$16.5 Million in Revenue, Established Oil & Gas Services Customer Base, Proprietary Green Technology, Aggressive Grwth Strategy - USOG is the Smart Way to Play the Energy Sector

United States Oil and Gas Corp. (USOG) acquires and drives the growth of profitable small to mid-sized oil & gas services companies with strong revenue, proven management and established market share. USOG also develops innovative proprietary oil & gas exploration and extraction technologies that can increase production while minimizing environmental impact. In May 2009 USOG acquired Kansas-based Turnbull Oil, a profitable, family run oil and gas distributor with a 44 year track record. Wholly owned Turnbull Oil generated $16.5 million in revenue and $447,000 in EBITDA in fiscal year 2008. For the quarter ended December 31, 2009, Turnbull Oil generated $4,400,000 in sales revenue and posted $278,000 in Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). USOG announced that its second acquisition, that of United Oil & Gas (United) was completed as of January 1, 2010. United is a seller of diesel, race gasoline, propane and lubricants. It has a customer base of over 400 customers that include regional businesses, farms and private residences. It is forecasting a turnover of $8 million for the year ending 2009, up $1 million from 2008 figures.

More good news for USOG: United States Oil and Gas Corp. Signs Six New Customers, Expects to Add $1.2 Million in Revenue

On November 2, 2009 USOG announced Turnbull secured new sales contracts during the third quarter which should add an estimated $1.2 million in annual revenue. Alex Tawse, CEOof USOG, commented: "USOG is expanding market share in the oil and gas services business, adding key customers and increasing sales. Turnbull Oil achieved a 29% increase in sales last quarter. These six new valued customers help to position us for continued growth and increased value for shareholders."
Read the full announcement…

United States Oil & Gas Corp. Acquisition Expected to Add $8 Million in Sales

USOG has closed its acquisition of United Oil ("United"), a profitable North Dakota-based distributor of refined fuels and other oil-based products. United, along with Turnbull Oil, which USOG purchased in May 2009, is now a wholly owned operating subsidiary of USOG. The purchase was made using a combination of cash, stock and promissory note. Notwithstanding the fact that to date United has done very little to no advertising or direct marketing, revenue is expected to total $8 million for the year ending December 31, 2009, with steady growth moving forward. Read More…

Key Investment Highlights:
Why USOG Should Be on Your Radar NOW

• USOG is focused on generating value for shareholders through the acquisition of profitable oil and gas drilling and service companies and the development of drilling technology for “greener” oil and gas exploration and production.
• USOG leverages a proprietary prospecting system to identify and acquire companies with historically profitable results, strong balance sheets, high profit margins and solid management teams in place.
• Preliminary January 2010 results for operations at Turnbull Oil showed total sales were $1.5 million, a 29% increase over the same period last year. For the quarter ended December 31, 2009, Turnbull Oil generated $4,400,000 in sales revenue and posted $278,000 in Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). Turnbull is a wholly owned operating subsidiary of USOG. Turnbull was acquired by USOG in May 2009
• Turnbull has strong and consistent margins on its fuels and a relatively large, established customer base, the business has been able to turn a profit and increase revenue even in a down economy.
• During 2010, the Company will explore available efficiencies from the combined operations of its two subsidiaries. The Company plans to share best practices, explore savings from bulk purchases from suppliers and possible combined marketing and sales strategies both at the local level and through the increased exposure that comes with being a public company.
• United Oil & Gas (United) is now a wholly owned subsidiary of USOG in a deal that came into effect on 1 January 2010. United is a profitable North Dakota-based distributor of refined oils and other oil-based products. The purchase was made using a combination of cash, stock and promissory note. The management team at United Oil has been immersed in the oil and gas industry for over thirty years
• By providing access to financial markets, expanded marketing opportunities and operating expense efficiencies, USOG works to build growth and higher long-term profits for subsidiaries.
• The company is actively engaged in developing technology that supports green oil and gas operations. USOG has two patents pending for technologies including a simple fibre optic seismometer for rugged environments and an automated levelling system for portable drilling rigs.
• USOG is working to upgrade its listing from the Pink Sheets to the OTC Bulletin Board in Q1 2010. The company reported that it intends to move to a more regulated exchange to enhance communication with shareholders and ensure corporate transparency.
• USOG is growing quickly with what we believe is spectacular potential for increasing revenue and company value. Its current share price is a bargain considering where we feel the stock is heading.

