UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington, D.C.
20549





Form 10-K/A


(Amendment
No. 1)





x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      the fiscal year ended December 31, 2008ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934


Commission File
No. 001-33777


South Texas Oil
Company


(Exact
Name of Registrant as Specified in Its Charter)





Nevada
              74-2949620(State
      or other jurisdiction of
                incorporation
      or organization)
              (I.R.S.
      Employer
                Identification
      Number)





300
East Sonterra Boulevard, Suite 1220


San
Antonio, Texas 78258


(Address
of principal executive offices, including zip code)


(210) 545-5994


(Registrant’s
telephone number, including area code)





Securities
registered pursuant to Section 12(b) of the Act: None





Securities
registered pursuant to Section 12(g) of the Act:





Title
      of each class
              
              Name
      of each exchange
                on
      which registeredCommon
      Stock, par value $0.001 per share
              
              The
      NASDAQ Global Market





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes oNo x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act.


Yes o No x




Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes xNo o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):


Large accelerated filer o
              Accelerated filer oNon-accelerated filer o
              Smaller reporting company x(Do not check if a smaller reporting company)




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes oNo x





The
aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing price of the Registrant’s common stock of $3.69
per share as reported on the NASDAQ Global Stock Market on June 30, 2008 was
$33,505,886.





As
of April 29, 2009, there were outstanding 16,788,862 shares of common
stock.





Documents
Incorporated by Reference





None








EXPLANATORY
NOTE




South
Texas Oil Company (hereinafter referred to as the “Company”, “we”, “us” or
“our”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to
its Annual Report on Form 10-K for the fiscal year ended December 31, 2008,
originally filed on March 30, 2009 (the “Original Report”), for the sole purpose
of including the information required by Part III of Form 10-K. Accordingly,
Items 10, 11, 12, 13 and 14 of Part III of our Original Report are replaced in
their entirety with the information provided herein. This Form 10-K/A does not
amend, update or change any other items or disclosure in the Original Report or
reflect events that occurred after the date of the Original Report. Therefore,
this Amendment should be read in conjunction with our Original Report and our
other filings made with the United States Securities and Exchange Commission
(SEC) subsequent to the filing of the Original Report.





We have
also included as exhibits the certifications required under Section 302 of
the Sarbanes-Oxley Act of 2002. Because no financial statements are contained
within this Amendment, we are not including certifications pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.





PART
III





ITEM
10.              DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE





Directors





The following biographical
information provides forth the names and ages of each of our directors, as
well the positions with the Company held by such directors as of December 31,
2008 and certain other biographical information:





Mr. Michael J. Pawelek, age
51, has been Chairman of the Board of Directors of the Company since November
2007 and serves on the Board’s Executive and Compensation
committees.  Mr. Pawelek has been Chief Executive Officer and
President of the Company since June 23, 2008.  Mr. Pawelek began his
career as a geophysicist with Clayton Williams Company in 1981.  From
1985 to 1989 he was employed by TXO Production Corporation as a district
geophysicist.  In 1989, he founded CPX Petroleum, which drilled over
60 wells under his management.  From 1991 to 1999, he founded and was
the chief executive officer of Universal Seismic Associates, Inc., which
generated annual revenue of $65 million and had over 400
employees.  From 1999 to 2001, he served as Vice PresidentofOperations of Amenix USA, Inc., a
private exploration and production company focused on oil and gas exploration in
Louisiana.  From 2001 to 2004, he held a similar position at IBC
Petroleum, managing the company’s assets while seeking financial
partners.  From 2004 to 2007 he was President of BOSS Exploration
& Production Corporation, a privately held Gulf Coast production
company.  Immediately prior to joining the Company as its CEO, Mr.
Pawelek served as President of Sonterra Resources, Inc., a company that has oil
and gas assets in Texas state waters in Matagorda Bay.  Mr. Pawelek
received a BS degree in Engineering from Texas A&M University.





Mr. David P. Lieberman, age
64, has been a member of the Company’s Board of Directors since November 2007
and serves on the Board’s Audit Committee (Chairman and Financial Expert),
Compensation and Nomination committees.  Mr. Lieberman has been the
Chief Financial Officer of Datascension, Inc., a telephone market research
company that provides both outbound and inbound services to corporate customers,
since January 2008 and a director of that company since 2006.  He has
over40 years of
financial experience beginning with five years as an accountant with Price
Waterhouse, from 1967 through 1972.  Mr. Lieberman has held executive
management positions with both public and private companies, including serving
in various senior executive positions, and he has a strong financial and
operations background.  From 2006 to 2007, he served as Chief
Financial Officer of Dalrada Financial Corporation, a publicly traded payroll
processing company based in San Diego.  From 2003 to 2006, he was the
Chief Financial Officer for John Goyak & Associates, Inc., a Las Vegas-based
aerospace consulting firm.  In the 1990s, Mr. Lieberman served as
President and Chief Operating Officer of both JLS Services, Inc. and
International Purity, and also served as Chief Financial Officer for California
Athletic Clubs, Inc.  Mr. Lieberman attended the University of
Cincinnati, where he received his B.A. in Business, and is a licensed CPA in the
State of California. He resides in Las Vegas, Nevada.





Mr. Stanley A. Hirschman, age
62,has been a member
of the Company’s Board of Directors since November 2007 and serves on the
Board’s Executive, Audit and Nominating committees.  Since 1997, Mr.
Hirschman has been President of CPointe Associates, Inc., a Plano, Texas
executive management and retail operations consulting firm. He is an investment
due diligence specialist and works regularly with public companies dealing with
the difficulties of the balance between increased regulatory requirements and
reasonable corporate governance. He has been a director of Axion Power
International, Inc. since 2006 and Datascension, Inc. since July
2008.  He was a director of Mustang Software, Inc. from 1995 and its
chairman from 1999 to its acquisition in 2000.  Prior to establishing
CPointe Associates, he was Vice President Operations, Software Etc., Inc., a
396-store retail software chain, from 1989 until 1996. He also held senior
executive management positions with T.J. Maxx, Gap Stores and Banana Republic.
Mr. Hirschman is a member of the National Association of Corporate Directors,
the KMPG Audit Committee Institute and attended the Harvard Business School
Audit Committees in the New Era of Governance symposium.  He is active
in community affairs and serves on the Advisory Board of the Salvation Army
Adult Rehabilitation Centers.





