U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934

     For the fiscal year ended December 31, 2005

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the transition period from ___________ to ___________

                         Commission file number: 0-50731

                              SOUTH TEXAS OIL COMPANY
                  --------------------------------------------
                 (Name of small business issuer in its charter)

        Nevada                                               74-2949620
------------------------                                   --------------
(State or other jurisdiction of                            (IRS Employer
incorporation  or  organization)                         Identification No.)

            2881 CR 2880, Big Foot, TX                         78005
       ----------------------------------                    ---------
    (Address of principal executive offices)                 (Zip Code)

        P.O. Box 531431, Henderson, NV                         89053
       ----------------------------------                    ---------
               (Mailing Address)                             (Zip Code)

                    210-568-9760 (Telephone)  210-568-9761 (Fax)
                    --------------------------------------------
                           (Issuer's telephone number)

              900 NE Loop 410, Suite E-121, San Antonio, TX 78209
              ---------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, par value $.001
                          -----------------------------
                                (Title of class)

      Check  whether  the  issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange  Act during the past 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 [X] No [
]

     Check if there is no disclosure of delinquent  filers  in response to Item
405 of Regulation S-B contained herein, and no disclosure will 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-KSB  or  any
amendment to this Form 10-KSB. [X]

     The issuer had revenues of $278,817 for the fiscal year ended December 31,
2005.

      Based on the average  of the closing bid and asked prices of the issuer's
common stock on December 31,  2005,  the  aggregate  market value of the voting
stock held by non-affiliates of the registrant on that date was $1,613,426.

      As  of March 30, 2006, the issuer had 4,889,171 shares  of  common  stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

The Company's report on Form 8-K dated February 7, 2006 - Part III, Item 9
The Company's report on Form 8-K dated December 14, 2005
The Company's report on Form 8-K dated December 14, 2005 - Part II, Item 5
The Company's report on Form 8-K dated August 1, 2005 - Part II, Item 5
The Company's report on Form 8-K dated April 14, 2005 - Part II, Item 5
The Company's report on Form 8-K dated April 7, 2005 - Part I, Item 2

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


                                       2
<PAGE>

                               TABLE OF CONTENTS

                                                                       Page No.

                                     PART I

Item 1.       Description of Business....................................     6

Item 2.       Description of Properties..................................    16

Item 3.       Legal Proceedings..........................................    23

Item 4.       Submission of Matters to a Vote of Security Holders........    23

                                     PART II

Item 5.       Market for Common Equity and Related Stockholder Matters ..    23

Item 6.       Management's Discussion and Analysis of Financial
              Condition or Plan of Operation.............................    27

Item 7.       Financial Statements.......................................   F-1

Item 8.       Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure.....................    32

Item 8A.      Controls and Procedures....................................    32

Item 8B.      Other Information..........................................    32


                                    PART III

Item 9.       Directors and Executive Officers of the Registrant.........    32

Item 10.      Executive Compensation.....................................    36

Item 11.      Security Ownership of Certain Beneficial Owners
              and Management and Related Stockholder Matters.............    37

Item 12.      Certain Relationships and Related Transactions.............    38

Item 13.      Exhibits and Reports on Form 8-K...........................    40

Item 14.      Principal Accountant Fees and Services.....................    42

Signatures    ...........................................................    43











                                       3
<PAGE>
                                     PART I

Forward-Looking Statements

     References in this annual report to "the Company," "we," "us" or "our" are
intended to  refer  to  South  Texas Oil Company. This report contains numerous
"forward-looking statements" that  involve substantial risks and uncertainties.
These include, without limitation, statements  relating  to future drilling and
completion of wells, well operations, production, prices,  costs  and expenses,
cash  flow, investments, business strategies and other plans and objectives  of
our management  for  future  operations  and  activities and other such matters
including, but not limited to:

-    Failure to obtain, or a decline in, oil production, or a decline in oil or
     gas   prices,
-    Incorporate estimates of required capital expenditures,
-    Increase in the cost of drilling, completion and oil production or other
     costs of production and operations,
-    An inability to meet growth projections, and
-    Other risk factors set forth under "Risk Factors" in this annual report.
     In addition, the words "believe", "may", "could", "when", "estimate",
     "continue", "anticipate", "intend", "expect", and similar expressions, as
     they relate to the South Texas Oil Company, our business or our
     management, are intended to identify forward-looking statements.

     These statements are based on our beliefs and the assurances we made using
information currently available to us. Because  these  statements  reflect  our
current  views  concerning  future  events,  these  statements  involve  risks,
uncertainties and assumptions. Our actual results could differ materially  from
the results discussed in the forward-looking statements. Some, but not all,  of
the  factors  that  may  cause  these differences include those discussed below
under the section entitled "Risk Factors" in this annual report. You should not
place  undue  reliance on these forward-looking  statements.  You  should  also
remember that these  statements are made only as of the date of this report and
future events may cause them to be less likely to prove to be true.

Glossary of Terms

      CONDENSATE refers  to  hydrocarbons associated with natural gas which are
liquid under surface conditions but gaseous in a reservoir before extraction.

      DEPLETION is the reduction in petroleum reserves due to production.

      FORMATION is a reference  to  a  group of rocks of the same age extending
over a substantial area of a basin.

      HYDROCARBONS  is the general term for  oil,  gas,  condensate  and  other
petroleum products.

      PARTICIPATION  INTEREST   or  WORKING  INTEREST  is  an  equity  interest
(compared with a royalty interest)  in  an  oil  and  gas  property whereby the
participating  interest  holder  pays  its  proportionate percentage  share  of
development  and  operating costs and receives  the  equivalent  share  of  the
proceeds of hydrocarbon  sales  after  deduction  of royalties due on the gross
income.

      PROSPECT  is a potential hydrocarbon trap which  has  been  confirmed  by
geological  and  geophysical   studies  to  the  degree  that  drilling  of  an
exploration well is warranted.

                                       4
<PAGE>

      PROVED RESERVES of crude oil,  natural  gas,  or  natural gas liquids are
estimated  quantities  that  geological and engineering data  demonstrate  with
reasonable certainty to be recoverable  in  future  years from known reservoirs
under existing economic and operating conditions, i.e.,  prices and costs as of
the  date  the estimate is made.  Prices include consideration  of  changes  in
existing  prices   provided  only  by  contractual  arrangements,  but  not  on
escalations based upon future conditions.

      Reservoirs are  considered  proved if economic producibility is supported
by either actual production or conclusive  formation  tests or if core analysis
and/or log interpretation demonstrates economic producibility  with  reasonable
certainty.   The   area   of  a  reservoir  considered proved includes (1) that
portion delineated by drilling and defined by  fluid  contacts, if any, and (2)
the  immediately  adjoining  portions not yet drilled that  can  be  reasonably
judged as economically productive  on  the  basis  of  available geological and
engineering data. In the absence of data on fluid contacts,  the  lowest  known
structural  occurrence  of  hydrocarbons controls the lower proved limit of the
reservoir.  Proved reserves are  estimates of hydrocarbons to be recovered from
a given data forward. They are expected  to  be  revised  as  hydrocarbons  are
produced and additional data become available.

      Reserves  that  can  produced  economically  through  the  application of
established   improved   recovery   techniques   are  included  in  the  proved
classification when these qualifications are met:  (1)  successful testing by a
pilot  project,  or  the operation of an installed program in  that  reservoir,
provides support for the  engineering  analysis on which the project or program
was based, and (2) it is reasonably certain the project will proceed. Estimates
of  proved  reserves do not include the following:  (1)  oil  that  may  become
available from  known  reservoirs  but  is  classified  separately as indicated
additional reserves; (2) crude oil, natural gas, and natural  gas  liquids, the
recovery of which is subject to reasonable doubt because of uncertainty  as  to
geology, reservoir characteristics, or economic factors; (3) crude oil, natural
gas,  and  natural  gas liquids, that may occur in undrilled prospects; and (4)
crude oil, natural gas, and natural gas liquids, that may be recovered from oil
shales, coal, gilsonite  and  other  such  sources. PROVED DEVELOPED RESERVES A
subcategory of proved reserves. They are those reserves that can be expected to
be  recovered  through  existing wells with existing  equipment  and  operating
methods. Additional oil and  gas expected to be obtained through application of
fluid injection or other improved  recovery  techniques  for  supplementing the
natural forces and mechanisms of primary recovery are considered developed only
after testing by a pilot project or after the operation of an installed program
has  confirmed  through  production  response that increased recovery  will  be
achieved.

      PROVED UNDEVELOPED RESERVES is a subcategory of proved reserves. They are
reserves that are expected to be recovered from new wells on undrilled acreage,
or from existing wells where a relatively  major  expenditure  is  required for
recompletion. Reserves on undrilled acreage are limited to those drilling units
offsetting  productive  units  that  are reasonably certain of production  when
drilled. Proved reserves for other undrilled  units  are  claimed only where it
can be demonstrated with certainty that there is continuity  of production from
the  existing  productive formation. Estimates for proved undeveloped  reserves
are not attributable to any acreage for which an application of fluid injection
or other improved  recovery  technique  is contemplated, unless such techniques
have  been  proved effective by actual tests  in  the  area  and  in  the  same
reservoir.

      RESERVOIR is a porous and permeable sedimentary rock formation containing
adequate pore space in the rock to provide storage space for oil, gas or water.


                                       5
<PAGE>
      TRAP is  a geological structure in which hydrocarbons build up to form an
oil or gas field.

ITEM 1.  DESCRIPTION OF BUSINESS.

(a)Business Development

Historical Corporate Development

      SOUTH TEXAS  OIL COMPANY, was incorporated under the laws of the State of
Texas on December 3,  1998 and was not operational until February 22, 2000.  At
inception  South  Texas Oil  Company's  Articles  of  Incorporation  Authorized
50,000,000 Common Shares  at  $.001 Par Value and 5,000,000 preferred shares at
$.001 Par Value.

      On February 22, 2000, South Texas Oil Company, issued to Nutek, Inc. (the
parent company) 4,500,000 unregistered  shares  of  its  $.001 par value common
stock  for  selected assets, at their fair market value of $1,279,896.   Nutek,
Inc. had acquired these selected assets from the Clipper Operating Company.

      On or about  May  10,  2001,  the domicile of the Corporation was changed
from Texas to Nevada and was incorporated in the State of Nevada on that date.

      On  August 1, 2001 a dividend of  approximately  509,604  shares  of  the
common stock  of  South  Texas  Oil  Company, was distributed pro rata to Nutek
Inc., shareholders on the basis of a ratio  of one (1) share of South Texas Oil
Company for each one hundred (100) issued and outstanding shares of Nutek, Inc.
held.

      On September 17, 2002, South Texas Oil  Company  began trading its Common
Shares on the Pink Sheets Electronic Quotation Service, under the symbol NUTO.

      On January 8, 2004 the parent Company distributed  a  further dividend of
shares of the common stock of South Texas Oil Company.  This  distribution  was
distributed pro rata to Nutek Inc., shareholders on the basis of a ratio of one
(1)  share  of  South  Texas Oil Company for each five hundred (500) issued and
outstanding shares of Nutek, Inc. held.

      The dividend was in  the  form  of  a  dividend  certificate representing
restricted common stock, and was distributed to the parent Company's beneficial
stockholders of record as of the record date, which was January 8, 2004.

      On April 1, 2005, South Texas Oil Company changed  its  name  from  Nutek
Oil, Inc., to South Texas Oil Company.

   (b) Business of Issuer

   The Company.

      South  Texas  Oil  Company  was formed for the purpose of development and
operation of oil and gas properties  with  proven  reserves.  South  Texas  Oil
Company's  strategy  is  to  focus  in  domestic  areas where major oil and gas
producing companies have reduced their exploration efforts to move offshore and
overseas in search of the larger reserves. South Texas  Oil  Company's  initial
development  strategy  has  been  to  acquire such proven fields and attempt to
increase production and the exploration  of other proven formations in the same
fields.

      However, marginal wells frequently have  production costs that are higher
than the revenue from hydrocarbons produced which would have a material adverse
affect on earnings.  See Item 1 (c) Risk Factors  Relating  to the Oil Industry
and Our Business.
                                       6
<PAGE>

      South  Texas  Oil  Company's  primary operational strategy  includes  the
operation of its own projects, giving  it substantial control over drilling and
production costs. South Texas Oil Company has associated itself with Mr. Conrad
Humbke, an experienced oil field developer  to  advise  on  methods  of  adding
production at lower costs through development drilling, work-overs, behind pipe
re-completions and secondary recovery operations.

General Discussion of Operations

From  inception  in  1998, South  Texas  Oil Company had no operations until it
acquired its interests in producing oil wells in 2000. On April 1, 2005,  South
Texas  Oil  purchased an additional 44 oil wells, increasing the  total  number
of wells South  Texas  Oil Company  has  interest in to 135 and total gross
acres under lease to 5,243.685 acres.

      South  Texas  Oil Company currently has two full time employees and three
part-time employees and  contracts  the services of consultants and contractors
in the various areas of expertise as required.

The way in which the business currently operates is as follows:

      Most  of  the  engineering and geology  for  South  Texas  Oil  Company's
projects is performed  by  consulting  firms, while the actual drilling, rework
and other field operations are performed  on a project basis by contractors who
bid for the work.  This is the most cost-effective  manner of operation, as the
range of expertise and services required varies by project and time duration.

       South  Texas  Oil Company recently employed Mr.  Edward  Shaw  as  Chief
Operating Officer who is responsible for all day to day field operations.  This
includes oil lease repairs  to  electrics,  maintaining  the  operation  of the
wells,   providing   production   reports   to  South  Texas  Oil  Company  and
communicating with the oil haulers to collect production when necessary.

      Mr. Conrad Humbke, is available to advise on methods of adding production
at  lower  costs  through development drilling,  work-overs,  behind  pipe  re-
completions and secondary recovery operations.

      South Texas Oil Company's website address is http://www.southtexasoil.com


                                       7
<PAGE>
   (c) Risk Factors Relating to the Oil Industry and Our Business.

1.  South Texas Oil  Company  must  increase its oil production revenue or this
could adversely affect South Texas Oil Company's oil operations.

