Citadel Exploration Closes $1.39 Million Private Placement

NEWPORT BEACH, Calif., Feb. 5, 2013

The proceeds from the private placement 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. 

Rancho Grande - San Joaquin Basin:  Citadel expects drilling will commence at its Rancho Grande prospect area 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' to 22,000'.  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 - Salinas Basin: Located on 688 acre lease from Vintage Petroleum Inc. which is owned by Occidental Petroleum. As operator, Citadel has proposed the drilling of a 5 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 (previous drilling records support 11-17 API oil.) Heavy oil such as Midway Sunset (MS) in California is currently receiving more than a $10.00 per barrel premium to West Texas Intermediate (WTI) prices, as displayed daily on Chevron's website California Posted Oil Price. As a direct result of historically low natural gas prices and advances in development techniques and technology, the economics of shallow heavy oil are very favorable. Currently, 50% of California's oil production comes from shallow heavy oil reservoirs, using thermal recovery. Citadel estimates that Project Indian has the potential to hold more than 100 million barrels of original oil in place (OOIP).  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 the second quarter of 2013. 

"This raise was a testament to the abilities of our recently hired CFO, Phil McPherson. He has solidified his position with this company and he continues to demonstrate a tireless work ethic," said Armen Nahabedian, President and CEO of Citadel Exploration Inc. He continued, "The drilling programs we have ahead of us should generate terrific value for our shareholders if we are successful and we are eager to begin operations."

About Citadel:

Citadel Exploration (OTCBB: COIL) is a pure-play California oil company with operations in the Salinas and San Joaquin Basins of California.  Citadel has a broad portfolio of capital investment opportunities arising from management's extensive knowledge of the geology and the history of oil and gas exploration and development in California.