Mr. Bryce W. Rhodes, age 55,
has been a member of the Company’s Board of Directors since December 2008 and
serves on the Board’s Audit and Nominating and Corporate Governance committees.
Mr. Rhodes has been providing oil and gas investment advice and management
services to Whittier Properties, LLC since March 2007. Prior to then, Mr. Rhodes
served as the President and Chief Executive Officer and board member of Whittier
Energy Corporation from September 2003 until the sale of the company in March
2007.  Mr. Rhodes was a Vice President of Whittier Energy Company
since its incorporation in 1991 through September 2003.  In that
capacity, he managed its acquisitions and exploration investments.  He
served on the board of directors of PYR Energy Corporation, a public oil and gas
exploration company from April 1999 until its sale in July 2007.  Mr.
Rhodes began his career in 1979 as a strategic planning analyst for Santa
Fe International Corporation and joined the M.H. Whittier Corporation, an
independent oil company in 1985 as an investment analyst. He currently provides
investment consulting and management services for the Whittier Trust Company and
is a member of the board of directors of Canadian Phoenix Corporation.  He
serves on several community boards and chairs the board of directors of the
Helen Woodward Animal Center in Rancho Santa Fe, California.










Mr. Doyle A. Valdez, age 53,
has been a member of the Company’s Board of Directors since December 2008 and
serves on the Board’s Compensation and Nominating and Corporate Governance
committees. Mr. Valdez is President of Valco Resource Management, Inc., an oil
and gas production marketing and consulting firm that he established in
1987.  Mr. Valdez holds a BBA with concentration in finance from St.
Edward’s University, and has worked in the energy industry for 26
years.  From 2001 to 2003, he served as Vice-President of Marketing
for United Resources, LP.  In 1986-1987, Mr. Valdez was the Marketing
Director of EnerPro, Inc.  Mr. Valdez is the former President of the
Austin Independent School District Board of Trustees.  In 2007, the
University of Texas created the Doyle Valdez Social Justice Award to recognize
and honor an outstanding individual who works everyday to implement the
principles of social justice.





Executive
Officers





The following table sets forth the
names and ages of our executive officers and the positions held by each as of
December 31, 2008:





Name
                  
                  Age
                  
                  Position(s)Michael
      J. Pawelek
                  
                  51
                  
                  Chairman,
      President and CEOWayne
      A. Psencik
                  
                  45
                  
                  Executive
      Vice President, Chief Operating OfficerSherry
      L. Spurlock
                  
                  47
                  
                  Executive
      Vice President, Chief Financial OfficerTheodore
      J. Wicks
                  
                  40
                  
                  Executive
      Vice President, Corporate
Development





Background
of Executive Officers





Mr. Pawelek’s background information is
set forth above under the caption “Directors”.





Mr. Wayne A. Psencik is the
Executive Vice President and Chief Operating Officer and has served in such
capacity since June 2008. Mr. Psencik previously served
as Vice PresidentofOperations at Sonterra
Resources, Inc. and its predecessor companies, from April 2007 through June
2008. From 2005 to 2007, he held the position of Vice President of Operations of
Boss Exploration & Production Corporation. From 2001 to 2005, Mr. Psencik
served as an engineer and drilling manager at El Paso Production Company, where
he was responsible for the design and implementation of drilling and completion
operations and the supervision of staff engineers in the Gulf of Mexico unit.
From 1999 to 2001 he was a consulting drilling engineer for Coastal Oil and Gas
Company focused in the Gulf of Mexico. Mr. Psencik served as district manager
from 1996 to 1999 for Chesapeake Operating Company for its southern division.
From 1994 to 1996, Mr. Psencik held positions of drilling engineer for
Chesapeake Operating Company, focusing on horizontal drilling in Texas and
Louisiana. From 1991 to 1994, he was a drilling engineer working Gulf of Mexico
projects for AGIP Petroleum. Mr. Psencik earned his BS degree in petroleum
engineering from Texas A&M University.





Ms. Sherry L. Spurlock is the
Executive Vice President and Chief Financial Officer and has served in such
capacity since June 2008. Prior to joining our Company, Ms. Spurlock served as
Chief Financial Officer of Sonterra Resources, Inc. and its predecessor
companies, from April 2007 through June 2008. From 2005 to 2007, she was the
Chief Financial Officer of Boss Exploration & Production Corporation, where
she was responsible for the preparation of the financial statements and other
financial and accounting matters. From 2000 to 2005, Ms. Spurlock was the
controller and held various other financial positions with United Oil &
Minerals, LP, a private oil and natural gas exploration company. From 1992 to
2000, Ms. Spurlock served as Controller at Brigham Exploration Company, an
Austin, Texas-based publicly traded exploration and production company.
While at Brigham, she was responsible for the SEC reporting and internal
management reporting among other audit and accounting systems management. Prior
to that, she held accounting positions at private and public oil and natural gas
companies and began her career as an accountant at Deloitte, Haskins and Sells.
Ms. Spurlock is a certified public accountant and holds a BBA degree in
accounting from Stephen F. Austin State University.










Mr. Theodore J. Wicks is the
Executive Vice President of Corporate Development and has served in such
capacity since October 2008. Prior to joining our Company, Mr. Wicks was a
Managing Director with Petro Capital Securities, LLC (“PCS”), a Dallas-based
energy investment bank, since 2007. Mr. Wicks’ responsibilities at PCS included
client coverage and leading the structuring and execution of a wide variety of
M&A, strategic advisory and capital markets transactions for clients across
all sectors of the energy industry. Prior to PCS, Mr. Wicks was a Vice President
in the energy investment banking group of First Albany Capital. From 2006 to
2007, Mr. Wicks was a Vice President in the energy investment banking group of
Sanders Morris Harris. From 2004 to 2005, Mr. Wicks was a Director in the Equity
Capital Markets group at KeyBanc Capital Markets, and from 1999 through 2003,
Mr. Wicks was a Vice President in the Equity Capital Markets group of RBC
Capital Markets. Mr. Wicks earned his Masters of Business Administration in
Finance and Bachelor of Arts with Accounting and Finance concentrations from the
University of St. Thomas.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who beneficially own more than ten percent of a
registered class of our equity securities to file with the SEC initial reports
of ownership and reports of change in ownership of common stock and other equity
securities of our Company. Officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. Based on a review of such forms filed, to our
knowledge, the following persons have failed to file, on a timely basis, the
identified reports required by Section 16(a) of the Exchange Act during the 2008
fiscal year:Mr.
Hirschman filed one late Form 4, with one transaction not timely
filed;  Messrs. Lieberman and Wicks each had one known failure to file
a Form 4, with one transaction each not timely filed;  Messrs. Valdez
and Rhodes each had each failed to file a Form 3 and Form 4, with one
transaction not timely filed;  Messrs. Pawelek and Psencik and Ms.
Spurlock each had one known failure to file a Form 4, with 2 transactions not
timely reported.