      South Texas Oil Company's long  term  success  is ultimately dependent on
its ability to expand its revenue base through the acquisition  and development
of   producing  properties.  South  Texas  Oil  Company  has  made  significant
investments  in  producing  properties  in  Texas.  The  acquisitions  are  not
indicative of future success.

      All  of the producing projects are subject to the risk of failure and the
loss of South  Texas  Oil  Company's  investment.  In the event South Texas Oil
Company is not able to increase the revenues  from its properties, or unable to
continue to produce oil from its properties, the leases could fall into default
and South Texas Oil Company lose its rights to those leases.

2. Prices of oil fluctuate widely based on market  conditions  and any extended
decline in oil prices may adversely affect our business, financial condition or
results   of  operation  and  our  ability  to  meet  our  capital  expenditure
obligations and financial commitments.

      South  Texas  Oil  Company's  revenues,  operating results, cash flow and
future  rate  of  growth  are very dependent upon prevailing  prices  for  oil.
Historically, oil markets have  been volatile and not predictable, and they are
likely to continue to be volatile  in  the future. The price we receive for our
oil production heavily influences our revenue, profitability, access to capital
and future rate of growth. Lower oil prices  may not only decrease our revenues
on a per unit basis but also may reduce the amount  of  oil that we can produce
economically. A substantial or extended decline in oil or  natural  gas  prices
may  materially  and adversely affect our future business, financial condition,
results  of  operations,  liquidity  or  ability  to  finance  planned  capital
expenditures.  Prices  for  oil are subject to wide fluctuations in response to
relatively  minor  changes  in  the  supply  of  and  demand  for  oil,  market
uncertainty and a variety of additional  factors  that  are beyond our control,
including:
           - political conditions in the oil producing and exporting countries;
           - the supply and price of foreign oil;
           - the level of consumer product demand;
           - the price and availability of alternative fuels;
           - the effect of federal and state regulation of production and
             transportation; and
           - the proximity of South Texas Oil Company's wells  to pipelines and
             their capacity.

3.   Unless  we  replace  our  oil  reserves, our reserves and production  will
decline, which would adversely affect our cash flows and income.

      The following leases contain proved developed oil reserves:  Ann Burns A,
Jane Burns B, Jane Burns, G. Davidson,  Foster,  Talley,  and  E.  Wright.  The
following  leases  have not been attributed with proved developed reserves: Ann
Burns, Jane Burns C,  Jane Burns D, Jane Burns E, Jane Burns F, Crowther, Hill,
Rizik, Shell C, Smith et  al,  Tomblin, and Wright.  Successful development and
production  of  those  reserves  cannot  be  assured.  Additional  drilling  or
workovers will be necessary in future  years both to maintain production levels
and to define the extent and recoverability  of  existing reserves. South Texas
Oil  Company's  present oil wells may not continue to  produce  at  current  or
anticipated rates  of  production,  development drilling may not be successful,
production of oil may not commence when  expected,  there  may  be  unfavorable
markets for oil produced in the future or that prior
                                       8
<PAGE>(cont)

production rates cannot be maintained. If South Texas Oil Company is  unable to
develop  or  produce reserves for continued production at current rates,  South
Texas Oil Company would become unprofitable or cease business.

4.   Drilling for  and  producing  oil  is  a  high  risk  activity  with  many
uncertainties  that could adversely affect our business, financial condition or
results of operations.

      Our future  success  will  depend  on  the  success  of our exploitation,
exploration,  development  and production activities. Our oil  exploration  and
production  activities  are subject  to  numerous  risks  beyond  our  control,
including the risk that drilling  will  not  result  in commercially viable oil
production. Our decisions to purchase, explore, develop  or  otherwise  exploit
prospects  or properties will depend in part on the evaluation of data obtained
through geophysical  and  geological  analyses, production data and engineering
studies, the results of which are often  inconclusive  or  subject  to  varying
interpretations. Our cost of drilling, completing and operating wells is  often
uncertain  before  drilling  commences.  Overruns  in budgeted expenditures are
common  risks  that  can make a particular project uneconomical.  The  cost  of
drilling,  completing  and  operating  wells  is  often  uncertain.   Moreover,
drilling may be curtailed,  delayed  or  canceled  as a result of many factors,
including  title  problems,  weather conditions, shortages  of,  or  delays  in
delivery of equipment, as well  as the financial instability of well operators,
major working interest owners and  well  servicing  companies.  South Texas Oil
Company's  wells  may  be  shut-in  for  lack  of a market until a pipeline  or
gathering system with available capacity is extended  into  our  area.  Our oil
wells  may  have  production curtailed until production facilities and delivery
arrangements are acquired  or  developed for them. The affect of one or more of
the above factors could result in South Texas Oil Company becoming unprofitable
or ceasing business.

5. Competition in the oil industry  is  intense, which may adversely affect our
ability to compete.

      The oil industry is highly competitive.  South Texas Oil Company competes
with others for property acquisitions and for opportunities  to  explore  or to
develop  and produce oil. South Texas Oil Company faces strong competition from
many companies  and  individuals  with greater capital, financial resources and
larger technical staffs. South Texas  Oil Company also faces strong competition
in  procuring  services  from  a limited pool  of  laborers,  drilling  service
contractors and equipment vendors.  The  affect  of  one  or  more of the above
factors  could  result  in  South  Texas  Oil Company becoming unprofitable  or
ceasing business.

6.   South Texas Oil Company may not carry sufficient  insurance,  which  could
adversely affect our business, financial condition and future operations.

      South  Texas  Oil  Company  and well operators maintain general liability
insurance  but  it  may not cover all  future  claims.  If  a  large  claim  is
successfully asserted  against South Texas Oil Company, it might not be covered
by insurance, or it might  be  covered but cause South Texas Oil Company to pay
much  higher  insurance  premiums  or   a   large   deductible  or  co-payment.
Furthermore, regardless of the outcome, litigation involving  South  Texas  Oil
Company  operations or even insurance companies disputing coverage could divert
management's  attentions  and  energies away from operations. The nature of the
oil business involves a variety of operating hazards such as fires, explosions,
cratering, blow-outs, adverse weather  conditions,  pollution and environmental
risks,  encountering  formations with abnormal pressures,  and,  in  horizontal
wellbores, the increased  risk  of  mechanical failure and collapsed holes, the
occurrence of any of which could result  in  substantial  losses to South Texas
Oil Company.
                                       9
<PAGE>

7.  Reserve  estimates  depend  on  many assumptions that may turn  out  to  be
inaccurate. Any material inaccuracies  in these reserve estimates or underlying
assumptions will materially affect the quantities  and  present  value  of  our
reserves.

   Estimating   South   Texas   Oil   Company  proved  reserves  involves  many
uncertainties, including factors beyond  South  Texas  Oil  Company's  control.
There  are  uncertainties  inherent  in  estimating  quantities  of  proved oil
reserves  since  petroleum  engineering  is not an exact science. Estimates  of
commercially recoverable oil reserves and  of  the  future  net cash flows from
them are based upon a number of variable factors and assumptions including:

   -  historical production from the properties compared with  production  from
      other producing properties;
   -  the effects of regulation by governmental agencies;
   -  future oil prices; and
   -  future  operating  costs,  severance and excise taxes, abandonment costs,
      development costs and workover and remedial costs.

8.  Governmental regulation, environmental  risks  and  taxes  could  adversely
affect South Texas Oil Company's oil operations in the state of Texas.

      South  Texas  Oil  Company's  oil  operations  in  Texas  are  subject to
regulation  by federal and state governments, including environmental laws.  To
date, South Texas  Oil  Company  has not had to expend significant resources in
order  to  satisfy environmental laws  and  regulations  presently  in  effect.
However, compliance  costs  under  any  new  laws and regulations that might be
enacted could adversely affect South Texas Oil  Company's business and increase
the  costs  of  planning,  designing,  drilling,  installing,   operating   and
abandoning  South  Texas Oil Company's oil wells.  Additional matters that are,
or have been from time to time, subject to governmental regulation include land
tenure, royalties, production  rates,  spacing,  completion  procedures,  water
injections,  utilization,  the  maximum  price at which products could be sold,
energy taxes and the discharge of materials into the environment.

      The  Registrant  is  subject to laws and  regulations  that  control  the
discharge of materials into  the  environment  require  removal  and cleanup in
certain  circumstances,  require  the  proper  handling  and disposal of  waste
materials  or  otherwise  relate  to  the  protection  of  the environment.  In
operating  and  owning petroleum interests, the Registrant may  be  liable  for
damages and the costs  of  removing  hydrocarbon  spills  for  which it is held
responsible. Laws relating to the protection of the environment  have  in  many
jurisdictions  become  more  stringent  in  recent  years  and  may, in certain
circumstances,  impose  strict liability, rendering the Registrant  liable  for
environmental damage without  regard  to negligence of fault on the part of the
Registrant. Such laws and regulations may  expose  the  Registrant to liability
for  the  conduct  of,  or  conditions  caused by, others or for  acts  of  the
Registrant that were in compliance with all  applicable  law  at  the time such
acts  were performed. The application of these requirements or the adoption  of
new requirements  could  have  a material adverse effect on the business of the
Registrant.

9.  Properties that we buy may not  produce  as projected, and we may be unable
to  identify liabilities associated with the properties  or  obtain  protection
from sellers against them.

      Our  business  strategy  includes  a  continuing acquisition program. The
successful acquisition of producing properties  requires  assessments  of  many
factors,  which  are  inherently  inexact  and may be inaccurate, including the
following:
                                      10
<PAGE>(cont)

      -  the amount of recoverable reserves;
      -  future oil prices;
      -  estimates of operating costs;
      -  estimates of future development costs;
      -  estimates of the costs and timing of plugging and abandonment; and
      -  potential environmental and other liabilities.

      Our assessment will not reveal all existing  or  potential  problems, nor
will it permit us to become familiar enough with the properties to assess fully
their capabilities and deficiencies. In the course of our due diligence, we may
not  inspect  every  well,  platform  or  pipeline.  Inspections may not reveal
structural   and  environmental  problems,  such  as  pipeline   corrosion   or
groundwater contamination,  when  they  are  made. We may not be able to obtain
contractual indemnities from the seller for liabilities that it created. We may
be required to assume the risk of the physical  condition  of the properties in
addition to the risk that the properties may not perform in accordance with our
expectations.

10.  Indemnities  may be Unenforceable or Uncollectible which  could  adversely
affect our business, financial condition and future operations.

      The operating  agreements with participants in a property provide for the
indemnification of the  Registrant as operator. Such indemnification may not be
enforceable or a participant  may  not be financially able in all circumstances
to comply with its indemnification obligations,  or  the  Registrant may not be
able to obtain such indemnification agreements in the future.  The  failure  to
obtain  enforceable  indemnification agreements or a participant's inability to
indemnify the Registrant may cause the Registrant to assume all operating costs
of a property. Such a  result  could  adversely  affect our business, financial
condition and future operations which additionally,  could cause the Registrant
to become insolvent.

11. Our Stock is considered a "Penny Stock" which could  have an adverse effect
on the trading market for South Texas Oil Company's shares.

      South Texas Oil Company's securities are classified  as  a  "penny stock"
based  upon  their  market  price and the manner in which they are traded.  The
Securities and Exchange Act of  1934 requires additional disclosure relating to
the market for "penny stocks." A  penny  stock  is  generally defined to be any
equity security not listed on NASDAQ or a national securities exchange that has
a market price of less than $5.00 per share, subject to certain exceptions.

Among these exceptions are shares issued by companies that have:

   - net  tangible assets of at least $2 million, if the  issuer  has  been  in
     continuous operation for three years;
   - net  tangible  assets  of  at  least $5 million, if the issuer has been in
     continuous operation for less than three years; or
   - average annual revenue of at least  $6  million for each of the last three
     years.

   South Texas Oil Company does not currently  meet  the  requirements of these
exceptions  and,  therefore,  the  common  shares are deemed penny  stocks  for
purposes of the Exchange Act at any time while South Texas Oil Company's common
stock trades below $5.00 per share. In such  cases,  trading in South Texas Oil
Company's shares is regulated pursuant to Rules 15-g-1 through 15-g-6 and 15-g-
9 of the Exchange Act. Under these rules, brokers or dealers  recommending  our
shares  to  prospective  buyers  would  be  required,  unless  an  exemption is
available, to:

                                      11
<PAGE>(cont)
   -  deliver  a lengthy disclosure statement in a form designated by  the  SEC
     relating to  the  penny stock market to any potential buyers, and obtain a
     written acknowledgement from each buyer that such disclosure statement has
     been received by the buyer prior to any transaction involving our shares;

   -  provide detailed written disclosure to buyers of current price quotations
     for our shares, and of any sales commissions or other compensation payable
     to any broker or dealer,  or  any  other  related  person, involved in the
     transaction;

   - send monthly statements to buyers disclosing updated price information for
     any penny stocks held in their accounts, and these monthly statements must
     include specified information on the limited market for penny stocks.

      In addition, as South Texas Oil Company is subject  to  the  penny  stock
rules, all brokers or dealers involved in a transaction in which our shares are
sold to any buyer, other than an established customer or "accredited investor,"
must make a special written determination that South Texas Oil Company's shares
would  be  a suitable investment for the buyer, and the brokers or dealers must
receive the  buyer's  written  agreement to purchase our shares, as well as the
buyer's written acknowledgement  that the suitability determination made by the
broker  or  dealer  accurately  reflects   the   buyer's  financial  situation,
investment  experience  and  investment  objectives, prior  to  completing  any
transaction in our shares. These Exchange  Act  rules  may limit the ability or
willingness of brokers and other market participants to  make  a  market in our
shares  and may limit the ability of our shareholders to sell in the  secondary
market, through  brokers,  dealers  or otherwise.  South Texas Oil Company also
understands that many brokerage firms  discourage  their customers from trading
in  shares  falling  within  the  "penny stock" definition  due  to  the  added
regulatory and disclosure burdens imposed  by these Exchange Act rules. The SEC
from time to time may propose and implement  even  more stringent regulatory or
disclosure  requirements  on  shares  not listed on NASDAQ  or  on  a  national
securities exchange. The adoption of the  proposed  changes that may be made in
the future could have an adverse effect on the trading  market  for South Texas
Oil Company's shares.

