley provides a good analog for Hot Creek Valley, due to its existing production and location relative to Hot Creek Valley. FGA note that the oil found in the Eblana #1 well is of higher quality than the oil found in Railroad Valley. The report confirms that gravity, magnetic, surface geology, and geochemical analysis are in agreement as to the potential for hydrocarbons in the area of interest. Areas defined with studies such as these have shown to be productive in Railroad Valley. 2-D and passive seismic are in agreement with the other data analyses and indicate anomalies with the potential of hydrocarbons over the leasehold. Passive seismic has been used to further decrease exploration risk. The Eblana #1 well flowed non-commercial oil and some gas on long term flow tests.

Resource Summary

FGA has estimated contingent and prospective resources in accordance with the guidelines set out in the SPE Petroleum Resources Management System (SPE-PRMS). In FGA’s opinion, the intervals believed to be potential reservoirs in the Eblana #1 should be classified as contingent resources in the nearby area updip of the Eblana #1 well. These fall into the Project Maturity Sub-class of “Development Pending”, as appraisal drilling and detailed evaluation are ongoing to confirm commerciality. Furthermore, it is FGA’s opinion that all other
estimated hydrocarbon volumes should be classified as prospective resources and, as such, carry a low level of confidence.

Hot Creek Valley

Tertiary Volcanics

Estimated Net Recoverable Resources (MBbl)

Low Best High
Resource Category Estimate Estimate Estimate
(P90) (P50) (P10)
Eblana #1 Area

Contingent Recoverable Oil 8,636 19,256 33,513

Oil-In-Place 45,301 107,344 165,286

20 sq KM Core Area

Prospective Recoverable Oil 11,873 20,189 45,049

Oil-In-Place 61,120 132,060 222,919

Total Prospective 88 sq KM Area

Prospective Recoverable 20,138 57,200 683,646

Oil-In-Place 102,342 282,818 3,342,163

Note: Probabilistic aggregation of prospective resources in multiple areas, not arithmetic summation.
Note: Net figures reflect adjustment for 12.5% government royalty.

Net Present Value (NPV)

A financial model was provided by Major Oil. FGA reviewed the assumptions used in the model and ran an independent economics study. The model was based on a fifty-well exploration and development plan with wells being drilled over a five-year period, a capital investment of $206 million and oil production and cash flows projected over a fifteen-year period. The fifty-well project has an estimated present value discounted at ten percent per year of $588 million for the fifteen-year projection.

CPR Conclusions and Recommendations

FGA conclude that, based on their review of the materials provided, the ongoing exploration activities undertaken and proposed in this program are consistent with current practices in oil and gas exploration.
Major Oil used a thorough, rigorous process to identify possible oil and gas accumulations, mitigate risk, and determine the location of the Eblana #1.

Based on the available data, FGA opines that Major Oil has used reasonable methodology while exploring for hydrocarbons in Hot Creek Valley. Further, based on outcrops to the east and to the west and the presence of oil in the Eblana #1, the Chainman shale is present in the valley and is likely the source rock. Trap types have yet to be determined, and could to be similar to those found in Railroad Valley. These conclusions are supported by available data, Major Oil’s maps, results from the Eblana #1, and general knowledge of the Hot Creek Valley area. FGA believes this is sub-categorized as a “prospect” according to the SPE-PRMS guidelines and is sufficiently well-defined to be a viable drilling target. FGA notes that the potential for hydrocarbons in Major Oil’s interest in Hot Creek Valley represent prospective and contingent resources, which are higher risk and exploratory in nature.

The Eblana #1 exploratory well found hydrocarbons in low saturations and non-commercial quantities in multiple zones in the Tertiary Volcanics. This well may be in an oil-water transition zone, or the zone may be swept. FGA recommends updip drilling of the Eblana #1 in an attempt to find the oil column. Prior to locating a future well, running a vertical seismic profile in Eblana #1 and additional seismic lines may be necessary to better determine structure.

CEO Comment

Commenting on the report, CEO Brian McDonnell said: “I am delighted by the independent confirmation of our significant discovery in Hot Creek Valley. We researched the prospect, drilled and struck oil with our first well and, in an intensive programme of testing, gathered an immense amount of invaluable data. This has enabled FGA to reclassify a portion of our overall resources as contingent rather than prospective resources, reflecting significantly reduced risk and adding value.