Code
of Business Conduct and Ethics





Our Code
of Business Conduct and Ethics is designed to help directors and employees
resolve ethical issues and to help us conduct our business in accordance with
all applicable laws, rules and regulations and with the highest ethical
standards. Our Code of Business Conduct and Ethics applies to all directors and
employees, including our principal executive officer, principal financial
officer, principal accounting officer and all other executive officers. We also
expect that any consultants we retain to abide by our Code of Business Conduct
and Ethics. Our Code of Business Conduct and Ethics sets forth our policies with
respect to public disclosure of Company conflicts of interest, corporate
opportunities, fair dealing, confidentiality, equal employment opportunity and
harassment, protection and proper use of our assets and employee complaint
procedures. Our Code of Business Conduct and Ethics is posted on our website
at www.southtexasoil.com under the
“Corporate Governance” caption. Any amendments to, or a waiver from, a provision
of our Code of Business Conduct and Ethics that is applicable to our principal
executive officer, principal financial officer, principal accounting officer or
controller (or persons performing similar functions) and is required to be
disclosed by the relevant rules and regulations of the SEC will be posted on our
website.





Stockholder
Nominations for Director Nominees




No
material changes have been made to the procedures by which our stockholders may
recommend nominees to our board of directors since we described the procedures
in our information statement on Schedule 14A filed with the SEC on November 25,
2008.  Our nominating and corporate governance committee will propose
the slate of directors to be put up for election at our annual meeting of
stockholders.




Audit
Committee




We
currently maintain an audit committee.  The audit committee of our
board of directors is composed of Messrs. Hirschman, Lieberman (chair) and
Rhodes. Our board of directors has determined that each current member of the
audit committee is independent for purposes of serving on such committee under
NASDAQ listing standards and applicable federal law. Our board of directors has
also determined that each current member of the audit committee is
financially literate under NASDAQ listing standards and that Mr. Lieberman
qualifies as an “audit committee financial expert,” as such term is defined in
Item 407(d) of Regulation S-K. See Mr. Lieberman’s relevant biography
contained under the caption “Directors”. We believe that the composition
and functioning of our audit committee complies with all applicable requirements
of the Sarbanes-Oxley Act of 2002, as well as NASDAQ listing standards and SEC
rules and regulations.











ITEM
11.              EXECUTIVE
COMPENSATION




Overview




This compensation discussion and
analysis describes the significant elements of compensation awarded to, earned
by, or paid during the fiscal year ended December 31, 2008, to each of our
executive officers who are listed as named executive officers in our Summary
Compensation Table below.  This discussion focuses on the information
contained in the following tables and related footnotes for primarily the last
completed fiscal year.  We have also included discussion of
compensation actions taken before the last completed fiscal year to the extent
we consider it contributes to the understanding of our executive compensation
disclosure.




The
principal components of our executive compensation program are salary and equity
incentives including restricted stock grants and incentive stock
options.  Additionally, we have agreement and contract provisions with
our named executive officers providing for certain post-termination
compensation.  Our strategy is to design and balance these
compensation components such that we will adequately compensate and retain our
executive officers.




Our
Compensation Committee administers our executive compensation
program.  The primary role of the Compensation Committee is to (i)
reviewing and making determinations with respect to matters having to do with
the compensation of executive officers and Directors of the Company and (ii)
administering certain plans relating to the compensation of officers and
Directors.




Our named
executive officers are:




Michael
      J. Pawelek
                Chief
      Executive Officer, President and Chairman of the BoardSherry
      L. Spurlock
                Executive
      Vice President and Chief Financial OfficerWayne
      A. Psencik
                Executive
      Vice President and Chief Operating OfficerJ. Scott Zimmerman
                Former
      Chief Executive Officer and PresidentMurray
      N. Conradie
                Former
      Chief Executive Officer and Chairman of the
  Board





Summary
Compensation Table





The following table summarizes the
total compensation paid to or earned by our named executive officers for the
fiscal years ended December 31, 2008 and 2007.





SUMMARY
COMPENSATION TABLE
 FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007
 Name&PrincipalPosition
                                        
                                        Year
                                        
                                        Salary($)
                                        
                                        
                                        Stock
                                          Awards
                                          ($)(1)
                                        
                                        
                                        Option
                                          Awards
                                          ($)(1)
                                        
                                        
                                        AllOther
                                          Compensation($)
                                        
                                        
                                        Total($)Michael
      J. Pawelek,
                                          CEO,
      President and Chairman of the Board
                                        
                                        2008
                                        
                                        $
                                        103,758
                                        (2)
                                        
                                        $
                                        948,056
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        3,000
                                        (3)
                                        
                                        $
                                        1,054,8142007
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -Sherry
      L. Spurlock
                                          CFO,
      Executive Vice President
                                        
                                        2008
                                        
                                        $
                                        62,283
                                        (2)
                                        
                                        $
                                        948,056
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        1,010,3392007
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -Wayne
      A. Psencik,
                                          COO,
      Executive Vice President
                                        
                                        2008
                                        
                                        $
                                        93,450
                                        (2)
                                        
                                        $
                                        948,056
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        1,041,5062007
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -J.
      Scott Zimmerman,
                                          Former
      CEO and President
                                        
                                        2008
                                        
                                        $
                                        82,500
                                        (4)
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        182,500
                                        (5)
                                        
                                        $
                                        265,0002007
                                        
                                        $
                                        42,500
                                        (4)
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        261,373
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        303,873Murray
      N. Conradie,
                                          Former
      CEO and Chairman of the Board
                                        
                                        2008
                                        
                                        $
                                        14,331
                                        (6)
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        244,072
                                        (6)(7)
                                        
                                        $
                                        258,4032007
                                        
                                        $
                                        207,000
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        1,306,863
                                        
                                        
                                        $
                                        29,000
                                        (7)(8)
                                        
                                        $
                                        $1,542,863





(1)
              Stock
      and option award values represent the compensation cost of awards
      recognized for financial statement purposes, in accordance with Statement
      of Financial Accounting Standards 123, as revised (SFAS
      123R).  Assumptions used to determine SFAS 123R values are
      described in Note 7 Stockholders’ Equity in our Notes to the Consolidated
      Financial Statements on our Form 10-K for the year ended December 31,
      2008.