12.  Dilution could have an adverse affect on the ownership of the  stockholder
in the Registrant.

      The  Registrant  may issue more common shares at prices determined by the
board  of directors in any  private  placements  or  offerings  of  securities,
possibly  resulting in dilution of the value of common shares, and, given there
is no preemptive  right  to  purchase  common shares, if a stockholder does not
purchase  additional  common  shares, the percentage  share  ownership  of  the
stockholder in the Registrant will be reduced.

13. Defeasance of Title could adversely  affect  South  Texas Oil Company's oil
operations.

      The  possibility  exists  that  title  to one or more properties  of  the
Registrant may be lost due to an omission in the claim of title. The Registrant
does not maintain title insurance. If title to  one or more properties is lost,
this  could  adversely  affect  our business, financial  condition  and  future
operations.

14. A Limited Operating History could  adversely affect our business, financial
condition and future operations.

      South Texas Oil Company first acquired  its  interests  in  producing oil
wells  in 2000. No additional wells have been acquired. Because of the  limited
operating  history of South Texas Oil Company, stockholders and South Texas Oil
Company face a

                                      12
<PAGE>(cont)

risk that future  acquisitions of oil wells or development may be unsuccessful.
South Texas Oil Company  would  then  remain unprofitable which would adversely
affect our business, financial condition and future operations.

15. Lack of Management Experience in the  Oil  and Gas Industry could adversely
affect South Texas Oil Company.

      Some members of Management and the Board of  Directors  do not have prior
experience in the oil industry. Some members do have extensive  work experience
in   geology,   land  acquisition,  leasing  properties  for  natural  resource
extraction (mining), and business management. The lack of experience in the oil
industry may impair  Management and the Directors' ability to evaluate and make
decisions involving current  operations  of  South  Texas  Oil  Company and any
future projects South Texas Oil Company may undertake in the oil industry. Such
impairment  and  lack  of  experience  could  adversely  affect  our  business,
financial condition and future operations.

16.  Amount  of  Time Officers Can Devote to South Texas Oil Company Operations
could have a material adverse affect on South Texas Oil Company.

      Mr. Conradie, our President and Chief Executive Officer and Mr. Shaw, our
Chief Operational Officer currently devote 100% of their time to the operations
and demands of South  Texas  Oil  Company.   If  two or more of the officers of
South  Texas  Oil  Company  could not perform the duties  and  responsibilities
necessary for the success and  development  of  South  Texas  Oil Company, this
could have a material adverse affect on our business, financial  condition  and
both current and future operations.

   Environmental and Government Compliance and Costs.

      All  oil  and  gas  operations  are  subject  to  extensive environmental
permitting and governmental regulation. All drilling and  rework operations are
subject  to  inspection  by local, state and federal regulators.  Violation  of
these requirements or environmentally  damaging spills or accidents due to non-
compliance in these areas can result in fines and, depending on the severity of
the negligence, criminal prosecution. South  Texas Oil Company is not currently
a   party  to  any  judicial  or  administrative  proceedings   which   involve
environmental regulations or requirements and management believes that it is in
substantial compliance with all applicable environmental regulations.

GOVERNMENTAL REGULATION

       GENERAL.  South Texas Oil Company is subject to federal, state and local
laws and regulations  governing environmental quality and pollution control. It
is  anticipated  that,  absent   the  occurrence  of  an  extraordinary  event,
compliance with existing federal,  state  and local laws, rules and regulations
concerning the protection of the environment  and  human health will not have a
material  effect  upon  South  Texas  Oil  Company,  capital  expenditures,  or
earnings.   South  Texas  Oil  Company  cannot predict what  effect  additional
regulation  or  legislation, enforcement policies  thereunder  and  claims  for
damages for injuries  to property, employees, other persons and the environment
resulting from South Texas  Oil Company's operations. South Texas Oil Company's
operations related to the exploration,  development  and  production of oil and
natural  gas  are subject to stringent environmental regulation  by  state  and
federal authorities including the Environmental Protection Agency ("EPA"). This
regulation has  increased  the cost of planning, designing, drilling, operating
and in some instances, abandoning  wells.  In  most  instances,  the regulatory
requirements  relate  to  the  handling and disposal of drilling and production
waste products and waste created by water and air
                                      13
<PAGE>(cont)

pollution control procedures. Although  South  Texas  Oil Company believes that
compliance  with  environmental regulations will not have  a  material  adverse
effect on its operations  or  results of these operations, risks of substantial
costs and liabilities are inherent  in oil and gas operations, and there can be
no  assurance  that  significant  costs  and  liabilities,  including  criminal
penalties,  will  not  be  incurred.  Moreover,   it  is  possible  that  other
developments, including stricter environmental laws and regulations, and claims
for damages for injuries to property or persons resulting  from South Texas Oil
Company activities could result in substantial costs and liabilities.

       EXPLORATION  AND  PRODUCTION. South Texas Oil Company's  operations  are
subject to various types of  regulation at the federal, state and local levels.
Such  regulation  includes  requiring   permits  for  the  drilling  of  wells,
maintaining  bonding  requirements in order  to  drill  or  operate  wells  and
regulating the location  of wells, the method of drilling and casing wells, the
surface use and restoration  of  properties  upon  which wells are drilled, the
plugging and abandoning of wells and the disposal of fluids used or obtained in
connection with operations. South Texas Oil Company  is also subject to various
conservation regulations. These include the regulation  of the size of drilling
and  spacing  units  and  the  density  of wells which may be drilled  and  the
unitization  or  pooling  of  oil  and  gas  properties.   In  addition,  state
conservation laws establish maximum rates of production from oil and gas wells,
generally  prohibit  the  venting  or  flaring  of  gas   and   impose  certain
requirements  regarding  the ratability of production. These regulations  limit
the amount of oil and gas  that  can  be  produce  from  wells and to limit the
number of wells or the locations at which wells can be drill.

      WASTE DISPOSAL. South Texas Oil Company currently owns or leases, and has
in the past owned or leased, numerous properties that for  many years have been
used  for  the  exploration  and  production of oil. Although South  Texas  Oil
Company has utilized operating and disposal practices that were standard in the
industry at the time, hydrocarbons or other wastes may have been disposed of or
released on or under the properties  owned or leased by South Texas Oil Company
or on or under other locations where these wastes have been taken for disposal.
State and federal laws applicable to oil  and natural gas wastes and properties
have gradually become stricter. Under these laws, South Texas Oil Company could
be required to remove or remediate previously disposed wastes (including wastes
disposed of or released by prior owners or operators) or property contamination
(including  groundwater  contamination)  or  to   perform   remedial   plugging
operations   to   prevent  future  contamination.  South  Texas  Oil  Company's
operations and activities may generate wastes, including hazardous wastes, that
are subject to the  federal Resource Conservation and Recovery Act ("RCRA") and
comparable state statutes.  The  EPA and applicable state agencies have limited
the disposal options for certain hazardous  and  nonhazardous  wastes  and  are
considering  the  adoption  of  stricter  disposal  standards  for nonhazardous
wastes.  Furthermore,  certain  wastes  that  may be generated by the  oil  and
natural gas operations that are currently exempt  from  treatment  as hazardous
wastes  may  in the future be designated as hazardous wastes, and therefore  be
subject  to considerably  more  rigorous  and  costly  operating  and  disposal
requirements.

       SUPERFUND.  The  Comprehensive  Environmental Response, Compensation and
Liability Act ("CERCLA"), also known as the "Superfund" law, imposes liability,
without regard to fault or the legality  of  the  original  conduct, on certain
classes of persons with respect to the release of a "hazardous  substance" into
the  environment.  These  persons  include  the owner and operator of  a  site,
persons  that  disposed  of  or  arranged for the  disposal  of  the  hazardous
substances found at a site, and prior  owners and operators of the site. CERCLA
also authorizes the EPA and, in some cases,  third  parties  to take actions in
response  to  threats to the public health or the environment and  to  seek  to
recover from responsible classes of
                                      14
<PAGE>(cont)

persons the costs  of such action. In the course of operations, South Texas Oil
Company's operations  and  activities  may  generate  wastes  that  fall within
CERCLA's definition of "hazardous substances." South Texas Oil Company  may  be
responsible  under  CERCLA  for  all  or part of the costs to clean up sites at
which such wastes have been released. To date, however, neither South Texas Oil
Company nor, to its knowledge, its predecessors  have  been named a potentially
responsible party under CERCLA or similar state Superfund  laws  affecting  the
Leases on which South Texas Oil Company's wells are located.

      AIR  EMISSIONS.  South  Texas Oil Company's operations and activities are
subject to local, state and federal regulations for the control of emissions of
air pollution. Legal and regulatory  requirements  in this area are increasing,
and there can be no assurance that significant costs  and  liabilities will not
be  incurred  in  the  future  as  a result of new regulatory developments.  In
particular, regulations promulgated under the Clean

      Air Act Amendments of 1990 may  impose additional compliance requirements
that  could  affect the operations. However,  it  is  currently  impossible  to
predict accurately the effect, if any, of the Clean Air Act Amendments on South
Texas Oil Company's  operations  and activities. South Texas Oil Company may in
the future become subject to civil  or  administrative  enforcement actions for
failure to comply strictly with air regulations or permits.  These  enforcement
actions  are generally resolved by payment of monetary fines and correction  of
any identified  deficiencies.  Alternatively, regulatory agencies could require
South Texas Oil Company to forego  construction  or  operation  of  certain air
emission sources.

      OSHA.  In the conduct of its activities South Texas Oil Company  and  its
operations will  be  subject  to  the  requirements of the federal Occupational
Safety and Health Act ("OSHA") and comparable  state  statutes. The OSHA hazard
communication standard, the EPA community right-to-know regulations under Title
III  of  the federal Superfund Amendment and Reauthorization  Act  and  similar
state statutes  require  us  to  organize information about hazardous materials
used, released or produced in its  operations. Certain of this information must
be provided to employees, state and  local  governmental  authorities and local
citizens.  South  Texas  Oil  Company  is also subject to the requirements  and
reporting set forth in OSHA workplace standards.

      OPA AND CLEAN WATER ACT. Federal regulations  require  certain  owners or
operators  of  facilities  that  store  or  otherwise handle oil to prepare and
implement spill prevention control plans, countermeasure  plans  and facilities
response  plans relating to the possible discharge of oil into surface  waters.
The Oil Pollution  Act of 1990 ("OPA") amends certain provisions of the federal
Water Pollution Control  Act  of  1972, commonly referred to as the Clean Water
Act ("CWA"), and other statutes as  they  pertain  to  the  prevention  of  and
response  to  oil  spills  into  navigable  waters.  The OPA subjects owners of
facilities  to  strict  joint  and  several liability for all  containment  and
cleanup costs and certain other damages  arising  from  a spill, including, but
not limited to, the costs of responding to a release of oil  to surface waters.
The  CWA  provides  penalties  for  any  discharges  of  petroleum  product  in
reportable  quantities  and  imposes  substantial  liability  for the costs  of
removing  a spill. State laws for the control of water pollution  also  provide
varying civil and criminal penalties and liabilities in the case of releases of
petroleum  or   its  derivatives  into  surface  waters  or  into  the  ground.
Regulations are currently  being  developed under OPA and state laws concerning
oil  pollution  prevention  and  other   matters  that  may  impose  additional
regulatory burdens on South Texas Oil Company.



                                      15
<PAGE>

      SAFE  DRINKING  WATER  ACT.  South Texas  Oil  Company's  operations  and
activities involve the disposal of produced  saltwater  and  other nonhazardous
oilfield  wastes  by reinjection into the subsurface. Under the  Safe  Drinking
Water Act ("SDWA"),  oil  and gas operators, like South Texas Oil Company, must
obtain a permit for the construction  and  operation  of  underground  Class II
injection  wells.  To protect against contamination of drinking water, periodic
mechanical integrity  tests  are  often  required  to  be performed by the well
operator.

      TOXIC SUBSTANCES CONTROL ACT. The Toxic Substances  Control  Act ("TSCA")
was  enacted to control the adverse effects of newly manufactured and  existing
chemical  substances.  Under  the  TSCA,  the EPA has issued specific rules and
regulations governing the use, labeling, maintenance,  removal from service and
disposal of PCB items, including transformers and capacitors  used  by  oil and
gas  companies.  South Texas Oil Company believes it is in compliance with  the
TSCA and that the  TSCA  will not have a material adverse effect on South Texas
Oil Company's operations and activities.

       In many cases there  is  a  bond  required of operators to ensure that a
prospective well is properly plugged and abandoned  when  its  useful  life  is
determined to be concluded.

       South  Texas Oil Company has posted such a bond in the amount of $50,000
with the Texas  Rail  Road  Commission  to  cover  its projects. Such bonds are
additions to the cost of South Texas Oil Company's projects.   The current bond
of $50,000 covers the wells operated by South Texas Oil Company  as required by
the Rail Road Commission of Texas under the Texas Administrative Code, Title 16
Economic  Regulation, Chapter 3 Oil and Gas Division, Rule {section}3.78  Fees,
Performance  Bonds  and  Alternate  Forms  of Financial Security Required To Be
Filed.

ITEM 2.  DESCRIPTION OF PROPERTY.

     The  corporate  offices of South Texas Oil  Company  are  located  in  San
Antonio, Texas, within the Petroleum Building located at 900 NE Loop 410, Suite
E-121, San Antonio, Texas, 78209 at a monthly cost of $535.

Current Oil and Gas Properties.

1.  BIG FOOT AND KYOTE FIELDS.

    Selected assets and  leases  of the Clipper Operating Company were acquired
on February 22, 2000  with  2,064,348  shares  of   Nutek,  Inc. (former parent
company)  stock  at the current market price of $.31 representing  $639,948;  a
note for $639,948 was issued  for  the  balance  of  the  purchase  price.  The
purchase price of $1,279,896 was made  up  of  mineral  acreage  for  $454,959;
equipment  at market value $788,217 and a gas pipeline at market value $36,720.
(See Exhibit  10.1:  Letter  of Intent to Purchase Selected Assets from Clipper
Operating Company.)

    On or about February 22, 2000,  South  Texas  Oil  Company issued to Nutek,
Inc. 4,500,000 unregistered shares of its .001 par value common stock for these
assets, at their fair market value of $1,279,896. (See Exhibit  10.2:  Purchase
Agreement of Selected Assets from Nutek Inc.)

