Citadel Exploration Inc. (OTCBB: COIL) closed its private placement of some 4 million shares of its common stock at US $0.34 per share.
Gross proceeds are US $1.39 million. Proceeds will be used to fund exploration and development of Citadel's Rancho Grande prospect area in the San Joaquin Basin, its Project Indian located in the Salinas Basin, additional acreage acquisitions, and working capital.
Citadel expects drilling will commence at its Rancho Grande prospect area located in the San Joaquin Basin in March along with its operating partner, Sojitz Energy Ventures. Sojitz Energy Ventures has leased 52,000 acres targeting conventional oil zones ranging from 1,500 feet to 22,000 feet. Citadel has agreed to participate on a prospect-by-prospect basis with varying working interests. As drilling plans are finalized, Citadel will update the market on well locations, timing and final working interest net to Citadel. Permits have already been obtained on portions of Rancho Grande.
Project Indian in the Salinas Basin is located on 688 acre lease from Vintage Petroleum Inc. which is owned by Occidental Petroleum. As operator, Citadel has proposed the drilling of a five-well pilot program, with Citadel owning 60% working interest and Sojitz Ventures Inc. owning 40% working interest. The proposed pilot program has been engineered to test the economic viability of a thermal recovery development program of a shallow heavy oil reservoir.
Citadel estimates that Project Indian has the potential to hold more than 100 million barrels of original oil in place. The proposed pilot program is in the final stages of permitting with the County of San Benito. Citadel expects that operations on the lease will commence in 2Q 2013.
Based in Ojai, Calif., Citadel Exploration is a pure-play oil company with operations in the Salinas and San Joaquin Basins of California.