(2)
              Messrs.
      Pawelek and Psencik, and Ms. Spurlock began their employment with the
      Company on June 23, 2008.


(3)
              Mr.
      Pawelek was elected as the Chairman of Board and outside director on
      January 22, 2008.  He continued to serve in this position until
      his employment with the Company began on June 23, 2008, at which time he
      was no longer an outside director but continued to serve as Chairman of
      the Board.  During the portion of 2008 that Mr. Pawelek served
      as an outside director, we paid to him approximately $3,000 in
      director fee
compensation.


(4)
              Mr.
      Zimmerman was named President of the Company on June 18,
      2007.  On January 22, 2008, he also became the Chief Executive
      Officer.  On June 23, 2008, Mr. Zimmerman resigned as President
      and Chief Executive Officer of the
Company.


(5)
              Mr.
      Zimmerman received post-termination payment of 50,000 shares of the
      Company’s common stock in exchange for consulting services he provided to
      the Company subsequent to his resignation as an executive officer and
      employee of the Company.  The cost of stock payments
      recognized for financial statement purposes was determined in accordance
      with  EITF Abstract Issue No. 96-18, “Accounting for Equity
      Instruments That Are Issued to Other Than Employees for Acquiring, or in
      Conjunction with Selling, Goods
  or Services.


(6)
              Mr.
      Conradie resigned from his position as Chief Executive Officer and
      Chairman of the Board on January 22, 2008.  He continued to
      receive post-termination cash compensation from the Company throughout the
      remainder of 2008 in the form of consulting fees and health insurance
      benefits.  The approximate total $237,000 paid to Mr. Conradie
      as post-termination compensation is presented as All Other
      Compensation.


(7)
              Mr.
      Conradie was paid by the Company approximately $24,000 during 2007, and
      approximately $7,100 during 2008, for the rental of approximately four
      acres of land used by the Company as a field office and storage facility,
      and for the rental of equipment belonging to Mr. Conradie and used by the
      Company in the field.


(8)
              Mr.
      Conradie received a monthly vehicle allowance totaling $5,000 during
      2007.





Outstanding
Equity Awards





The following table sets forth the
outstanding equity awards of our named executive officers at December 31,
2008.


OUTSTANDING
EQUITY AWARDS
  AT
DECEMBER 31, 2008


EquityEquity
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Equity
                                                      
                                                      
                                                      Incentive PlanIncentive
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Incentive Plan
                                                      
                                                      
                                                      Awards:Plan
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Awards:
                                                      
                                                      
                                                      Market orAwards:
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Number of
                                                      
                                                      
                                                      PayoutNumber of
                                                      
                                                      Number of
                                                      
                                                      Number of
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Number of
                                                      
                                                      
                                                      Market
                                                      
                                                      Unearned
                                                      
                                                      
                                                      Value ofSecurities
                                                      
                                                      Securities
                                                      
                                                      Securities
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Shares or
                                                      
                                                      
                                                      Value of
                                                      
                                                      Shares, Units
                                                      
                                                      
                                                      UnearnedUnderlying
                                                      
                                                      Underlying
                                                      
                                                      Underlying
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Units of
                                                      
                                                      
                                                      Shares or
                                                      
                                                      or Other
                                                      
                                                      
                                                      Shares, UnitsUnexercised
                                                      
                                                      Unexercised
                                                      
                                                      Unexercised
                                                      
                                                      Option
                                                      
                                                      
                                                      
                                                      Stock That
                                                      
                                                      
                                                      Units of
                                                      
                                                      Rights That
                                                      
                                                      
                                                      or OtherOptions
                                                      
                                                      Options
                                                      
                                                      Unearned
                                                      
                                                      Exercise
                                                      
                                                      Option
                                                      
                                                      Have Not
                                                      
                                                      
                                                      Stock That
                                                      
                                                      Have Not
                                                      
                                                      
                                                      Rights That(#)
                                                      
                                                      (#)
                                                      
                                                      Options
                                                      
                                                      Price
                                                      
                                                      Expiration
                                                      
                                                      Vested
                                                      
                                                      
                                                      Have Not
                                                      
                                                      Vested
                                                      
                                                      
                                                      Have NotName
                                                      
                                                      Exercisable
                                                      
                                                      Unexercisable</

      fon t>
                                                      
                                                      (#)
                                                      
                                                      ($/share)
                                                      
                                                      Date
                                                      
                                                      (#)
                                                      
                                                      
                                                      Vested($)
                                                      
                                                      (#)
                                                      
                                                      
                                                      Vested($)Michael
      J. Pawelek
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      833,334
                                                      (1)
                                                      $
                                                      2.00
                                                      
                                                      9/18/2018
                                                      
                                                      
                                                      258,264
                                                      (2)
                                                      $
                                                      142,045
                                                      
                                                      
                                                      *
                                                      (3)
                                                      $
                                                      2,000,000Sherry
      L. Spurlock
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      833,334
                                                      (1)
                                                      $
                                                      2.00
                                                      
                                                      9/18/2018
                                                      
                                                      
                                                      258,264
                                                      (2)
                                                      $
                                                      142,045
                                                      
                                                      
                                                      *
                                                      (3)
                                                      $
                                                      2,000,000Wayne
      A. Psencik
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      833,334
                                                      (1)
                                                      $
                                                      2.00
                                                      
                                                      9/18/2018
                                                      
                                                      
                                                      258,264
                                                      (2)
                                                      $
                                                      142,045
                                                      
                                                      
                                                      *
                                                      (3)
                                                      $
                                                      2,000,000







(1)
            Messrs.
      Pawelek, Psencik and Ms. Spurlock have each been granted performance stock
      options to purchase 833,334 shares of our common stock each under
      the terms of our Equity Incentive Compensation Plan (the “Plan”). The
      performance stock options vest in accordance with the achievement of
      certain performance criteria concerning (i) our production of oil and gas
      (“Production Objective” columns) and (ii) the increase on our oil and gas
      reserves (“Reserve Objective” columns), as set forth
  below:




PercentageofPerformance
                              OptionSharesIssuableUnder
                              PerformanceOption
                              Agreement
                            
                            
                            Production
                              Objective:
                              MonthlyAverage
                              perdayforThree
                              Consecutive
                              Months
                            
                            
                            SharesthatVest
                              Basedon
                              Achievementof
                              Production
                              Objective
                            
                            
                            Reserve
                              Objective
                              OverReserves
                              onDecember
                              31,2007
                            
                            
                            Sharesthat
                              VestBasedon
                              Achievementof
                              Reserve
                              Objective
                            
                            
                            Totalof
                              Percentage
                              Performance
                              OptionShares
                              toVest20
                            %
                            
                            500
      Boe (net)
                            
                            
                            
                            83,334
                            
                            
                            
                            50
                            %
                            
                            
                            83,334
                            
                            
                            
                            166,66835
                            %
                            
                            1,000
      Boe (net)
                            
                            
                            
                            145,833
                            
                            
                            
                            150
                            %
                            
                            
                            145,833
                            
                            
                            
                            291,66645
                            %
                            
                            1,500
      Boe (net)
                            
                            
                            
                            187,500
                            
                            
                            
                            250
                            %
                            
                            
                            187,500
                            
                            
                            
                            375,000416,667
                            
                            
                            
                            
                            
                            
                            
                            416,667
                            
                            
                            
                            833,334









(2)
            During
      2008, Messrs. Pawelek, Psencik and Ms. Spurlock were each granted the
      right to be issued shares of restricted common stock equal in value to
      $3,000,000 on the date of issuance over a two-year period in three equal
      installments of $1,000,000. The first tranche, consisting of 258,264
      shares to each of the named executive officers, was issued in June
      2008.  These shares vested on January 1,
  2009.




(3)
            As
      part of the award described at note (2), the Company will grant the second
      installment of shares of restricted stock to Messrs. Pawelek, Psencik and
      Ms. Spurlock on June 23, 2009, and the Company will make the third
      installment of shares of restricted stock on June 23, 2010, as to all
      three employees. The number of shares of restricted stock to be
      issued in both installments to each individual employee (as denoted
      by the “*” in the table above) will be determined on each grant date by
      dividing $1,000,000 by the public trading price of our common stock during
      the five-day
      period preceding each installment issue date, but at a price not less than
      $0.50 per share. The shares of restricted stock may not be sold,
      transferred or hypothecated by the officers unless and until the
      restrictions lapse and the officer remains an employee of the
      Company. The shares to be issued on June 23, 2009 and June 23, 2010, will
      vest on January 1, 2010 and January 1, 2011,
  respectively.




Additional
Narrative Disclosure




Employment
Agreements





The terms
and provisions of each of the employment agreements for the Company’s named
executive officers at December 31, 2008, are substantially
similar. The following discussion provides a summary of the
material terms of the employment agreements, which summary
is qualified in its entirety by reference to the complete terms of such
agreements, the forms of which are incorporated herein by reference, as
filed with the Securities and Exchange Commission as exhibits to our Form 8-K on
June 25, 2008.




·
            Term: The
      employment agreements for Messrs. Pawelek, Psencik and Ms. Spurlock each
      has a three-year term that began on June 23, 2008, as approved by the
      Company’s stockholders on September 19,
2008.




·
            Annual Salaries: The
      employment agreements provide annual salaries of $200,000, $180,000, and
      $120,000 for Mr. Pawelek, Mr. Psencik and Ms. Spurlock,
      respectively.




·
            Equity Awards (Restricted
      Common Stock): The employment agreements for Messrs. Pawelek,
      Psencik and Ms. Spurlock each granted the officer the right to be issued a
      number of shares of restricted common stock equal in value to $3,000,000
      over a two-year period in three equal installments of $1,000,000 of
      restricted stock. The Company’s executive officers have each been issued
      the first tranche, with the second installment of the restricted
      stock grant to be made on June 23, 2009, and the third installment to be
      made on June 23, 2010. The number of shares of restricted stock to be
      issued in each installment will be determined by the public trading price
      of our common stock during the five-day period preceding
      each installment issue date, subject to a minimum price of $0.50 per
      share. The shares of restricted stock may not be sold, transferred or
      hypothecated by the officers unless and until the restrictions lapse
      and the officer remains an employee. The restrictions on each tranche
      of restricted stock, assuming the conditions are met, lapse on an annual
      basis beginning January 1, 2009. For all restricted shares subject to this
      award, forfeiture restrictions will lapse upon the termination of an
      officer’s employment by us without cause or if the officer terminates
      employment with us for good reason, or the occurrence of other events
      as described further in our Equity Incentive Compensation Plan (the
      “Plan”).




·
            Equity Award (Performance
      Options): Messrs. Pawelek, Psencik and Ms. Spurlock have each been
      granted performance stock options to purchase 833,334 shares of our common
      stock each, at an exercise price of $2.00 per share under the terms
      of the Plan. The performance stock options vest in accordance with the
      achievement of certain performance criteria concerning (i) our production
      of oil and gas and (ii) the increase on our oil and gas reserves, as set
      forth below:




PercentageofPerformance
                              OptionSharesIssuableUnder
                              PerformanceOption
                              Agreement
                            
                            
                            Production
                              Objective:
                              MonthlyAverage
                              perdayforThree
                              Consecutive
                              Months
                            
                            
                            SharesthatVest
                              basedon
                              Achievementof
                              Production
                              Objective
                            
                            
                            Reserve
                              Objective
                              OverReserves
                              onDecember
                              31,2007
                            
                            
                            Sharesthat
                              Vestbasedon
                              Achievementof
                              Reserve
                              Objective
                            
                            
                            Totalof
                              Percentage
                              Performance
                              OptionShares
                              toVestOptions
      granted to each of Pawelek, Psencik and Spurlock:20
                            %
                            
                            500
      Boe (net)
                            
                            
                            
                            83,334
                            
                            
                            
                            50
                            %
                            
                            
                            83,334
                            
                            
                            
                            166,66835
                            %
                            
                            1,000
      Boe (net)
                            
                            
                            
                            145,833
                            
                            
                            
                            150
                            %
                            
                            
                            145,833
                            
                            
                            
                            291,66645
                            %
                            
                            1,500
      Boe (net)
                            
                            
                            
                            187,500
                            
                            
                            
                            250
                            %
                            
                            
                            187,500
                            
                            
                            
                            375,000416,667
                            
                            
                            
                            
                            
                            
                            
                            416,667
                            
                            
                            
                            833,334










The
      performance stock options expire on June 30, 2018. All unvested
      performance stock options shall fully vest and become exercisable upon the
      termination of an officer’s employment by us without cause or if the
      officer terminates employment with us for good reason, or the occurrence
      of other events as described further in the Plan.·
              Non-Competition: Under
      the terms of their respective employment agreements, Messrs. Pawelek and
      Psencik and Ms. Spurlock have agreed not to compete with us for a period
      of six months after the termination of employment with us. In addition,
      each individual has agreed not to solicit or induce any person or entity
      that is engaged in any business activity or relationship with us or any of
      our subsidiaries or affiliates to terminate or reduce that business
      activity or relationship for a period of two years after the officer’s
      employment terminates.