     South  Texas  Oil Company acquired a 100 percent working interest in these
properties in the Big  Foot  and  Kyote  fields  of Frio and Atascosa Counties,
Texas.


                                      16


<PAGE>

    The highlights of the purchase agreement included the following terms:

     A.   Purchase of all mineral acreage at a price  of  one  hundred  dollars
($100.00) per  acre.   Total  price  was  four hundred fifty-four thousand nine
hundred and fifty-nine dollars ($454,959).

    B.  Purchase of equipment will be at market  value.    Total  price will be
seven  hundred  eighty-eight  thousand  two  hundred  and  seventeen and no/100
dollars ($788,217).

     C.  Purchase of pipeline will be at market value.   Total  price  will  be
thirty six thousand seven hundred twenty and no/100 dollars ($36,720).

Big Foot Field: This is a 3,605 acre oil field that South Texas Oil Company has
under  lease  and  is made up of 15 leases consisting of 75 wells.  It includes
several existing well  bore  that South Texas Oil Company intends to recomplete
in new pay zones shown on the logs.

BIG FOOT FIELD, FRIO COUNTY

Ann Burns            20 ac.
Ann Burns A      689.43 ac.
Burns            637.25 ac.
Davidson            300 ac.
Foster          331.062 ac.
Jane Burns           80 ac.
Jane Burns 'A'       20 ac.
Jane Burns 'B'       80 ac.
Jane Burns 'C'       80 ac.
Jane Burns 'D'       80 ac.
Jane Burns 'E'       40 ac.
Jane Burns 'F'       20 ac.
Jane Burns 'G'       20 ac.
Shell - C.           80 ac.
Smith, et. al.   327.48 ac.
Talley              800 ac.

Total acreage in Big Foot field - Frio Co. = 3,605.222 ac.

Kyote Field: This is a 944 acre  oil  field  that  South  Texas Oil Company has
under lease and is made up of 5 leases consisting of 16 wells.   This  property
has three  wells  that  are  candidates  for  re-entry  so  as  to workover and
recomplete  in zones that were not produced to their economic limits  and  were
prematurely plugged  during  low  oil prices in the 1980s. There are also other
possible  productive zones that have never been produced. One of the  wells  in
the field can be converted into a salt water disposal well.

KYOTE FIELD, ATASCOSA COUNTY

Crowther         197.42 ac.
Hill              87.41 ac.
Rizik               180 ac.
Tomblin          129.24 ac.
Wright          350.293 ac.

Total acreage in Kyote field - Atascosa Co. = 944.363 ac.


                                      17
<PAGE>
    Currently,  the  Talley  Lease  has  the most oil wells, while the Davidson
lease  has  the  most potential for future drilling.  The  Davidson  lease  has
untapped B and D strata  that can be drilled.  Also, many of the existing wells
are only pulling from the  deeper  D  stratum,  thus there is more oil in the B
stratum to be pumped at high production rates.

     South  Texas  Oil Company plans its future growth  through  a  balance  of
acquisition  of  working  interests  in  existing  wells  and leases, increased
production on current leases and new drilling on current leases  in  accordance
with  new  State  of  Texas  guidelines of one (1) well per ten (10) acres,  as
opposed to the previous ratio  of  one  (1)  well  per  twenty (20) acres. This
latter strategy of in-fill  drilling affords the most potential for South Texas
Oil Company. The new guidelines will allow South Texas Oil Company to place new
wells between existing wells  that  have  previously  produced or are currently
producing oil.

    South Texas Oil Company serves as operator with respect to these properties
acquired  pursuant to association contracts in which South  Texas  Oil  Company
obtains a controlling  interest or holds the largest ownership interest.  It is
anticipated  that  South  Texas  Oil  Company  will  also  participate  in  the
development  of  properties  operated  by  third  parties and in some cases may
delegate operations to a third party.

    The production from  the fields for 2005 was 2,060 gross bbls for the Kyote
Field and 5,674 gross bbls  for  the  Big Foot Field and 1,077 for the Somerset
Field.  South Texas Oil Company currently  has  an interest in 135 wells; 16 in
the Kyote Field, 75 in the Big Foot Field and 44  in  the  Somerset  Field. The
number of gross wells South Texas Oil Company operates in each field are:

BIG FOOT FIELD, FRIO COUNTY

Ann Burns          1
Ann Burns A        8
Burns              1
Davidson          17
Foster             9
Jane Burns         1
Jane Burns 'A'     0
Jane Burns 'B'     3
Jane Burns 'C'     2
Jane Burns 'D'     1
Jane Burns 'E'     2
Jane Burns 'F'     1
Jane Burns 'G'     1
Shell - C.         4
Smith, et. al.     1
Talley            23

Total wells in Big Foot field - Frio Co. = 75

KYOTE FIELD, ATASCOSA COUNTY

Crowther         3
Hill             1
Rizik            2
Tomblin          2
Wright           8

Total wells in Kyote field - Atascosa County = 16
                                      18
<PAGE>

2.  Somerset Fields

On April 1, 2005, South Texas Oil Company completed the purchase of the leases,
farm-outs  and  mineral  interests held by JGM Oil Investments, LLC in Atascosa
County, Texas insofar as they cover the following minimum net revenue interests
(NRI).

Minimum Net Revenue Interest (NRI)

      A. G.O. Davidson Lease, a minimum of a seventy and 4/10 percent (70.4%)
net revenue interest (NRI).

      B. Oldjamie Lease, a minimum  of a  sixty  five  and  925/1000  percent
(65.925%) net revenue interest (NRI).

      C. Diamond Head Lease, a minimum of a fifty seven percent (57%) net
revenue interest (NRI).

      D.  Fowler A Lease, a minimum of a fifty eight and 1/8 percent (58.125%)
net revenue interest (NRI).

      E. Fowler C Lease, a minimum of a sixty three percent (63%) net revenue
interest (NRI).

      South  Texas  Oil Company additionally  purchased  all  of  the  personal
property associated with  the  oil wells on the lands described in the Purchase
Agreement attached as Exhibit 10.14  including,  but  not  limited to, all well
equipment, spare equipment and tank batteries. Equipment will be sold "as is".

      The  total purchase price was three hundred seven thousand  four  hundred
twenty-six dollars  ($307,426)  made  up  as  follows;  Purchase of all mineral
acreage at a price of one  hundred dollars ($100.00) per acre.  Total price for
the  acreage  was sixty nine thousand  four  hundred  ten  and  no/100  dollars
($69,410). Purchase  of  all equipment was at a depreciated price of forty five
percent (45%) of the replacement  value.  Total  price  for  equipment  was two
hundred thirty eight thousand sixteen and no/100 dollars ($238,016).

      The method of payment will be as  follows;  The  issuance of five hundred
twelve thousand three hundred seventy-seven (512,377) shares of South Texas Oil
Company restricted stock representing fifty percent (50%) of the purchase price
at  $0.30 per share, calculated as the prior thirty (30)  day  average  closing
price from the date of closing. The remaining amount of one hundred fifty three
thousand  seven  hundred  thirteen  and  no/100 dollars ($153,713) will be paid
monthly for a period of thirty six (36) months  with  interest of seven percent
(7%) accruing on the outstanding balance. The monthly payment amount is not  to
exceed  the  income  from the minimum net revenue interest (NRI) from the prior
month's production.    Payment  will  be adjusted accordingly and the remaining
balance increased by the monthly shortfall  should  any  occur.    The purchase
price of the leases and assets were based on current market conditions  as well
as  the  historical purchase prices made by South Texas Oil Company for acreage
and a determination of the current replacement value of the equipment.

Somerset Field: This is a 694.1 acre oil field that South Texas Oil Company has
under lease and is made up of 7 leases consisting of 44 wells.




                                      19
<PAGE>

SOMERSET FIELD - ATASCOSA COUNTY

G.O.Davidson        40 ac.
Fowler 'A'         140 ac.
Fowler 'C'         229 ac.
Oldjamie         105.1 ac.
Diamond Head        40 ac.
Diamond Head 'A'   120 ac.
Diamond Head 'B'    20 ac.

Total acreage in Somerset Field - Atascosa Co. = 694.1 ac.

Total acreage in Big Foot, Kyote and Somerset fields = 5,243.685 ac.

The number of gross wells South Texas Oil Company operates in the Somerset
field are:

SOMERSET FIELD - ATASCOSA COUNTY

G.O. Davidson     2
Fowler 'A'        9
Fowler 'C'       22
Oldjamie          6
Diamond Head      1
Diamond Head 'A'  3
Diamond Head 'B'  1

Total wells Somerset = 44

Total of wells in Big Foot, Kyote and Somerset fields = 135

Oil Operations.

      South  Texas Oil Company realized from the sale of its production for the
fiscal year ended  December  31, 2005, $53.03 per barrel of oil. Production was
calculated as 5,674 barrels from  the  Big  Foot  Field, 2,060 barrels from the
Kyote Field and 1,077 barrels from the Somerset Field for a total production of
8,811  barrels in 2005. As of the end of December 31,  2005,  South  Texas  Oil
Company  is  currently  producing  from  twenty-three wells in the Big Foot and
Kyote Fields, from a potential fifty-six wells  which  are  able  to be brought
back  online  through workovers, on a total of approximately 4,549 acres.  With
the purchase of  the  additional  694.1 acres on April 1, 2005, South Texas Oil
Company is currently only producing  from  twenty-seven wells, from a potential
ninety-two wells, on a total of approximately  5,244  acres  as of December 31,
2005.

Productive Wells and Acreage

       South  Texas  Oil  Company  conducts  its  oil  and gas exploration  and
production operations in southern Texas. At December 31,  2005, South Texas Oil
Company had interests in 135 wells located in Texas.

      All of South Texas Oil Company's Producing Properties  are  leased for an
indeterminate number of years, as long as production is maintained.  Therefore,
it is not possible to provide expiration dates of the Leases on which Producing
Properties are located.


                                      20

<PAGE>

       The  following  table sets forth, at December 31, 2005, by state,  South
Texas  Oil  Company's  producing  wells,  Developed  Acreage,  and  Undeveloped
Acreage, excluding service (injection and disposal) wells:

<TABLE>
<S>                                  <C>       <C>          <C>        <C>

             Productive Wells (1)    Developed Acreage   Undeveloped Acreage
(2)
              Gross   	Net         Gross     Net      Gross        Net

Texas         37  	37          1,350     1,350    3,893,69     3,893.69
              --  	--          -----     -----    --------     --------
Totals        37  	37          1,350     1,350    3,893,69     3,893.69

</TABLE>

      The following table  sets  forth,  at  December 31, 2004, by state, South
Texas  Oil  Company's  producing  wells,  Developed  Acreage,  and  Undeveloped
Acreage, excluding service (injection and disposal) wells:

<TABLE>
<S>                                  <C>       <C>          <C>        <C>
<C>           <C>
             Productive Wells (1)    Developed Acreage   Undeveloped Acreage
(2)
             Gross      Net         Gross       Net      Gross      Net

Texas         28  	28           910        910      3,639.59   3,639.59
              --  	--           ---        ---      --------   --------
Totals        28  	28           910        910      3,639.59   3,639.59

</TABLE>

      The following table sets forth, at December  31,  2003,  by  state, South
Texas  Oil  Company's  producing  wells,  Developed  Acreage,  and  Undeveloped
Acreage, excluding service (injection and disposal) wells:

<TABLE>
<S>                                  <C>       <C>          <C>        <C>
<C>           <C>
             Productive Wells (1)    Developed Acreage   Undeveloped Acreage
(2)
             Gross      Net         Gross       Net      Gross      Net

Texas         28  	28           910        910      3,639.59   3,639.59
              --  	--           ---        ---      --------   --------
Totals        28  	28           910        910      3,639.59   3,639.59

</TABLE>

      (1) The wells in Texas are oil wells.
      (2) "Undeveloped Acreage" includes leasehold  interests  on  which  wells
          have not been drilled or completed to the point that would permit the
          production of commercial quantities of natural gas and oil regardless
          of whether the leasehold interest is classified as containing  proved
          undeveloped reserves.

                                      21
<PAGE>

      The basic terms of the oil and gas leases held by South Texas Oil Company
as of December 31, 2004 are shown in the following table.

                 Gross           Annual                    Lease
                 Acres          Rental (1)              Expiration

      Texas     4,549.59       Held By Production           N/A
                --------
                4,549.59

      The basic terms of the oil and gas leases held by South Texas Oil Company
as of December 31, 2005 are shown in the following table.

                 Gross           Annual                    Lease
                 Acres          Rental (1)              Expiration

      Texas     5,243.685      Held By Production           N/A
                --------
                5,243.685

       (1)   Represents  South  Texas  Oil Company's share of the annual rental
payment.

       Leased acres Held By Production remain  in  force  so  long  as  oil  is
produced from the well on the particular lease. Leased acres which are not Held
By Production  require  annual  rental payments to maintain the lease until the
first to occur of the following the  expiration of the lease or the time oil is
produced from one or more wells drilled  on the lease acreage.  At the time oil
is produced from wells drilled on the leased acreage the lease is considered to
be Held By Production.   Although  some of  the  leases  do not contain  proved
developed reserves, they are still held  by  production  so  long  as  there is
production  within  a two year period.  All of South Texas Oil Company's leases
currently meet this requirement and no leases are currently  at  risk  of being
lost.

Production, Prices and Costs

      South  Texas  Oil  Company  is  not obligated  to  provide  a  fixed  and
determined quantity of oil or gas in the  future.  During the last three fiscal
years, South Texas Oil Company has not had, nor does it now have, any long-term
supply or similar agreement with any government or governmental authority.  The
following table sets forth South Texas Oil Company's net production of oil  and
gas,  average  sales  prices  and  average  production costs during the periods
presented:

                                      Year Ended December 31,
                               -------------------------------------
                               2005           2004              2003
                               ----           ----              ----
Production Data:
Production, Net - Oil (Bbls)  5,258           4,972             7,586
Gas (Mcf)                      0.00            0.00              0.00
Average sales price -
Oil (Bbls)                   $53.03          $39.36            $26.18
Gas (Mcf)                    $ 0.00          $ 0.00            $ 0.00

Average production
    costs per BOE
 (inclusive of taxes)        $27.16          $31.09            $12.12

Production Taxes             $ 2.76          $ 4.73            $ 2.36

                                      22
<PAGE>(cont)

Average production
   costs per BOE
(exclusive of taxes)         $24.40          $ 26.36            $9.76

      The components of production costs may  vary  substantially  among  wells
depending  on the methods of recovery employed and other factors, but generally
include severance taxes, administrative overhead, maintenance and repair, labor
and utilities.

