CITADEL EXPLORATION, INC. (Exact name of registrant as specified in its charter)

Transcription

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 18, 2018 CITADEL EXPLORATION, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation) (Commission File Number) st Street, Unit A, Newport Beach, CA (Address of Principal Executive Offices) (Zip Code) Registrant s telephone number, including area code: (949) (IRS Employer Identification No.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: Written communications pursuant to Rule 425 under the Securities Act (17 CFR ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR e-4(c))

2 Section 7 Regulation FD Item 7.01 Regulation FD Disclosure Press Release On July 18, 2018, Citadel Exploration, Inc. (the "Company") announced that the Company had achieved record production rate of 100 barrels of oil per day at its Kern Bluff Oil Field. The Company is disclosing under Item 7.01 of this Current Report on Form 8-K the information attached to this report as Exhibit 99.1, which information is incorporated by reference herein. The Company is furnishing the information in this Current Report on Form 8-K to comply with Regulation FD. Such information shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any of the Company s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent as referenced to such filing. Exhibit No. Description 99.1 Press Release Dated July 18, SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. CITADEL EXPLORATION, INC. Date: July 18, 2018 By: /s/ Armen Nahabedian Armen Nahabedian Chief Executive Officer

3 EXHIBIT 99.1 For Immediate Release Citadel Exploration Announces Record Production of over 100 Barrels of oil per day to Mark Third Anniversary of Kern Bluff Oil Field Acquisition Newport Beach, CA, July 18, Citadel Exploration, Inc. (OTCQB: COIL) ( Citadel or the Company ), announced today that the company has set a Company record for daily production at the Kern Bluff Oil Field ( Kern Bluff ). During the month of June, Citadel produced 3,000 barrels of oil, or an average of 100 barrels per day, with an average sale price of $68.85 per barrel. Company plans to accelerate development with drilling of a horizontal well in 4Q18 Premium pricing continues in California - $68.85 per barrel in June. Currently producing over 100 barrels of oil per day. After years of working to develop unique opportunities, our strategy of patiently waiting for exactly the right asset is proving to be prudent and profitable, said Armen Nahabedian, President and CEO of Citadel. The production numbers we are seeing out of Kern Bluff should only continue to grow as we build-out our steam infrastructure and commence execution of our fall drilling program he added. Citadel acquired Kern Bluff during a period of extreme distress in the industry. Oil prices had collapsed from above $ a barrel to under $30.00 in just six months, the bulk of the drop coming in November and December Hundreds of independent E&P companies filed for bankruptcy and shed assets at pennies on the dollar. Citadel s management recognized that this nadir was also the seed of future opportunity. With the support of a private equity group partner and additional investors, the Company was able to acquire an asset that was a diamond in the rough The Kern Bluff Oil Field ( Kern Bluff ). The change in economic environments tells the story of Citadel and Kern Bluff. When the field was acquired, heavy oil was selling at $37.50 per barrel, a $5.00 discount to West Texas Intermediate (WTI). It eventually hit a bottom of $28.00 a barrel in January of 2016, less than six months after the acquisition. Conversely the average price per barrel in June 2018 was $68.85 a barrel at Kern Bluff (a $3.00 premium to WTI), and an increase of nearly 150% from the January 2016 bottom. The Kern Bluff acquisition is likely to be regarded as one of the most impactful acquisitions of the 2015 downturn.

4 THE ISLAND OF CALIFORNIA This oil price premium for California heavy oil is diverging from other basins in the United States that are now experiencing pipeline bottlenecks. Several U.S. basins are now receiving a negative differential of up to $20.00 a barrel from WTI. While California refines two million barrels a day of oil to supply gasoline and other petrochemicals to its nearly 40 million residents, the State s oil production has dropped to roughly 500,000 barrels a day (now 6 th in the U.S). This 1.5 million-barrel-per-day shortfall is met with imports from Alaska, Colombia and Saudi Arabia, all of which receive Brent pricing at a $5.00 to $10.00 premium (in recent months) to WTI. This shortfall has California refiners clamoring for local oil and willing to pay a premium. And Citadel is happy to help them close that gap. For Citadel, this premium pricing compared to other U.S. basins is an equalizer. California heavy oil is often penalized in capital markets as too expensive to produce and receives an inferior price. Typically, heavy oil costs $25.00 per barrel to produce vs. $10.00 or less in other basins. This higher cost drags on valuation and investor enthusiasm. Today that view is out dated. Given the island that is California oil infrastructure (2MM barrels a day of refining vs. 500k in production) California prices will continue to outpace other basins. There are no oil pipelines to California and no political will to permit any. THE TIME IS NOW During the prolonged downturn, Citadel took advantage of a low-priced oil field services environment in order to execute an infrastructure build-out so that it could capitalize when oil prices rebounded. That time is now. The Company plans to ramp up its drilling program in the fourth quarter with its first horizontal well. Analogous fields to Kern Bluff (Kern River and Kern Front) have been successfully redeveloped using horizontal well technology to reverse decade long decline rates. Kern Bluff should potentially see similar results. Citadel plans to drill the first properly engineered and optimally located horizontal well at Kern Bluff in the coming months. This well is a key component of the exploitation program Citadel put in motion when it began drilling at Kern Bluff. The most recent 3 vertical producers drilled by Citadel in the first quarter of 2018, provide excellent control points to guide the well path of this horizontal. These wells were keyed off the Mississippi Queen #3 which has one of the highest individual well production rates tested in Kern Bluff History, said Armen Nahabedian, President and CEO of Citadel. Having now achieved proof of concept with six vertical wells, the Company feels confident in accelerating development via a horizontal well. The company expects to SPUD its first horizontal well in October This well, alone, could grow the Company s daily production by several hundred barrels a day. It is an exciting time to have a huge oil resource base. Citadel s management is committed to developing Kern Bluff at an aggressive pace that matches the market s expectations. We have spent nearly three years cautiously deploying capital to position the Company for this moment. Now is the time for Citadel to go on the offense and reap the rewards of our hard work, we thank our partners and investors for their patience, and look forward to updating the investment community on our progress over the coming months, said Philip J. McPherson, Chief Financial Officer of Citadel.

5 His comments were echoed by Mr. Nahabedian. "Citadel and its shareholders have remained painfully patient for many years. We thank them for sticking with us. While many companies have made excuses and spun tales, we have worked diligently stretching our capital to position us for a market turn we knew would come, said Nahabedian. While oil prices remained suppressed longer than we anticipated, we continued to charge forward without doubt. Having drilled six wells and achieving proof of concept, we now know empirically -- that our purchase of this field during the bottom of the oil market was exactly the right thing to do for our shareholders. With production now exceeding 100 barrels per day, our growth profile is potentially only limited by access to capital. During the next 6-12 months, Citadel will finally blossom into the independent E&P Company that we envisioned when we started, Nahabedian said. About Citadel Exploration, Inc.: Citadel Exploration (OTCQB: COIL) is a pure-play California oil company with operations in the San Joaquin Basin of California. Citadel is currently focusing its efforts on the Kern Bluff Oil Field acquired in Citadel prides itself on its legacy of discovery and innovation in the industry, the best place to find oil is where it has already been found. Please visit for our latest presentation. Company Contact: Phil McPherson CFO