Major Market Opportunity

Editor’s Note: As energy demand continues to increase and oil and gas production ramps back up, market conditions are ripe for oil and gas service companies. With its growing revenue, niche focus and smart acquisition strategy USOG is ideally positioned to benefit from the significant upside we see in the oil and gas distribution and services sector near term.

With crude prices hovering around the $70 per barrel range, even with reduced demand, oilfield services remains one of the more promising sectors still with room to grow. (Seeking Alpha, “Oilfield Sector Shows More Promise”, September 2009)

The rig count is rising again, still off of its record 2008 highs but gaining steadily. The October 31, 2009 Baker Hughes Rig Count reports the number of rotary rigs actively exploring and producing nationwide rose by 60 in October to reach 1069. The rig count for September 2009 was 1009, up 29 from the 980 counted in August. While still well below the 2,014 counted in September 2008, producers have begun ramping up drilling activity in anticipation of better prices.

In Kansas, where USOG subsidiary Turnbull Oil operates, Independent Oil & Gas Service reports the rotary rig count has climbed nearly 75% since April 2009 to reach 71.

USOG’s new subsidiary, United Oil & Gas, will be looking to take advantage of its proximity to the Bakken Formation in North Dakota. The Bakken Formation is the biggest oil field found since Prudhoe Bay in Alaska. United Oil is well positioned in the area to take advantage of increased fuel needs, that will arise from the additional prospecting and drilling.

The US Department of Energy projects world marketed energy consumption will increase 44% by 2030, according to its International Energy Outlook 2009 report published in May by the Energy Information Administration (EIA). The report asserts that while the current economic downturn dampens world demand for energy in the near term, most nations will begin to return to trend growth within the next 12 to 24 months. Fossil fuels (liquid fuels and other petroleum, natural gas, and coal) are expected to continue supplying much of the energy used worldwide.

The EIA’s International Energy Outlook 2009 projects the price of light sweet crude oil in the United States (in real 2007 dollars) will rise from $61 per barrel in 2009 to $110 per barrel in 2015 and $130 per barrel in 2030. With oil prices rebounding and continuing to rise, consumers are also expected to choose less expensive (and cleaner burning) natural gas to meet their energy needs whenever possible, particularly in the industrial sector, where, for example, newly constructed petrochemical plants are expected to rely increasingly on natural gas as a feedstock.

If you're betting on the return of high gas and oil prices or even the return of historically reasonable prices, you're going to get a big move sector wide in oil service (The Street, “Baker Hughes Could Break Out”, October 8, 2009). The majors in this sector are Schlumberger (SLB) with a $65 billion market cap, Halliburton (HAL) with a $21 billion market cap, and Baker Hughes International (BHI) with a $10.5 billion market cap.

Revenue Generators

USOG acquires solid companies with significant revenue, proven track records and experienced management. The company targets oil and gas distributors and suppliers that make money, even under economic downturn conditions. USOG works to streamline operations and grow the already profitable businesses of their subsidiaries.

Turnbull Oil
In May 2009 USOG acquired Plainville, Kansas-based Turnbull Oil, a growing regional distributor of oil and gas products. The acquisition includes Turnbull subsidiary Basinger Inc., an established propane distributor located in Utica, Kansas. Turnbull is a regional distributor of oil and gas products including propane, diesel, gasoline, and lubricants. Customers include farmers, commercial and industrial businesses, oilfield businesses, rural and small city gas stations, construction companies and residential communities.

Wholly owned USOG subsidiary Turnbull Oil was founded in 1965. It is currently managed by Jeff Turnbull who purchased the business from his father in 1991. The company owns two bulk storage plants, a fleet of tankers, both propane and fuel bobtails, and office, warehouse and maintenance facilities.

For more than 44 years Turnbull Oil has excelled at providing top quality service to its customers, currently numbering over 300. The company delivers three brands of gasoline in addition to its branded and unbranded lubricants. The company has maintained a consistent level of service and is widely recognized for its superior customer service and excellent facility maintenance, including meeting all federal and local environmental regulations.