·
            Termination–Respective Rights:
      Under the terms of the employment agreements, we have the right to
      terminate each officer’s employment for cause. Our sole responsibility
      upon such termination would be the payment of accrued and unpaid salary,
      reimbursable expenses and vacation accrued through the employment
      termination date. If we terminate an officer’s employment without cause or
      if the officer terminates employment for good reason, we are obligated to
      pay the officer the lesser of six-month’s salary or the salary remaining
      to be paid to the officer for the remaining term under the employment
      agreement, plus accrued and unpaid reimbursable expenses and vacation, and
      the continuation of group medical and dental insurance for the applicable
      period.





Other Agreements with Named
Executive Officers Providing for Post-Termination
Compensation





On
January 22, 2008, Mr. Conradie resigned as a director and officer our parent
company and all of our subsidiaries. Mr. Conradie was  retained by us
as a consultant for a one-year period to assist in the management transition and
to offer guidance on specific current or anticipated business opportunities and
projects, which agreement could be terminated by either party after the
expiration of the initial 90 days of the contract term. The consulting agreement
was terminated in June 2008.  Pursuant to the contract, we remained
obligated to pay Mr. Conradie’s consulting fees and the cost of Mr. Conradie’s
health insurance, on an independent contractor basis during the full consulting
contract period.  The final payments under this arrangement were made
in December 2008.





On January 22, 2008 and concurrent with
the resignation of Mr. Conradie, Mr. Zimmerman, who was then serving as
President, was appointed our Chief Executive Officer and a director of our
Board. Mr. Zimmerman retained those positions with us until June 23, 2008, when
he resigned. In addition to the cash compensation earned by Mr. Zimmerman, we
granted Mr. Zimmerman incentive options to purchase shares of our common stock
according to the Executive Stock Option Plan. Mr. Zimmerman did not have
a written employment contract with us. Mr. Zimmerman resigned June 23,
2008, concurrent with the appointment of new senior management for the
Company.  We entered into a consulting agreement with Mr. Zimmerman
effective July 1, 2008, with a term of one year, whereby Mr. Zimmerman provides
certain services to us in the role of a consultant in exchange for issuance of
100,000 shares of our common stock. The stock is payable in four equal tranches
of 25,000 shares on each of September 30, 2008; December 31, 2008; March 31,
2009; and June 30, 2009.





Director
Compensation





The
following table sets forth the aggregate cash compensation paid by us to our
directors for services rendered during the period indicated.





COMPENSATION
PAID TO DIRECTORS
 YEAR
ENDED DECEMBER 31, 2008
  Name
                    
                    Fees
                      Earnedor
                      Paidin
                      Cash($)(1)
                    
                    
                    Stock
                      Awards
                      ($)
                    
                    
                    Option
                      Awards
                      ($)(2)
                    
                    
                    Non-Equity
                      IncentivePlan
                      Compensation($)
                    
                    
                    Non-Qualified
                      Deferred
                      Compensation
                      Earnings($)
                    
                    
                    AllOther
                      Compensation
                      ($)
                    
                    
                    Total($)Stanley
      A. Hirschman
                    
                    $
                    14,000
                    
                    
                    $
                    -
                    
                    
                    $
                    78,410
                    (3)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    92,410David
      P. Lieberman
                    
                    $
                    14,000
                    
                    
                    $
                    -
                    
                    
                    $
                    78,410
                    (3)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    92,410Bryce
      W. Rhodes
                    
                    $
                    3,000
                    
                    
                    $
                    -
                    
                    
                    $
                    1,100
                    (4)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    4,100Doyle
      A. Valdez
                    
                    $
                    3,000
                    
                    
                    $
                    -
                    
                    
                    $
                    1,100
                    (4)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    4,100Murray
      N. Conradie (5)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Owen
      Naccarato (5)
                    
                    $
                    16,000
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    16,000Edward
      Shaw (5)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -J.
      Scott Zimmerman (5)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -




(1)
            Paid
      to independent directors.




(2)
            Based
      on options for 20,000 shares of common stock granted to each of
      Messrs. Hirschman, Lieberman, Rhodes and Valdez during 2008, and
      additional options for 20,000 shares of common stock granted to each of
      Messrs. Hirschman and Lieberman prior to 2008. Amounts listed in this
      column represent the compensation expense of stock awards and option
      awards recognized by us under Statement of Financial Accounting Standards
      No. 123 (revised 2004) (SFAS 123R) for fiscal year ending December 31,
      2008, rather than amounts realized by the named
    individuals.




(3)
            Messrs.
      Hirschman and Lieberman each have options outstanding at December 21,
      2008, for an aggregate of 40,000 shares of common
  stock.




(4)
            Messrs.
      Rhodes and Valdez each have options outstanding at December 31, 2008, for
      an aggregate of 20,000 shares of common
stock.




(5)
            Mr.
      Conradie resigned from the Board of Directors on January 22,
      2008.  Messrs. Naccarato and Shaw resigned from the Board of
      Directors on December 19, 2008.  Mr. Zimmerman resigned from the
      Board of Directors on June 23,
2008.





Narrative
to Directors’ Compensation Table





For
January through November of fiscal year 2008, each non-employee director
received an annual cash retainer fee of $3,000 for the partial year during which
these directors served in that capacity, for all services including committee
participation and meetings of the Board of Directors attended regardless of form
of attendance. Beginning in December 2008, the non-employee director fee
structure was modified to be based on Board of Directors and/or committee of the
Board of Directors meetings attended.  Non-employee directors receive
$3,000 per Board of Directors meeting; the chairman of the Audit Committee
receives $2,250 per Audit Committee meeting; all other Audit Committee members
receive $1,500 per Audit Committee meeting; all other committee members
(chairman and other positions) receive $500 per committee
meeting.  Employee directors were not compensated in cash for their
service on our Board of Directors.  All directors are reimbursed for
their reasonable out-of-pocket expenses in serving on the Board of Directors or
any committee of the Board of Directors.