ITEM 3.  LEGAL PROCEEDINGS.

      South  Texas  Oil  Company  is  from  time to time involved in litigation
incident to the conduct of its business.  Certain litigation with third parties
and present and former employees of South Texas  Oil  Company  is  routine  and
incidental,   such   litigation   can  result  in  large  monetary  awards  for
compensatory or punitive damages.

      South Texas Oil Company is not  a  party  to  any  pending material legal
proceeding.  To  the  knowledge  of  management,  no  federal, state  or  local
governmental  agency  is presently contemplating any proceeding  against  South
Texas Oil Company. To the  knowledge  of  management,  no  director,  executive
officer  or  affiliate  of  South  Texas  Oil  Company,  any owner of record or
beneficially of more than 5% of South Texas Oil Company's  common  stock  is  a
party  adverse to South Texas Oil Company or has a material interest adverse to
South Texas Oil Company in any proceeding.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 2005.

                                PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

South Texas  Oil  Company's  common  stock  is  traded  on the Over the Counter
Bulletin Board (OTCBB), under the symbol "STXX". The following table sets forth
the high and low bid quotations for the Common Stock for the periods indicated.

      Period                            High       Low

      Calendar Year 2004

      March 31, 2004                     0.30      0.11
      June 30, 2004                      0.30      0.12
      September 30, 2004                 0.51      0.18
      December 31, 2004                  0.51      0.18

      Calendar Year 2005

      March 31, 2005                     1.01      0.20
      June 30, 2005                      1.16      0.25
      September 30, 2005                 0.56      0.17
      December 31, 2005                  0.49      0.17


                                      23
<PAGE>

      These quotations were obtained from Commodity Systems,  Inc. (CSI) and do
not  necessarily  reflect  actual transactions, retail mark-ups, mark-downs  or
commissions. The transactions include inter-dealer transactions.

      These quotations reflect  inter  dealer  prices,  without retail mark-up,
markdown or commission, and may not necessarily represent  actual transactions.
These bid quotations have not been adjusted retroactively by any stock split.

Shareholders of Record and Outstanding Shares

      The  authorized  capital  stock  of South Texas Oil Company  consists  of
50,000,000 shares of common stock with a  par  value  of  $.001  and  5,000,000
shares of preferred stock at a par value of $.001.

    Common Stock. The holders of the common stock are entitled to one vote  per
share  on  each  matter submitted to a vote at any meeting of the shareholders.
Shares of common stock do not carry cumulative  voting  rights, and therefore a
majority of the shares of outstanding common stock will be  able  to  elect the
entire  Board of Directors, and if they do so, minority stockholders would  not
be  able to  elect   any   persons   to  the  Board  of  Directors. South Texas
Oil Company's By-laws provide that a majority  of  the  issued  and outstanding
shares  of  South Texas Oil Company shall constitute a quorum for shareholders'
meeting except  with  respect to certain matters for which a greater percentage
quorum  is  required by statute  or  South  Texas  Oil  Company's  Articles  of
Incorporation or By-laws.

    Shareholders  of  South  Texas  Oil  Company  have no pre-emptive rights to
acquire additional shares of common stock or other securities. The common stock
is not subject to redemption and carries no subscription or conversion rights.

    Preferred Stock.  As of December 31, 2005, there  were  no preferred shares
issued or outstanding. The Board  of Directors is authorized by the Articles of
Incorporation  to  prescribe by resolution  the  voting  powers,  designations,
preferences, limitations,  restrictions,  reactive  rights  and  distinguishing
designations of the preferred shares if issued.

Shares Eligible for Future Sale

As of December 31, 2005, South Texas Oil Company has issued 4,889,171 shares of
Common  Stock.   South  Texas  Oil Company has registered 9,130,003  shares  of
Common  Stock  for  resale,  all of  which  will  be  freely  tradable  without
restriction or further registration  under  the  Securities Act.  7,170,775  of
the  underlying  common shares that were registered  through  the  registration
statement  pertain  to  $450,000  in  Convertible   Debentures   issued to  the
Longview  Equity  Fund,  LP, $1,700,000  in convertible  debentures issued   to
the  Longview  Fund  LP,   and   $150,000   in convertible debentures issued to
the Longview International Equity Fund, LP.

This also includes the registration of warrants  to  issue  1,959,228 shares of
common  stock  with  an  exercise price of $0.574 per share. These  shares  are
related to the convertible debentures issued above.

The Shares offered for resale  by  our  Selling  Stockholders  are  issuable in
accordance with section 4(2) and  Rule  506 under the Securities Act  of  1933,
as amended (the "Securities Act"),




                                      24
<PAGE>

Recent Financing

On July 28, 2005, South Texas Oil Company entered into a subscription agreement
for  $2,300,000,  whereby South Texas Oil Company issued Convertible Debentures
to the following: 1)  $450,000 to the Longview Equity Fund LP, 2) $1,700,000 to
the Longview Fund LP.,  and  3)  $150,000  to the Longview International Equity
Fund, LP. The interest rate on these notes shall not be less than eight percent
(8%). The convertible notes are convertible  into  the  number of common shares
that would equal forty-five percent (45%) of the equity of  the  fully  diluted
shares of South Texas Oil Company.  At the time of the registration, on a fully
diluted  basis,  this  approximated  3,918,456  shares  at $.587 per share. The
subscription agreement executed required  South  Texas Oil  Company  to reserve
shares  at  175%  of  the   shares  estimated to be issued plus interest or  an
aggregate of 7,170,775 shares.  In conjunction   with   the  convertible notes,
warrants   were   issued   to  the  note holders that convert  into   1,959,228
common  shares with an exercise price of $.574 per share.

    There are no provisions  in  the  By-laws  or  Articles of Incorporation of
South Texas Oil Company which would delay, defer or prevent a change in control
of South Texas Oil Company.

    The stock transfer agent for South Texas Oil Company  is  Transfer  Online,
Inc.,  located  at  317  SW Alder Street, 2nd Floor, Portland, OR  97204. Their
telephone and fax numbers are respectively (503) 227-2950 and (503) 227-6874.

      As of March 30, 2006,  South  Texas  Oil  Company  had four million eight
hundred and eighty nine thousand one hundred and seventy-one (4,889,171) shares
of  its  $.001 par value common voting stock issued and outstanding  which  are
held by one  thousand  eight  hundred  and thirty three (1,833) shareholders of
record.  There are no preferred shares issued and outstanding.

Dividends

      South Texas Oil Company has not paid any dividends to date.  In addition,
it does not anticipate paying dividends  in  the  immediate foreseeable future.
The  Board  of Directors of South Texas Oil Company will  review  its  dividend
policy from time  to  time  to  determine  the  desirability and feasibility of
paying  dividends  after  giving  consideration to South  Texas  Oil  Company's
earnings, financial condition, capital  requirements  and such other factors as
the board may deem relevant.



                                      25
<PAGE>

Securities Authorized for Issuance under Equity Compensation Plans

      In March 2004, our board of directors adopted an executive stock option
plan, the Qualified Equity Incentive Stock Option Plan, which has not been
approved by our stockholders.

      The following table sets forth information as of December 31, 2005
regarding outstanding options granted under the plan to each of the directors
and executive officers

     Option/SAR Grants in Last Fiscal Year (Individual Grants):

                      Number of      Percent of total
                      Securities       Options/SARs
                      Underlying        granted to                  Exercise or
                     Options/SARS      employees in    base price   Expiration
    Name               Granted         fiscal year     ($/Share)        date
    -----            ------------   ----------------   ----------   -----------
Murray N. Conradie      150,000           18.2           $0.46        4/1/09
                        200,000           24.2           $0.50        4/1/14

Jason F. Griffith       100,000           12.1           $0.46        4/1/09
                        100,000           12.1           $0.50        4/1/14

Edward Shaw             100,000           12.1           $0.46       12/1/10
                        100,000           12.1           $0.50       12/1/15

Conrad Humbke            75,000           9.09           $0.46       11/2/09

Recent Sales of Unregistered Securities

      During the fiscal year ended December 31, 2005, South  Texas  Oil Company
issued  securities using the exceptions available under the Securities  Act  of
1933 including  unregistered  sales  made  pursuant  to  Section  4(2)  of  the
Securities Act of 1933 as follows:

      On December 27, 2005, 100,000 shares of restricted common stock valued at
$.17  per share were issued to Edward Shaw, our Chief Operating Officer as part
of his incentive package.

     This  transaction  was  exempt  from  the registration requirements of the
Securities Act of 1933, as amended, by virtue  of the exemptions provided under
section 4(2) was available because:

     -  The  transfer  or issuance did not involve  underwriters,  underwriting
        discounts or commissions;
     -  A restriction on transfer legend was placed on all certificates issued;
     -  The distributions  did not involve general solicitation or advertising;
	and,
     -  The distributions were made  only  to insiders, accredited investors or
        investors who were sophisticated enough  to  evaluate  the risks of the
        investment.  Each shareholder was given access to all information about
        our  business and the opportunity to ask questions and receive  answers
        about  our  business from our management prior to making any investment
        decision.

Issuer Repurchases

      We did not make  any  repurchases  of  our  equity  securities during the
quarter ending December 31, 2005.
                                      26
<PAGE>
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Introduction

      The following discussion and analysis should be read  in conjunction with
our  accompanying  financial  statements  and  the  notes  to  those  financial
statements  included elsewhere in this Annual Report. The following  discussion
includes forward-looking  statements  that  reflect  our  plans,  estimates and
beliefs.  Our  actual  results could differ materially from those discussed  in
these forward-looking statements.  Factors  that  could  cause or contribute to
such  differences  include, but are not limited to, those discussed  below  and
elsewhere in this Annual Report.

Overview

      South Texas Oil  Company  derives  its  revenues  from  its producing oil
properties.  These  properties  consist  of working interests in producing  oil
wells having proved reserves.  South Texas Oil Company's capital for investment
in producing oil properties has been provided  by  the  sale of common stock to
its shareholders.

Plan of Operation

(a)  Work-overs

 South  Texas  Oil Company intends to continue with its current  work-overs  of
existing wells over  the next 12 months by way of replacing any existing tubing
which has deteriorated  and/or  pumps  that  have failed on our existing wells.
The estimated cost for this rework program is  between  $1,500  to  $2,500  per
well.

(b) In-field Drilling

 South  Texas  Oil  Company's independently commissioned engineering report has
identified several potential low risk offset in-field drilling opportunities on
our leased acreage, which  are  classified  as proved undeveloped.  South Texas
Oil Company intends to drill at a minimum one  of  these  in-field wells within
the next 12 months.

       The  costs  for  the  drilling of an in-field well are estimated  to  be
$200,000 - $240,000 per new well based on the depth of the well.

 (c) Cash Requirements

      South Texas Oil Company  intends to meet its financial needs for the next
12 months from funds derived from  revenue  and  utilizing  the  recent funding
received.

 (d) Purchase of Additional Leases.

      South Texas Oil Company does not anticipate acquiring additional  oil  or
gas  properties over the next 12 months.  However, South Texas Oil Company will
continue  to  evaluate  any  properties  as  the  opportunities  arise  and the
potential of the property to produce oil and gas.

 (e) Expected Significant Changes in the Number of Employees

      South  Texas  Oil  Company  does not expect any significant change in the
number  of  employees  over  the  next  12  months  of  operations.   As  noted
previously, South Texas Oil Company currently  coordinates  all operations, oil
field  maintenance  and  supervision  activities  using  part  time  employees,
consultants and contract labor.
                                         27
<PAGE>

Managements Discussion and Analysis of Financial Condition and Results of
Operations

      For the calendar year, ended December 31, 2005, South Texas  Oil  Company
has  generated  $292,143  in  revenues and generated a loss of $911,457 for the
same period.  This compares to  $195,654 in revenues and a loss of $183,196 for
the  calendar year ended December  31,  2004.   For  the  calendar  year  ended
December  31,  2005,  South Texas Oil Company has increased its working capital
position by $1,939,927  from  a  negative $306,457 as of December 31, 2004 to a
positive $1,633,470 as at December 31, 2005.

      Analysis of the calendar year  ended  December  31,  2005 compared to the
calendar year ended December 31, 2004.

      Net  loss  was  $911,457  for the calendar year ended December  31,  2005
compared to a loss of $183,196 for  the  calendar year ended December 31, 2004,
an increased loss of $803,431.

      Total  expenses  increased to $1,203,601  for  the  calendar  year  ended
December 31, 2005 from $378,982  for the calendar year ended December 31, 2004,
an increase of $824,619. The increase in expenses was due to the following: (1)
having two employees on full time  payroll;  and  (2) the costs associated with
the recent funding.

      Depreciation expense for the calendar year ended  December  31,  2005 was
$111,072 compared to $98,886 for the calendar year ended December 31, 2004,  an
increase  of  $12,186.  The  increase  resulted  from  the  increase  in assets
purchased during the year.

      Interest  expense  for  the  calendar  year  ended  December 31, 2005 was
$550,249 compared to $19,584 for the calendar year ended December  31,  2004 an
increase  of  $530,665,  with  the increase due to costs associated with recent
funding and interest expense on the new debt.

Liquidity and Capital Resources

Liquidity

      Management believes that its  working interest revenues from the existing
wells will meet its minimum general and  administrative  cost  requirements and
provide the basic liquidity South Texas Oil Company needs to operate at current
levels  over  the next twelve months.  South Texas Oil Company entered  into  a
funding agreement  on  July  28,  2004  for  $2,300,000 which has been received
through the issuance of convertible notes. This  should  provide  the necessary
capital for our needs over the next twelve months.