Turnbull Oil is growing. The company recently increased its hauling capacity of refined fuels by 64% to meet demand. Turnbull purchased an additional tank wagon truck with 4,500 gallons of capacity. Based on existing capacity utilization rates and revenue of $2.7 million already generated from the sale of refined fuels during the third quarter of 2009, USOG can increase delivery volume and revenue from the purchase of this new hauling truck by an additional $1.9 million annually.

USOG recently announced that Turnbull Oil has added four new wholesale bulk agents to its customer roster. The new customers are expected to purchase a minimum of 100,000 gallons of diesel worth approximately $300,000 during the next twelve months. The company has also closed sales with two new drilling companies. Turnbull expects to sell combination of fuel and lubricants to the Kansas drillers for a combined $720,000 in annual sales.

Well-Defined Growth Strategy Already Delivering Value, More to Come

USOG is implementing a shrewd strategy for value creation:

1. Find and negotiate the acquisition of small to midsize oil and gas companies that have strong financial track records and experienced management. USOG has a proprietary method of identifying and securing acquisitions that meet the following criteria:

1. Solid growth history
2. Profitable
3. Opportunity to increase profits
4. Strong management team willing to stay on board for minimum of two years
5. Little or no debt on the books

These companies are primarily successful family owned businesses that are looking for a way to increase market presence and provide financial security for the owners while at the same time leading further growth and technological advancement. USOG offers all of that by taking the company to the public marketplace, providing valuable business management experience to identify operating efficiencies, linking companies together to exploit synergies, and providing technical expertise and technology to their already successful businesses.

Proven Management

USOG’s management team has extensive experience accelerating business growth in a variety of industries. The company also leverages the deep operational expertise of its subsidiaries. When USOG makes an acquisition it keeps the company’s proven management team under contract for a minimum of two years, capitalizing on its oil and gas experience, local knowledge of competitors and operating climate, and loyal customer relationships.

Alex Tawse, CEO/CFO
Prior to taking the reins of USOG in 2008, Alex Tawse spent 10 years as CFO and Vice President of Operations for the Kaizen Institute, an international consulting company whose mission is to lead the implementation of lean strategy and continuous improvement culture. Clients included Nike, Dannon, Kraft, BioMerieux, JB Poindexter, Hella Lighting and Bacardi. While VP of Operations, Tawse doubled customer sales and drastically improved cash flow by reducing cash to cash cycle time by 270%. He has saved customers millions of dollars and increased their competitive advantage through improved system performance and reliability, greater process flexibility, and increased production capacity without investment in new equipment.

Tawse is a kaizen expert and has trained others in lean tools and principles such as Total Productive Maintenance, Just In Time Systems, 5S, Lean Accounting, and Total Quality Systems. He has served both manufacturing and service companies with a focus on delivering goods and services that delight customers, not just satisfy their needs. Tawse has serviced high profile global customers in the U.S., China, Russia, Italy, and the U.K. that operate in a variety of industries including specialized oil drilling equipment, consumer goods, automotive, and pharmaceutical.

Tawse studied at Oxford University, holds a Bachelor of Arts degree in Economics and International Relations from Stanford University, earned an MBA degree from the University of Texas, and is a Certified Public Accountant.

The company recently signed an employment agreement with Tawse for him to remain in his position for three years effective February 1, 2010. This coincides with the employment agreement which was recently completed with the operating management team at wholly owned subsidiary United Oil. Mr. Tawse has also been appointed to the Board of Directors.

Investment Conclusion

With its strong foothold in the energy service sector, growing revenue, a second acquisition on the table, salt-of-the-earth company focus, and proven management, USOG is fueled for growth and shareholder value. Don’t miss this opportunity!

We have found a quality, as-yet undiscovered company with an extremely smart strategy targeting the energy sector. USOG acquires stable, profitable oil and gas distribution and service companies with substantial sales and room for growth. The acquisition of Turnbull Oil, with its $16.5 million in revenue and its second acquisition, that of United Oil & Gas (United) was completed as of January 1, 2010 with a forecast turnover of $8 million for the year ending 2009, up $1 million from 2008 figures, are proof positive of USOG’s ability to execute on its growth strategy. USOG’s solid fundamentals call for a higher valuation but its stock is trading at a significant bargain—it’s time to do your due diligence on a company we believe should skyrocket!