We will now develop a detailed programme of activities to further derisk the asset. We will use the updated CPR to evaluate various development options, which may include considering suitable farm-in or other forms of partnerships for the Company. We also mean to further develop the company infrastructure in order to support the next phase of exploration and development.

I would like to thank the US Oil team for their total commitment to realizing the potential of this project and for their extraordinary levels of skill and professionalism in the face of Nevada’s challenging geology. I would also like to thank sincerely our shareholders for their continuing support.”


Neither this announcement nor the information contained herein constitutes an offer or solicitation by U.S. Oil and Gas plc for the purchase or sale of any securities nor does it constitute a solicitation to any person in any jurisdiction where solicitation would be unlawful.

For further information contact:

Brian McDonnell, Chief Executive Officer +353 (0) 87 238 3419

Alexander David Securities Ltd – Corporate Finance Adviser
Fiona Kinghorn/David Scott +44 (0) 20 7448 9800

Lionsgate Communications
Jonathan Charles +44 (0)779 189 2509
[email protected]

GXG Markets
Simon Kiero-Watson +44 (0) 20 7653 1935
[email protected]

Alex Benger +44 (0) 20 7653 1935
[email protected]

ADR Broker Desk, Deutsche Bank
United Kingdom
Simon Davies and Richard Willis
Tel: +44 (0) 20 7547-6500
Fax: +44 (0) 20 7547-9995
E-mail: [email protected]

Jay Berman
Tel: +1 212 250-9100
Fax: +1 732 544-6346
E-mail: [email protected]

About Forrest Garb Associates

FGA staff who participated in the compilation of this report includes Mr. William D. “Donnie” Harris, III, P.E., Ms. Stacy M. Light, P.E., Mr. Mike Rightmire, and Mr. John E. Cooper, C.P.G. All hold degrees in geoscience or petroleum engineering.

Founded in 1988, Forrest A. Garb & Associates, Inc. (FGA) is an International Petroleum Consulting firm providing services to the upstream oil and gas industry. FGA’s expertise includes petroleum reservoir evaluation and economic analysis, as well as geological services for exploration and exploitation projects. FGA restricts it business activities to consulting services only, and does not accept contingency fees. Because the company has no hydrocarbon production and because it has no outside ownership to dictate opinions, the determinations of the firm are independent. FGA’s studies are without bias and are based on the best interpretation of all available data after processing with current methods and equipment. FGA does not own operating interests in any oil, gas, or mineral properties. The firm subscribes to a code of professional conduct, and its employees actively support their related technical and professional societies. This report is based on information compiled by professional staff members of FGA, as well as consultants providing services to FGA.

Interaction with US Oil & Gas took place in order to understand the Company’s technical approach, but the conclusions drawn are entirely those of Forrest A. Garb & Associates. FGA has consented in writing to the reference to them in this announcement and to the estimates of oil provided.

Definitions – Contingent and Prospective Resources

The (Society of Petroleum Engineers Petroleum Resource Management System (SPE-PRMS) defines contingent resources as “those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies”. One of those contingencies is stated by the SPE-PRMS as “a discovered accumulation where project activities are ongoing to justify commercial development in
the foreseeable future”.

The SPE-PRMS defines prospective resources as “those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations”. The SPE-PRMS further states that these have an associated chance of discovery (geologic success) and a chance of development. Prospective Resources are exploratory in nature, carrying a high risk factor.

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About U.S. Oil & Gas

U.S. Oil & Gas plc is a GXG quoted (Ticker: USOP) oil and gas exploration company with a strategy to identify and acquire oil and gas assets in the early phase of the upstream life-cycle and mature them. The Company’s main asset is in Nye County, Nevada where it holds the entire share capital of US-based company Major Oil International LLC (“Major Oil”). Major Oil has acquired rights to exploration and development acreage in Hot Creek Valley, Nye County, adjacent to the oil and gas rich Railroad Valley area of Nevada, both of which are part of the Sevier Thrust of central Nevada and western Utah, USA.

U.S. Oil & Gas PLC.

For further information please refer to our website at: www.usoil.us