      On  December  31,  2005  South Texas Oil Company had assets of $3,738,196
compared to $1,565,014 on December  31, 2004, an increase of $2,173,182.  South
Texas Oil Company had a total stockholders'  equity  of  $1,095,252 on December
31, 2005 compared to $217,618 on December 31, 2004, an increase  in  equity  of
$877,634.

      All  assets  are  booked  at  historical  purchase  price and there is no
variance between book value and the purchase price.

      On December 31, 2005 South Texas Oil Company had Property  and  Equipment
of  $1,832,164  compared to $1,539,089 on December 31, 2004, or an increase  of
$293,075 which is  a  result  of  the  depreciation  of $111,072 along with the
purchase of $182,003 of property and equipment.
                                         28
<PAGE>
      For the calendar year ended December 31, 2005, South  Texas  Oil  Company
has  increased  its  working  capital  position  by  $1,939,927 from a negative
$306,457 as of December 31, 2004 to a positive $1,633,470  as  of  December 31,
2005.

Capital Resources

       The  Registrant's  capital resources are comprised primarily of  private
investors, including members of management, who are either existing contacts of
the Registrant's management  or  who  come  to  the attention of the Registrant
through   brokers,  financial  institutions  and  other   intermediaries.   The
Registrant's  access  to  capital  is  always  dependent upon general financial
market conditions, especially those which pertain to venture capital situations
such as oil and gas exploration companies. The Registrant's  capital  resources
are not anticipated to change materially in 2006.

Material Commitments for Capital Expenditures.

South  Texas  Oil Company has made no material commitments for future projects.
Each drilling and/or rework project is stand-alone and although South Texas Oil
Company is in constant discussion with prospective working interest partners on
each potential  project, commitments for the actual drilling or rework and site
preparation operations  are  not  made  for  each project until South Texas Oil
Company has received the funds from its working interest partners and the funds
for its portion of the working interest are in  place.  The  leases South Texas
Oil  Company  holds  are  "held  by production". If the leased property  has  a
producing well that is providing royalty  payments  to  the  leaseholders, then
annual  lease payments and renewals are not required. South Texas  Oil  Company
strives to  accomplish  the drilling or rework planned for each property within
the year first leased. When that does not occur however, management reviews the
potential of each property  as  its  leases  come  up  for  renewal and makes a
decision  whether  or  not  to  renew  each lease in light of South  Texas  Oil
Company's business planning at that time.

      The Registrant has no agreements with management, investors, shareholders
or anyone else respecting additional financing  at  this  time.  Because of the
nature of the Registrant's business, there are no trends in the nature  of  its
capital resources which could be considered predictable.

Inflation

      South Texas Oil Company's results of operations have not been affected by
inflation and management does not expect inflation to have a material impact on
its operations in the future.

Off-Balance Sheet Arrangements.

      South  Texas  Oil  Company  currently does not have any off-balance sheet
arrangements.

Recent Accounting Pronouncements

    In  November  2002,  the  FASB  issued  Interpretation No. 45, "Guarantor's
Accounting  and  Disclosure  Requirements  for Guarantees,  including  Indirect
Guarantees of Indebtedness of Others" ("Interpretation No. 45"). Interpretation
No. 45 elaborates on the existing disclosure  requirements for most guarantees,
including loan guarantees such as standby letters  of credit. It also clarifies
that at the time a company issues a guarantee, the company  must  recognize  an
initial liability for the fair market value of the obligations it assumes under
that  guarantee  and  must  disclose that information in its interim and annual
financial statements. The initial  recognition  and  measurement  provisions of
Interpretation
                                      29
<PAGE>(cont)

No.  45  apply  on  a prospective basis to guarantees issued or modified  after
December 31, 2002.  Interpretation  No.  45  did  not  have  an  effect  on the
financial statements.

    In January 2003, the FASB issued  Interpretation  No. 46, "Consolidation of
Variable  Interest  Entities" ("Interpretation No. 46"),  that   clarifies  the
application of Accounting  Research  Bulletin  No.  51, "Consolidated Financial
Statements,"  to certain entities in which equity investors  do  not  have  the
characteristics  of  a controlling financial interest or do not have sufficient
equity at risk for the  entity  to  finance  its  activities without additional
subordinated  financial  support from other parties.  Interpretation No. 46  is
applicable immediately for variable interest entities created after January 31,
2003.  For variable interest  entities  created  prior to January 31, 2003, the
provisions of Interpretation No.  46 are applicable no later than July 1, 2003.
Interpretation No. 46 did not have an effect on the  financial  statements.  In
December  2002,  the  FASB  issued  SFAS No. 148, "Accounting  for  Stock-Based
Compensation -- Transition and Disclosure,  an  amendment of FASB Statement No.
123"  ("SFAS  148").  This  Statement amends SFAS 123  to  provide  alternative
methods of transition for a voluntary  change  to  the  fair  value  method  of
accounting for stock-based employee compensation.  In addition, SFAS 148 amends
the    disclosure  requirements of SFAS 123 to require prominent disclosures in
both  annual and interim  financial  statements.   Certain  of  the  disclosure
modifications  are required for fiscal years ending after December 15, 2002 and
are included in the notes to these consolidated financial statements.

    Statement of  Financial  Accounting  Standards SFAS No.  149, "Amendment of
Statement 133 on Derivative Instruments and  Hedging Activities", SFAS No. 150,
"Accounting  for Certain Financial Instruments  with  Characteristics  of  both
Liabilities and  Equity",  were recently issued.  SFAS No, 149, and 150 have no
current  applicability  to  South  Texas Oil Company or  their  effect  on  the
financial statements would not have been significant.

    In  May  2005, the FASB issued SFAS  154,  "Accounting  Changes  and  Error
Corrections -  a  Replacement  of APB Opinion No. 20 and FASB Statement No. 3".
SFAS  154  requires  retrospective   application   to  prior  period  financial
statements of changes in accounting principle, unless  it  is  impracticable to
determine  either the period-specific effects or the cumulative effect  of  the
change. SFAS  154  also  redefines  "restatement" as the revising of previously
issued  financial  statements to reflect  the  correction  of  an  error.  This
statement is effective for accounting changes and corrections of errors made in
fiscal years beginning after  December  15,  2005. South Texas Oil Company does
not  believe that  the  adoption  of  SFAS  154   will   have   a   significant
impact  on  the consolidated financial statements.

Subsequent Events

       Effective  December  1,  2005  Mr.  Edward  Shaw  was appointed as Chief
Operating Officer of South Texas Oil Company to head field operations in Texas.
Mr. Shaw is qualified as both a mechanical and electrical engineer with over 10
years  of  experience in Saudi Arabia and has spent the last  4  years  in  New
Zealand where he was researching and developing methods of monitoring oil wells
to optimize  production,  including  using  existing  products  integrated with
emerging telemetry technologies.

       An  employment  agreement  was  entered into with Edward Shaw  effective
December 1, 2005. The initial term of employment  is three (3) years. We agreed
to  pay  Mr. Shaw a base salary of $48,000 per annum  for  the  first  year  of
employment,  increasing  based  on  performance  of South Texas Oil Company. In
addition to the cash
                                      30
<PAGE><cont>

compensation  earned  by Mr. Shaw, we granted Mr. Shaw  100,000  shares  as  an
employment and relocation incentive in addition to an option to purchase shares
of our common stock according to the Executive Stock Option Plan. Mr. Shaw will
also be provided with employee  benefits,  fringe benefits and perquisites on a
basis no less favorable than such benefits and  perquisites are provided by the
Company from time to time to the Company's other senior executives.

       Effective  February  7,  2006,  Jason Griffith  resigned  as  the  Chief
Financial Officer and member of the Board  of Directors of the Company to focus
on the development of his Accounting practice.  He  will  continue to offer his
services as an advisor and consultant to the Company as needed. In the interim,
Mr.  Conradie, President and CEO of South Texas Oil Company  will  additionally
assume  the  position of Principal Financial Officer.  Mr. Griffith has not had
any disagreements  with management or the company on any matter relating to the
company's operations, policies or practices.

       On February 6,  2006, there was a special meeting of the majority of the
Board of Directors in which  the  Board approved the appointment of Edward Shaw
as a Board Member of the Company to  replace  Mr. Griffith on the effectiveness
of his resignation.

       Effective March 1, 2006, the company has  closed  the San Antonio office
located at 900 NE Loop 410, Suite E121, San Antonio, TX and  relocated  to 2881
CR 2880, Big Foot, TX and pays the same monthly rental as before.

Safe Harbor

      The  discussions of the results of operations and financial condition  of
South Texas  Oil  Company  should  be  read  in  conjunction with the financial
statements and notes pertaining to them that appear  elsewhere in this Form 10-
KSB.  Statements made in this Form 10-KSB that are not  historical  or  current
facts are  "forward-looking  statements"  made  pursuant  to  the  safe  harbor
provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section
21E  of  the  Securities  Exchange  Act  of 1934. These statements often can be
identified  by  the use of terms such as "may,"  "will,"  "expect,"  "believe,"
"anticipate," "estimate," "approximate" or "continue," or the negative thereof.
South Texas Oil Company intends that such forward-looking statements be subject
to the safe harbors  for  such  statements.  South  Texas Oil Company wishes to
caution  readers  not  to  place  undue  reliance  on any such  forward-looking
statements,  which  speak  only  as  of  the  date  made.  Any  forward-looking
statements  represent management's best judgment as to what may  occur  in  the
future. However, forward-looking statements are subject to risks, uncertainties
and important  factors beyond the control of South Texas Oil Company that could
cause actual results and events to differ materially from historical results of
operations and events  and  those  presently  anticipated  or  projected. These
factors include adverse economic conditions, highly speculative  nature  of oil
and  gas exploration and development, risks of foreign operation, entry of  new
and stronger  competitors, inadequate capital and unexpected costs. South Texas
Oil Company disclaims any obligation subsequently to revise any forward-looking
statements to reflect  events or circumstances after the date of such statement
or to reflect the occurrence of anticipated or unanticipated events.



                                      31
<PAGE>




ITEM 7.  FINANCIAL STATEMENTS.


                           SOUTH TEXAS OIL COMPANY

                            FINANCIAL STATEMENTS
                            --------------------
                              December 31, 2005
                              December 31, 2004














































                                      F-1
<PAGE>

                             TABLE OF CONTENTS
                             -----------------

                                                                    PAGE
                                                                    ----

INDEPENDENT AUDITORS' REPORT:

     Independent Auditors Report - 2005                             F-3


FINANCIAL STATEMENTS:

     Balance Sheets                                                 F-5

     Statements of Operations                                       F-6

     Statement of Changes in Stockholders' Equity                   F-7

     Statements of Cash Flows                                       F-8


NOTES TO FINANCIAL STATEMENTS:                                      F-9


SUPPLEMENTARY INFORMATION:

     Oil and Gas Producing Activities                               F-17





                                      F-2
<PAGE>


Larry O'Donnell, CPA, P.C.
Telephone (303)745-4545
2228 South Fraser Street Unit 1
Aurora, Colorado    80014


            Report of Independent Registered Public Accounting Firm

To the Board of Directors
South Texas Oil Company formerly Nutek Oil, Inc.
Las Vegas, Nevada


I have audited the accompanying  balance  sheets  of  South  Texas  Oil Company
formerly  Nutek  Oil,  Inc., a Nevada corporation, as of December 31, 2005  and
2004, and the related statements  of loss, changes in stockholders' equity, and
cash  flows  for  the year then ended.   These  financial  statements  are  the
responsibility of the Company's management.  My responsibility is to express an
opinion on these financial statements based on my audits.

I conducted my audits  in  accordance  with  standards  of  the  Public Company
Accounting  Oversight  Board (United States).  Those standards require  that  I
plan and perform the audit  to  obtain  reasonable  assurance about whether the
financial  statements  are free of material misstatement.   An  audit  includes
examining, on a test basis,  evidence supporting the amounts and disclosures in
the financial statements.  An  audit  also  includes  assessing  the accounting
principles  used  and  significant  estimates  made  by management, as well  as
evaluating the overall financial statement presentation.   I  believe  that  my
audits provide a reasonable basis for my opinion.

In  my  opinion,  the financial statements referred to above present fairly, in
all material respects,  the  financial  position  of  South  Texas  Oil Company
formerly Nutek Oil, Inc., as of December 31, 2005 and 2004, and the results  of
its  operations  and  cash  flows  for  the years then ended in conformity with
accounting principles generally accepted in the United States of America.


Larry O'Donnell, CPA, P.C.
March 15, 2006



                                      F-3




<TABLE>
<CAPTION>



                           SOUTH TEXAS OIL COMPANY
                                BALANCE SHEETS
                                     AS OF
                    December 31, 2005 and December 31, 2004




					12/31/2005	12/31/2004
					------------	-----------
<S>						<C>		<C>

Current Assets:
Cash and cash equivalents	 	$  1,874,862 	$     9,944
Accounts receivable	 		      26,670 	     15,981
Prepaid expenses	 		       3,150 	 	  -
					------------	-----------
Total current assets	 		   1,904,682 	     25,925

Property and Equipment, net of
   accumulated depreciation	 	   1,832,164 	  1,539,089


Deposits	 			       1,350 	 	  -
					------------	-----------
Total Assets	 			$  3,738,196 	$ 1,565,014
					============	===========
Current Liabilities:
Accounts payable	 		$     13,026 	$    52,164
Related party accrued interest	 		   - 	     11,500
Accrued interest	 		      96,268 	 	  -
Line of credit	 				   - 	     72,573
Related party payable	 			   - 	     73,850
Accrued payroll liabilities	 	      56,052 	      2,295
Other short term loans	 		      70,000 	 	  -
Related party current portion of
  long-term debt	 		      35,866 	    120,000
					------------	-----------
Total current liabilities	 	     271,212 	    332,382
					------------	-----------
Long term loans				   2,300,000 	 	  -

Related party L.T. debt,
  net of current portion	 	      71,732 	  1,015,014
					------------	-----------
Total Liabilties	 		   2,642,944 	  1,347,396
					------------	-----------
Stockholders' Equity:
Common stock, $0.001 par value,
  50,000,000 shares authorized;
  4,893,677 and 3,061,474 shares
  issued and outstanding at December
  31, 2005 and 2004, respectively	       4,902 	      3,061
Additional paid-in capital	 	   2,400,273 	    730,272
Subscribed Stock			 	  (0)	   (117,250)
Accumulated deficit			  (1,309,923)	   (398,466)
					------------	-----------
Total stockholders' equity		   1,095,252 	    217,618
					------------	-----------
Total Liabilities and
  Stockholders' Equity	 		$  3,738,196    $ 1,565,014
					============    ===========

	See accompanying notes to financial statements.