For our
fiscal year ending December 31, 2008, each non-employee director who was elected
as a non-employee director received options to purchase 20,000 shares of our
common at an exercise price of $0.47 per share. One-half of the stock options
vested on March 31, 2009, and the remaining 50% will vest on the day prior to
our next annual meeting of stockholders. The stock options have a term of 10
years, subject to earlier termination following the director’s cessation of
Board of Directors service.





Equity
Compensation Plans





We adopted our 2007 Stock Compensation
Plan in October 2007.  This plan provided for the issuance of 650,000
shares of common stock upon the exercise of options granted to our management,
employees and directors.  This plan has not been approved by our
stockholders.  Pursuant to this plan, a total of 651,000 options were
granted in 2007 with an exercise price of $9.45 per share.  At
December 31, 2008, 245,500 of these options remain outstanding, of which 154,125
are unvested.









We adopted our Equity Incentive
Compensation Plan in June 2007.  This stock incentive plan provides
for the issuance of up to 6,000,000 shares of common stock awards to our
employees, directors and officers, and consultants and directors who may not be
our employees.  The Equity Incentive Compensation Plan provides for
the grant of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, nonqualified stock options, stock
appreciation rights and capital stock, which may be subject to contingencies or
restrictions.  Our stockholders approved the Equity Incentive
Compensation Plan in September 2008.  At December 31, 2008, 530,000
incentive stock options had been granted pursuant to this plan, all of which
were outstanding and unvested.








ITEM
12.              SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS





Securities
Authorized for Issuance Under Equity Compensation Plans





The
following table shows information with respect to each equity compensation plan
under which our common stock is authorized for issuance as of December 31,
2008:




Plan Category
                      
                      Number of securities to be
                        issued upon exercise of
                        outstanding options,
                        warrants and rights
                      
                      
                      Weighted average exercise
                        price of outstanding options,
                        warrants and rights
                      
                      
                      Number of securities
                        remaining available for
                        future issuance under equity
                        compensation plans
                        (excluding securities
                        reflected in column (a)(a)
                      
                      
                      (b)
                      
                      
                      (c)Equity
      compensation plans approved by security holders
                      
                      
                      530,000
                      
                      
                      $
                      0.47
                      
                      
                      
                      4,695,208Equity
      compensation plans not approved by security holders
                      
                      
                      245,500
                      
                      
                      $
                      9.45
                      
                      
                      Total
                      
                      
                      775,500
                      
                      
                      $
                      3.31
                      
                      
                      
                      4,695,208





The
following table sets forth certain information as of March 10, 2009, as to
shares of our common stock beneficially owned by: (i) each person who is known
by us to own beneficially more than 5% of our common stock, (ii) each of our
current named executive officers, (iii) each of our directors and (iv) all our
directors and executive officers as a group. Unless otherwise stated below, the
address of each beneficial owner listed on the table is c/o South Texas Oil
Company, 300 E. Sonterra Blvd., Suite 1220, San Antonio, Texas 78258. The
percentage of common stock beneficially owned is based on 16,788,862 shares
outstanding as of March 10, 2009.




Name and Address of Beneficial
                    Owner
                  
                  Shares
                    Beneficially
                    Owned
                  
                  
                  Right to Acquire
                    Beneficial
                    Ownership
                    within 60 days
                  
                  
                  Total
                  
                  
                  Percentage
                    Beneficial
                    OwnershipThe
      Longview Fund, L.P. (1)
                    600
      Montgomery Street, 44th
      Floor
                    San
      Francisco, CA 94111
                  
                  
                  7,126,871
                  
                  
                  
                  750,000
                  
                  
                  
                  7,876,871
                  
                  
                  
                  46.96
                  %Doud
      Oil & Gas Company LLC
                    25528
      Genesee Trail Road
                    Golden,
      CO 80401
                  
                  
                  2,419,355
                  
                  
                  
                  -
                  
                  
                  
                  2,419,355
                  
                  
                  
                  14.46
                  %Directors
      and Named Executive OfficersStanley
      A. Hirschman, Director
                  
                  
                  
                  
                  
                  
                  40,000
                  
                  
                  
                  40,000
                  
                  
                  
                  *David
      P. Lieberman, Director
                  
                  
                  
                  
                  
                  
                  40,000
                  
                  
                  
                  40,000
                  
                  
                  
                  *Bryce
      W. Rhodes, Director
                  
                  
                  
                  
                  
                  
                  20,000
                  
                  
                  
                  20,000
                  
                  
                  
                  *Doyle
      A. Valdez, Director
                  
                  
                  
                  
                  
                  
                  20,000
                  
                  
                  
                  20,000
                  
                  
                  
                  *Michael
      J. Pawelek, CEO, Chairman
                  
                  
                  258,264
                  
                  
                  
                  416,667
                  
                  
                  
                  674,931
                  
                  
                  
                  4.02
                  %Wayne
      Psencik, COO
                  
                  
                  258,264
                  
                  
                  
                  416,667
                  
                  
                  
                  674,931
                  
                  
                  
                  4.02
                  %Sherry
      L. Spurlock, CFO
                  
                  
                  258,264
                  
                  
                  
                  416,667
                  
                  
                  
                  674,931
                  
                  
                  
                  4.02
                  %Theodore
      J. Wicks, EVP
                  
                  
                  0
                  
                  
                  
                  250,000
                  
                  
                  
                  250,000
                  
                  
                  
                  1.49
                  %Executive
      Officers and Directors as a group
                  
                  
                  774,792
                  
                  
                  
                  1,620,001
                  
                  
                  
                  2,394,793
                  
                  
                  
                  14.27
                  %


* less
than 1%










ITEM
13.             
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





Transactions
with Related Persons





In the
ordinary course of business, from time to time we  purchase products
or services from, or engage in other transactions with, various third parties
deemed to be related parties (as that term is defined for purposes of Section
404(a) of Regulation S-K).  Occasionally, certain of these
transactions may involve individuals who currently or have recently served as
members of our executive management and/or Board of Directors  We also
have been involved in transactions with certain of our stockholders who, by
virtue of the amount beneficially owned of our outstanding stock, are deemed to
be related parties.  These transactions are conducted in the ordinary
course of business and on an arms-length basis.  The following
describes these transactions that occurred during the year ended December 31,
2008, and which involved amounts exceeding $120,000.





