SAN ANTONIO, Aug. 19 /PRNewswire-FirstCall/ -- South Texas Oil Company
(Nasdaq: STXX) today announced second quarter 2008 financial results.



    Highlights:
    -- Record Oil & Gas Sales: $3.8 Million

    Second Quarter 2008 Results

    The Company reported record oil and gas sales for the quarter-ended
June 30, 2008 of $3.8 million, versus $796,000 in the same period in 2007,
an increase of 383%. Total revenues were $3.8 million for the second
quarter 2008, versus $1.3 million in the year-ago period. Drilling
services, a revenue line item in previous periods, did not contribute to
total revenue in the 2008 quarterly period, but did contribute $522,000 in
the second quarter 2007.

    The Company reported a net loss for the second quarter 2008 of $6.8
million, or $0.42 per share, compared with a net loss of $800,000, or $0.07
per share, for the same period in 2007. Included in the second quarter 2008
costs and expenses was a loss from derivatives of $4.3 million, compared to
no loss for the same period in 2007. The agreements which generated the
losses during the second quarter 2008 were completely offset by additional
contracts purchased at the end of the quarter. Because of the contracts'
covered status, the Company does not anticipate that future additional
losses will be realized from the contracts that were outstanding during the
second quarter 2008. The Company did not engage in derivative transactions
during the second quarter 2007.

    All per-share amounts are presented on a weighted average basis. At
June 30, 2008, 16,017,736 weighted average shares were outstanding.

    First Half 2008 Results

    The Company reported oil and gas sales for the six months-ended June
30, 2008 of $5.7 million, versus $892,000 in the same period in 2007, an
increase of 542%. Total revenues were $5.7 million for the first half of
2008, versus $1.4 million in the year-ago period. Drilling services, a
revenue line item in previous periods, did not contribute to total revenue
in the 2008 year-to-date period, but did contribute $522,000 in the same
period in 2007.

    The Company reported a net loss for the first half of 2008 of $10.2
million, or $0.63 per share, compared with a net loss of $1.3 million, or
$0.10 per share, for the same period in 2007. Included in the first half
2008's costs and expenses was a loss from derivatives of $5.4 million,
compared to no loss for the same period in 2007. The Company did not engage
in derivative transactions during the comparable period in 2007.

    For the first half of 2008, net cash used in operations was $176,000,
as compared to net cash used in operations for the same period in 2007 of
$767,000.

    At June 30, 2008, the Company's total assets were $64.7 million and
stockholders' equity was $20.5 million. The Company's cash position at June
30, 2008 was $4.9 million, and its long-term debt was $34.1 million.

    Management Comment

    Mike Pawelek, President and CEO, said: "The new management team joined
the Company at the end of this reporting period, on June 23, 2008. One of
our main objectives is to strengthen our financial and operating
performance going forward as our management styles and industry experiences
become imbued at South Texas. The Company's asset portfolio is strong and
lends itself to development drilling and measured-risk exploration. To help
the income statement, we eliminated a glaring line item by largely
unwinding the hedge position that contributed to the net loss we posted
during the second quarter. On the operations front, in a subsequent event,
we spudded the State Tract 127 #1 well in state waters in Matagorda Bay,
Texas. The well, which we operate with an approximate 20% working interest,
targets the Frio formation at a proposed measured depth of 12,000 feet. We
expect to reach total depth on the well in mid-September. The Company
anticipates furnishing a more comprehensive operations update later in the
third quarter.

    "We acknowledge that drilling and completion results are the one of the
key marks of our effectiveness as management. We welcome the challenge. I
look forward to providing our shareholders with additional updates now that
we are firmly at the helm of South Texas Oil and working diligently to grow
reserves and production."

    About South Texas Oil Company

    San Antonio-based South Texas Oil Company is an independent oil and
natural gas exploration and production company with operations in South
Texas, the Gulf Coast and in Colorado. The Company has approximately 27,000
net acres and a high-working-interest inventory of drillable locations
within its operating areas.

    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.

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