</TABLE>
				F-4

<PAGE>

<TABLE>
<CAPTION>


                            SOUTH TEXAS OIL COMPANY
                            STATEMENT OF OPERATIONS
                                FOR YEARS ENDED
                    December 31, 2005 and December 31, 2004



				    2005	     2004
				-----------	 -----------
<S>					<C>		<C>


Revenue
Oil and gas sales	 	$   278,817 	 $   195,654
Interest income	 		     13,326	 	  82
Other Income	 			  -	    	  50
				-----------	 -----------
     Total Revenues	 	    292,143 	     195,786

Expenses

General and administrative	    379,134   	      40,581
Production costs	 	    132,033 	     154,570
				-----------	 -----------
Depreciation, depletion,
  and amortization	 	    111,072	      98,886
Interest expense	 	    550,249 	      19,584
Plugging of wells	 	     14,775 	      41,858
Production taxes	 	     16,338 	      23,503
				-----------	 -----------
     Total expenses	 	  1,203,601 	     378,982
Income before provision for
  income taxes			   (911,457)	    (183,196)
Provision for income taxes		  -   	 	   -
				-----------	 -----------
Net Loss			$  (911,457)	 $  (183,196)
				===========	 ===========
Basic weighted average number
of common shares outstanding	  4,640,474 	   2,992,954
				===========	 ===========
Diluted weighted average number
of common shares outstanding	  7,901,491 	 	   -
				===========	 ===========
Basic Net Loss Per Share	$    (0.196)	 $    (0.061)
				===========	 ===========


	See accompanying notes to financial statements.

</TABLE>
				F-5

<PAGE>

<TABLE>
<CAPTION>

                             			   SOUTH TEXAS OIL COMPANY
                			 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                			FOR YEARS ENDED
                    			   December 31, 2005 and December 31, 2004


				Common		Common		Additional
				Stock		Stock		Paid-in		Subscribed	Income		Total
				Shares		Amount		Capital		Stock		Deficit		Equity
				---------	--------	-----------	----------	-----------	-----------
<S>				<C>			<C>			<C>			<C>		<C>

Balance at December 31, 2003	5,157,742 	$  5,158 	$ 1,353,908 	$	 -   	$  (215,270)	  1,143,796
				=========	========	===========	==========	===========	===========
Balances at
December 31, 2003		5,157,742 	   5,158 	  1,353,908 		 -   	   (215,270)	  1,143,796

Repurchase and put into
Subscribed Stock		 	-   	       -   		  -   	  (272,610)		  -   	   (272,610)

Sale of Stock		 	   25,000 	      25 	      4,975 		 -   		  -   	      5,000

Repurchase and retired shares  (2,325,588)	  (2,326)	   (648,839)		 -   		  -   	   (651,165)

Issued for services		  204,320 	     204 	     20,228 		 -   		  -   	     20,432

Payment received for
subscribed stock		 	-   	       -   		  -   	    62,500 		  -   	     62,500

Reduction in subscribed stock		-   	       -   		  -   	    92,860 		  -   	     92,860

Net Profit (Loss) for Year
Ended December 31, 2004		 	-   	       -   		  -   		 -   	   (183,196)	   (183,196)
				---------	--------	-----------	----------	-----------	-----------
Balance at December 31, 2004	3,061,474 	$  3,061 	$   730,272 	$ (117,250)	$  (398,466)	$   217,618
				=========	========	===========	==========	===========	===========
Final adjustment on Nutek
dividend issuance		    6,740 	       7 	       (491)					       (484)

Payment received for
subscribed stock		 	-   	       -   		  -   	   117,250 		  -   	    117,250

Issued for settlement of debt	  957,349 	     957 	  1,002,874 		 -   		  -   	  1,003,831

Purchase of new leases		  512,377 	     512 	    153,201 		 -   		  -   	    153,713

Purchase of option for
additional drilling benefits	   20,000 	      20 	      4,980 		 -   		  -   	      5,000

Issued for services -
Dave Cummings			  157,959 	     166 	     31,889 		 -   		  -   	     32,055

Sale of common stock		  177,778 	     178 	     39,822 		 -   		  -   	     40,000

Debt discount from convertible,
fully expensed						 	    113,241 					    113,241

Beneficial conversion feature
from warrants, fully expensed					    142,032 					    142,032

Debt discount from convertible,
fully expensed						 	     80,154 					     80,154

Beneficial conversion feature
from warrants, fully expensed					    102,300 					    102,300

Net Profit (Loss) for Year
Ended December 31, 2005		 	-   	       -   		  -   		 -   	   (911,457)	   (911,457)
				---------	--------	-----------	----------	-----------	-----------
Balance at December 31, 2005	4,893,677 	$  4,902 	$ 2,400,273 	$	(0)	$(1,309,923)	$ 1,095,252
				=========	========	===========	==========	===========	===========


					See accompanying notes to financial statements.


</TABLE>
				F-6

<PAGE>



<TABLE>
<CAPTION>


                            SOUTH TEXAS OIL COMPANY
                            STATEMENT OF CASH FLOWS
                                FOR YEARS ENDED
                    December 31, 2005 and December 31, 2004



							12 months ended		12 months ended
							    12/31/05		    12/31/04
							---------------		---------------
<S>							<C>			<C>

Cash Flows from Operating Activities:
Net loss					 	$      (911,457)	$      (183,196)

Stock issued for services and purchases		 		 37,055 	 	 20,433
Non cash financing costs related to funding	 		437,727
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization			 		111,072 	 	 98,886
(Increase) decrease in accounts receivable	 		(10,689)	 	  1,772
Increase in prepaid expenses and deposits	 		 (4,500)	 	  3,775
Increase in related party accrued interest	 		(11,500)	 	  5,083
Increase in accrued interest	 96,268
Increase (decrease) in related party payable	 	       (295,706)	 	 73,850
Increase (decrease) in payroll liabilities	 		 53,757 		  2,295
Increase (decrease) in accounts payable	 			(39,138)		 43,408
							---------------		---------------
Net cash provided (used) by operating activities	       (537,112)	 	 66,306
							---------------		---------------
Cash Flows from Investing Activities:
Purchase of property and equipment			       (111,502)	 	(39,615)
							---------------		---------------
Cash Flows from Financing Activities:
Increase in loans payable				      2,263,563
Increase in related party notes payable			 	 50,036 		 89,979
Increase in subscribed stock				 	117,250 	       (117,250)
Increase in line of credit				 	 (1,834)		   (352)
Issuance of stock					 	   (484)		      -
Sale of common stock					 	 40,000 		  5,000
							---------------		---------------
Net cash provided by financing activities		      2,468,531 		(22,623)
							---------------		---------------
Net Increase in Cash					      1,819,918	 	 	  4,068

Balance, Beginning					 	 54,944 		 50,876
							---------------		---------------
Balance, Ending						$     1,874,862 	$	 54,944
							===============		===============
Interest Paid						$	 81,222 	$	 10,883
							===============		===============
Taxes Paid						$	      - 	$	      -
							===============		===============
Summary of Non Cash Items
Purchase of leases for note from seller			$	138,933
							===============

			See accompanying notes to financial statements.


</TABLE>

				F-7

<PAGE>


                            SOUTH TEXAS OIL COMPANY
                         NOTES TO FINANCIAL STATEMENTS


NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY

Nutek Oil, Inc. was incorporated on December  3,  1998.   The company is in the
oil producing business in the United States of America.  The  Company purchased
selected  equipment  and  assets  from  Clipper  Operating  Company  and  began
operations as a separate company during 2001.

The  company  changed  its  name from Nutek Oil to South Texas Oil on April  1,
2005.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist  of highly liquid investments with maturities
of three months or less when purchased.

USE OF ESTIMATES
The preparation of financial statements  in  conformity with generally accepted
accounting principles requires that management  make  estimates and assumptions
which affect the reported amounts of assets and liabilities  as  of the date of
the  financial  statements  and revenues and expenses for the period  reported.
Actual  results  may  differ  from  these  estimates.   The  estimates  include
amortization and depreciation of  capitalized  costs  of  oil wells and related
equipment.  Management emphasizes that amortization and depreciation  estimates
are  inherently  imprecise.  Actual results could materially differ from  these
estimates.

DIVIDEND POLICY
The Company has not yet adopted any policy regarding payment of dividends.

COMPREHENSIVE INCOME
Statements of Financial  Accounting  Standards No. 130, Reporting Comprehensive
Income (SFAS 130), requires that total  comprehensive income be reported in the
financial statements.  The Company does not  have  any  items  considered to be
other comprehensive income for the three months ended December 31, 2004.

FIXED ASSETS
The Company follows the "successful efforts" method of accounting for its costs
of  acquisition, exploration and development of oil properties.   Fixed  assets
are stated  at  cost.   Expenditures  that  materially increase the life of the
assets  are  capitalized.  Ordinary maintenance  and  repairs  are  charged  to
expense as incurred.   When  assets are sold or otherwise disposed of, the cost
and the related accumulated depreciation  and amortization are removed from the
accounts and any resulting gain or loss is  recognized  at that time.  Although
generally  accepted  accounting  principles  (GAAP)  requires  amortization  of
drilling  equipment  based  on the units-of-production-method,  management  has
determined that since reserve  studies  are  not  performed on a regular basis,
that  it would be appropriate to amortize this equipment  over  a  twenty  year
period.   Depreciation  is  computed  primarily on the straight-line method for
financial statements purposes over the following estimated useful lives:






                                      F-8
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FIXED ASSETS (continued)

           Office equipment             5 years
           Drilling equipment           20 years
           Well maintenance and workover20 years
           Equipment and machinery      20 years

All assets are booked at historical purchase  price  and  there  is no variance
between book value and the purchase price.

EARNINGS PER SHARE
Basic  earnings  per  share  are computed using the weighted average number  of
shares of common stock outstanding  for  the period end.  The net income (loss)
for  the  period  end  is  divided by the weighted  average  number  of  shares
outstanding for that period to arrive at earnings per share.

REVENUE RECOGNITION
Revenues from the sale of oil are recorded using the sales method.

CONCENTRATIONS OF CREDIT RISK
Credit risk represents the accounting  loss  that  would  be  recognized at the
reporting date if counter parties failed completely to perform  as  contracted.
Concentrations of credit risk (whether on or off balance sheet) that arise from
financial  instruments  exist  for groups of customers or counter parties  when
they have similar economic characteristics  that  would  cause their ability to
meet contractual obligations to be similarly affected by changes in economic or
other conditions described below.

The Company operates in one segment, the oil and gas industry.   The  Company's
customers   are  located  within  the  United  States  of  America.   Financial
instruments that  subject the Company to credit risk consist principally of oil
and gas sales which  are  based  on  a short-term purchase contracts from Shell
Trading (US) Company and various other  gatherers  in  the  area,  with related
accounts receivable subject to credit risk.

During  the  year  ended December 31, 2005 and 2004 Shell Trading (US)  Company
accounted for 82% and  100%,  respectively,  of  the  Company's  oil  revenues.
Management  does  not  believe  the  loss  of  Shell Trading (US) Company would
materially affect the ability to sell the oil.

INCOME TAXES
The Company experienced losses during the previous  fiscal  tax  year reported.
The Company will review its need for a provision for federal income  tax  after
each operating quarter.  The Company has adopted FASB No. 109, as discussed  in
Note 7.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

FASB  Interpretation  46R  "Consolidation  of  Variable  Interest Entities", as
revised  (FIN  46R),  requires that variable interest entities  created  before
December 31, 2003 be consolidated  during  the  first  interim period beginning
after December 15, 2003.  Management does not believe this  pronouncement  will
have a material effect on the financial statements of the company.

In  January,  2004 the Financial Accounting Standards Board issued Statement of
Financial Accounting  Standards  No. 132 (revised 2003) "Employers' Disclosures
about  Pensions  and  Other Postretirement  Benefits",  an  amendment  of  FASB
Statements No. 87, 88,  and  106.  The Statement revises employers' disclosures
about pension plans
                                      F-9
<PAGE>
(cont.)
and other postretirement benefit plans.  The  statement  retains the disclosure
requirements  contained  in  FASB  Statement  No. 132, which it  replaces,  and
requires  additional  annual disclosures about the  assets,  obligations,  cash
flows, and net periodic benefit cost of defined benefit pension plans and other
defined benefit postretirement plans. Statement No. 132R requires us to provide
disclosures in interim  periods for pensions and other postretirement benefits.
Management does not believe  this  pronouncement will have a material effect on
the financial statements of the company.

In   November 2004, the   FASB   issued   SFAS   No. 151, "Inventory   Costs an
amendment of  ARB No. 43, Chapter 4."  This Statement clarifies the  accounting
for abnormal amounts  of  idle  facility  expense, freight, handling costs, and
wasted materials.    This Statement   is   effective    for   inventory   costs
incurred during fiscal  years beginning after June 15, 2005.   Management  does
not believe this pronouncement  will  have  a  material effect on the financial
statements of the company.

In December 2004, the FASB issued SFAS No. 152,  "Accounting  for  Real  Estate
Time-Sharing  Transactions  -  an  amendment of FASB Statements No. 66 and 67."
This Statement  references the financial  accounting and reporting guidance for
real   estate   time-sharing   transactions    that  is   provided   in   AICPA
Statement   of  Position  04-2,  "Accounting  for  Real   Estate   Time-Sharing
Transactions."   This  Statement  also  states that the guidance for incidental
operations and costs incurred to sell real  estate  projects  does not apply to
real  estate  time-sharing  transactions.   This  Statement  is  effective  for
financial statements for fiscal years beginning after June 15, 2005. Management
does  not  believe  this  pronouncement  will  have  a  material effect on  the
financial statements of the company.