We are
deemed to have a related party relationship with The Longview Fund, L.P.
(“Longview”) because Longview is the beneficial owner of an amount in excess of
10% of our issued and outstanding common stock at December 31,
2008.  Refer to Note 4 – Long-Term Debt in our Notes to the
Consolidated Financial Statements on our Form 10-K for the year ended December
31, 2008, for a description of our credit facility with Longview and the related
notes payable.  Interest paid during the year ended December 31, 2008
on notes payable to Longview was $899,106.





We are deemed to have a related party
relationship with a third party who operates and is a joint interest owner in
our oil and gas properties located in the DJ Basin in Colorado.  This
party is the beneficial owner of an amount in excess of 10% of our issued and
outstanding common stock at December 31, 2008.  We acquired our
interests in these properties from the operator in a transaction which closed
during 2007, whereby we exchanged 2,419,335 shares of our common stock, then
valued at $7.5 million, for a 37.5% interest in the oil and gas
properties.  The Company received approximately $338,089 in net oil
and gas revenue distributions for the properties from the related party during
the year ended December 31, 2008.  We paid to the related party
approximately $ 23,587 and $202,074 for capital expenditures and lease operating
expenses, respectively, during 2008.





Director
Independence





Our
common stock is listed on the National Association of Securities Dealers
Automated Quotations System Global Market (“NASDAQ”). NASDAQ rules generally
require that a majority of our directors and all of the members of our Audit
Committee, Compensation Committee and Nominating and Corporate Governance
Committee be independent. Currently, we have five directors, four of whom
qualify as independent directors under NASDAQ rules.





In making
its determination of independence, the Board of Directors considers certain
categorical standards of independence as set forth in stock exchange corporate
governance rules and all relevant facts and circumstances to ascertain whether
there is any relationship between a director and our Company that, in the
opinion of the Board of Directors, would interfere with the exercise of
independent judgment by the director in carrying out the responsibilities of the
director. Under these standards and criteria, our Board of Directors has
determined that Messrs. David Lieberman, Stanley Hirschman, Bryce Rhodes and
Doyle Valdez are independent as defined in applicable Securities and Exchange
Commission and NASDAQ rules and regulations and that each constitutes an
“independent director” as defined in NASDAQ Marketplace Rule 4200.





ITEM
14.              PRINCIPAL
ACCOUNTANT FEES AND SERVICES





In March
2007, the Company replaced Larry O’Donnell, CPA, P.C., its prior independent
auditors, and engaged Causey Demgen & Moore, Inc. as its independent
auditors to provide the requisite audit services for the Company. There were no
disputes or conflicts as to the application of accounting policies or principles
between the Company and its former independent auditor. We do not expect our
current independent auditor to be present at the Annual Meeting.










Audit
Fees





For the
fiscal year ended December 31, 2008, our principal accountant billed $87,510 for
the audit of the Company’s annual financial statements and review of financial
statements included in our Form 10-Q filings. For the fiscal year ended December
31, 2007, our principal accountant billed $39,480, for the audit of the
Company’s annual financial statements and review of financial statements
included in our Form 10-QSB filings.





Audit-Related
Fees





For the
fiscal years ended December 31, 2008 and 2007, our principal accountant billed
$0 and $915, respectively, for assurance and related services that were
reasonably related to the performance of the audit or review of our financial
statements outside of those fees disclosed above under “Audit
Fees”.





Tax
Fees





For the
fiscal years ended December 31, 2008 and 2007, our principal accountant billed
$0 and $0, respectively, for tax compliance, tax advice, and tax planning
services.





All
Other Fees





For the
fiscal years ended December 31, 2008 and 2007, our principal accountant billed
$0 and $0, respectively, for products and services other than those described
above.





Pre-Approval
Policies and Procedures





Prior to
engaging the Company’s accountants to perform a particular service, our Board of
Directors obtains an estimate for the service to be performed. The Board of
Directors, in accordance with procedures for the Company, approved all of the
services described above prior to the services being performed.





PART
IV





ITEM
15.              EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES





(a)(3)
            Exhibits:


The
following documents are included as exhibits to this Annual Report:




Number
              
              Description
              Ref.14
              
              Code
      of Business Conduct and Ethics
              *31.1
              
              Principal
      Executive Officer Certification Pursuant to Item 601(b)(31) of Regulation
      S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
              *31.2
              
              Principal
      Financial Officer Certification Pursuant to Item 601(b)(31) of Regulation
      S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
              *





*
            Filed
      herewith





SIGNATURES




Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




SOUTH
      TEXAS OIL COMPANYDate: April
      30, 2009
              By:
              /s/ Michael
      J. PawelekMichael
      J. PawelekPresident
      and Chief Executive Officer
                (Principal
      Executive Officer)




SOUTH
      TEXAS OIL COMPANYDate: April
      30, 2009
              By:
              /s/ Sherry
      L. SpurlockSherry
      L. SpurlockExecutive
      Vice President and Chief Financial Officer
                (Principal
      Financial and Accounting
Officer)




Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





Signature
                    
                    Title
                    
                    Date/s/
      Michael J.
      Pawelek
                    
                    Chairman
      of the Board, President
                    
                    April
      30, 2009Michael
      J. Pawelek
                    
                    and
      Chief Executive Officer/s/
      David P.
      Lieberman
                    
                    Director
                    
                    April
      30, 2009David
      P. Lieberman/s/
      Stanley A.
      Hirschman
                    
                    Director
                    
                    April
      30, 2009Stanley
      A. Hirschman/s/Bryce W.
      Rhodes
                    
                    Director
                    
                    April
      30, 2009Bryce
      W. Rhodes








Exhibit
Index




Number
                  
                  Description
                  Ref.14
                  
                  Code
      of Business Conduct and Ethics
                  *31.1
                  
                  Principal
      Executive Officer Certification Pursuant to Item 601(b)(31) of Regulation
      S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
                  *31.2
                  
                  Principal
      Financial Officer Certification Pursuant to Item 601(b)(31) of Regulation
      S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
                  *





*
            Filed
      herewith