In  December  2004, the  FASB  issued SFAS No. 153, "Exchanges  of  Nonmonetary
Assets - an amendment of APB Opinion  No.  29."  This  Statement eliminates the
exception   for   nonmonetary  exchanges  of  similar  productive   assets  and
replaces it with a  general   exception  for  exchanges of  nonmonetary  assets
that   do    not   have   commercial   substance.    A nonmonetary exchange has
commercial substance  if  the  future  cash flows of the entity are expected to
change  significantly as a result of the exchange. This Statement is  effective
for nonmonetary asset exchanges occurring  in  fiscal periods  beginning  after
June  15, 2005. The Company does not expect application of SFAS No. 153 to have
a material affect on its financial statements.

ACCOUNTS RECEIVABLE
Accounts receivable are stated at the amount management expects to collect from
outstanding  balances.   Management provides for probable uncollectible amounts
through a charge to earnings and a credit to a valuation allowance based on its
assessment of the current  status of individual accounts.  Balances outstanding
after management has used reasonable collection efforts are written off through
a charge to the valuation allowance  and a credit to trade accounts receivable.
Changes in the valuation allowance have  not  been  material  to  the financial
statements.

STOCK-BASED COMPENSATION
The  Company  applies  Accounting  Principles  Board  ("APB")  Opinion No.  25,
Accounting  for  Stock  Issued  to  Employees, and Related Interpretations,  in
accounting for stock options issued to  employees.   Under APB No. 25, employee
compensation  cost is recognized when estimated fair value  of  the  underlying
stock on date of  the  grant  exceeds  exercise price of the stock option.  For
stock options and warrants issued to non-employees,  the  Company  applies SFAS
No.   123,   Accounting   for  Stock-Based  Compensation,  which  requires  the
recognition of compensation  cost based upon the fair value of stock options at
the grant date using the Black-Scholes option pricing model.
                                     F-10
<PAGE>

The following table represents the effect on net loss and loss per share if the
Company had applied the fair value  based  method and recognition provisions of
Statement of Financial Accounting Standards  (SFAS)  No.  123,  "Accounting for
Stock-Based  Compensation", to stock-based employee compensation for  the  year
ended December 31, 2005 and 2004:
                                                  2005        2004
      Net loss, as reported                  $  (911,457) $   (183,196)
      Add:  Stock-based employee
           compensation expense
          included in reported loss,
          net of related tax effects                  --            --
      Deduct:  Total stock-based employee
          Compensation expense determined
          under fair value based methods
          for all awards, net of related
          tax effects                             (21,221)     (60,926)
                                             ------------  -----------

        Pro forma net loss                   $   (932,678) $  (244,122)

        Net loss per common share:
            Basic and fully diluted loss
             per share, as reported          $      (0.20) $     (0.06)
            Basic and fully diluted loss
                  per share, pro forma       $      (0.20) $     (0.08)

For the options  granted in 2005, the company used the exercise price of $0.46,
the fair market value  of  $0.49  per share at the end of the year, a 3.25 year
term, and 23% volatility to determine the value of the options.

For the options granted in 2004, the  company used the exercise price of $0.46,
the fair market value of $0.25 per share at the end of the year, a 5 year term,
and 100% volatility to determine the value of the options.

In December 2002, the FASB issued SFAS  No.  148,  "Accounting  for Stock-Based
Compensation-Transition and Disclosure". SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS
No.  148  to  determine  if it will adopt SFAS No. 123 to account for  employee
stock options using the fair  value method and, if so, when to begin transition
to that method.


NOTE 3 - OIL PROPERTIES

      Oil properties are made up of the following:

                                            2005      2004
           Leasehold Improvements	$  862,260  $  707,195
           Equipment and machinery   	 1,537,591   1,288,509
	   Accumulated depreciation    	  (567,687)   (456,615)
                                  	----------  ----------
                                  	$1,832,164  $1,539,089






                                     F-11
<PAGE>

NOTE 4 - LINE OF CREDIT

The  Company has a line of credit agreement with a financial institution  which
provides  maximum  borrowing  of  $75,000.   Interest  on  outstanding balances
accrues at prime plus 2% and is payable monthly.  The current  interest rate at
December  31,  2005  is  7.25%.   The  line must be renewed each year.   As  of
December 31, 2005, the balance on this line was $0.

NOTE 5 - RELATED PARTY TRANSACTIONS

The Company has a note payable to a shareholder, in the amount of $50,000 as of
December 31, 2005.  This obligation is due  in 2006 and accrues interest at 10%
annually.   The accrued interest on this loan  as  of  December  31,  2005  was
$13,417.  The  amounts  are  considered  short  term  due to the delinquency of
payments on the accrued interest.

The Company has a note payable to a shareholder, in the amount of $20,000 as of
December 31, 2005.  This obligation is due in 2006 and  accrues interest at 10%
annually.   The  accrued  interest  on this loan as of December  31,  2005  was
$4,500.  The  amounts are considered short  term  due  to  the  delinquency  of
payments on the accrued interest.

The Company has  an  outstanding note payable to Murray Conradie, the Company's
CEO, related to the purchase  of  wells  during  the 2nd quarter of 2005, as of
December 31, 2005 for $68,133. This note is paid only  from  production  of the
related wells.

The  Company  has  an outstanding note payable to Jason Griffith, the Company's
CFO, related to the  purchase  of  wells  during the 2nd quarter of 2005, as of
December 31, 2005 for $34,066.  This note is  paid  only from production of the
related wells.


NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

As  of December 31, 2005, the company has accrued payroll  liabilities  due  of
$56,052.

As of  December  31,  2005, the company has accounts payable balance of $13,026
and accrued interest of $96,268.

NOTE 7 - CONVERTIBLE DEBTS AND WARRANTS

On  July  28,  2005,  the  Company   entered  into  a  funding  agreement  from
institutional and accredited investors with gross proceeds of $2,300,000, to be
received  in two traunches.  The first  traunch  of  $1,300,000  received  upon
execution of  the agreement and the remaining $1,000,000 within five days after
a to be filed registration  statement  becomes  effective, or sooner if certain
milestones are achieved. The remaining $1,000,000  was received on November 10,
2005  as all conditions of the funding agreement had  been  met  including  the
effectiveness of the registration statement.

The funding  consists of convertible securities which shall convert into forty-
five percent (45%)  equity  of  the  fully  diluted  shares  of South Texas Oil
Company if both traunches are received.

South  Texas  Oil  will  use the net proceeds of the first traunch  to  perform
workovers on existing wells,  drill  two  new  wells,  capital expenditures and
working  capital. The second traunch will be used to drill  an  additional  4-5
wells, if the milestones for the first traunch are met.
                                     F-12
<PAGE>

Additionally,  the  Company  entered into Lock-Up Agreements with the following
board members of the Company;  Murray  Conradie  and  Jason  Griffith.  In this
Agreement,  these  board members agreed not to sell any shares in the Company's
Common Stock owned by  them  for  a  period of 12 months, or until such time as
certain milestones have been met.

For purposes of the year ended December 31, 2005, the company recorded the loan
of $2,300,000 as well as the interest accrual of $78,405.

The  company  initially  determined  the  relative   fair   value  between  the
convertible debt and the detached warrants. After allocating  a  portion of the
proceeds  to  the  detached  warrants  (based  on  relative  fair values),  the
convertible  debt  and  the detached warrants were recorded. The  company  then
evaluated whether the embedded conversion option within the debt instrument was
beneficial (had an intrinsic  value)  to  the  holder. The effective conversion
price (that is, the allocated proceeds divided by  the  number  of shares to be
received  on conversion) based on the proceeds was determined. The  total  debt
discount immediately after the initial accounting was performed, as well as the
beneficial conversion feature were expensed on the income statement.

The debt discount related to the debt was $193,395 and was expensed at issuance
of each traunch  of  the  debt.  The  expense  was  to interest expense and the
offsetting entry was to additional paid in capital.

The beneficial conversion feature related to the warrants  was $244,332 and was
also  expensed  at  the issuance. The expense was to interest expense  and  the
offsetting entry was  to  additional  paid  in  capital.  The latter related to
1,959,228 and 851,789 warrants, with a calculated relative fair value, based on
Black-Scholes,  of  $126,794  and 89,068, respectively.  For the  Black-Scholes
model, the company assumed a risk  free  rate  of 3.50%, a dividend rate of 0%,
the respective stock price and exercise price for  each group of warrants and a
volatility rate based on the trailing 18-month historical prices.

NOTE 8 - STOCKHOLDERS' EQUITY

During the year ended December 31, 2005, the Company  sold  177,778  shares  of
common stock for $40,000.

During  the  year ended December 31, 2005, the Company issued 157,959 shares of
common stock for services rendered valued at $32,055.

During the year  ended  December 31, 2005, the Company issued 512,377 shares of
common stock for the purchase  of additional interest in oil leases, as well as
issuing 957,249 to settle debts listed on the books at $1,003,831.

The company also issued 20,000 shares  of  stock,  valued at $5,000, to royalty
owners  of  certain leases in relation to an agreement  related  to  additional
royalty interest incentives if the company drills on certain leases.

During the year  ended December 31, 2005, 2,325,588 shares of common stock were
repurchased and retired  at  a  value  of  $651,165,  and  subscribed stock was
recorded for $272,610.

6,740  shares were issued as a final adjustment to the original  issuance  from
the prior  parent  company's  spin out, Nutek Inc.  Those shares were issued to
unrelated parties who had not received their initial share distribution.

As of December 31, 2005, there were 4,893,677 shares issued and outstanding.
                                     F-13
<PAGE>

NOTE 9 - INCOME TAXES

Deferred income taxes result from  timing  differences  in  the  recognition of
expense  for  tax  and  financial  statement purposes.  Statements of Financial
Accounting Standards No. 109 "Accounting for Income Taxes", (SFAS 109) requires
deferred tax liabilities or assets at  the  end of each period to be determined
using the tax rate expected to be in effect when  taxes  are  actually  paid or
recovered.   The sources of those timing differences and the current tax effect
of each were as follows:

      Net operating loss carryforward$     32,962
      Depreciation and amortization       (10,587)
      Valuation allowance                 (22,375)
                                        ---------
                                        $       -

The components  of  the  net deferred tax asset at December 31, 2005 under SFAS
109 are as follows:

      Net operating loss carryforward$   524,127
      Depreciation and amortization     (428,561)
      Valuation allowance      		 (95,566)
                                        --------
                                        $      -


Reconciliations between the  actual  tax  expense  and  the  amount computed by
applying  the  U.S.  Federal  Income  Tax  rate to income before taxes  are  as
follows:

                                                       Percent of
                                                         Pretax
                                            Amount       Income
      Expected                    	$ (22,375)    	  (34%)
      Change in valuation allowance        22,375  	   34%
                                        ---------  	-------
      Actual expense        		$       -           0%

The net operating loss will begin to expire in 2021.


NOTE 10 - WARRANTS AND OPTIONS

The Company has adopted FASB No. 123 and will  account  for  stock  issued  for
services and stock options under the fair value method.

There were no options granted to officers or directors in 2005.

The  options  and  warrants  issued  in  2004  expire  in  April  2014  and are
exercisable  at  prices from $0.46 to $0.50 per option or warrant.  See Note  2
for pro-forma information and calculations.









                                     F-14
<PAGE>

The following is a  schedule  of  the  activity relating to the Company's stock
options and warrants.


                 		   Year Ended                Year Ended
                   		December 31, 2005        December 31, 2004
               			-----------------        -----------------
                     		   Weighted Avg.            Weighted Avg.
                   		 Shares    Exercise   	  Shares    Exercise
                        	(x 1,000)    Price    	  (x1,000)    Price
                        	---------  --------       --------  --------
Options and warrants
  outstanding at
  beginning of year                   650  $   0.48              -  $      -

Granted:
  Options  			      175  $   0.46            650  $   0.48
  Warrants      			-  $      -              -  $      -
Exercised     				-  $      -              -  $      -
Expired:
Warrants            		       (-) $   	  -              -  $      -
                        	---------  --------       --------  --------
Options and warrants
  outstanding and
  exercisable at end
  of period  			      825  $      -            650  $      -
                                 	   ========                 ========

Weighted average fair
  value of options and
  warrants granted during
  the year                                 $ 21,221                 $ 60,926

The following table summarizes information  about  the  Company's stock options
and warrants outstanding at December 31, 2005, all of which are exercisable.

	              	Weighted Average
  Range of        	     Number	      Remaining       Weighted Average
Exercise Prices 	  Outstanding      Contractual Life     Exercise Price
$ 0.46 - 0.50   	    107,550	      5.2 years           $ 0.477


NOTE 11 - ENVIRONMENTAL MATTERS

Various   federal  and  state  authorities  have  authority  to  regulate   the
exploration and developments of oil and gas and mineral properties with respect
to environmental matters.  Such laws and regulations, presently in effect or as
hereafter promulgated,  may  significantly  affect  the cost of its current oil
production  and any exploration and development activities  undertaken  by  the
Company and could  result in loss or liability to the Company in the event that
any such operations are subsequently deemed inadequate for purposes of any such
law or regulation.






                                     F-15
<PAGE>

NOTE 12 - SUBSEQUENT EVENTS

Effective December 1,  2005  Mr.  Edward  Shaw was appointed as Chief Operating
Officer of South Texas Oil Company to head  field operations in Texas. Mr. Shaw
is qualified as both a mechanical and electrical engineer with over 10 years of
experience in Saudi Arabia and has spent the  last 4 years in New Zealand where
he was researching and developing methods of monitoring  oil  wells to optimize
production,   including   using  existing  products  integrated  with  emerging
telemetry technologies.

An employment agreement was entered into with Edward Shaw effective December 1,
2005. The initial term of employment  is  three (3) years. We agreed to pay Mr.
Shaw  a base salary of $48,000 per annum for  the  first  year  of  employment,
increasing  based on performance of South Texas Oil Company. In addition to the
cash compensation  earned by Mr. Shaw, we granted Mr. Shaw 100,000 shares as an
employment and relocation incentive in addition to an option to purchase shares
of our common stock according to the Executive Stock Option Plan. Mr. Shaw will
also be provided with  employee  benefits, fringe benefits and perquisites on a
basis no less favorable than such  benefits and perquisites are provided by the
Company from time to time to the Company's other senior executives.

Effective February 7, 2006, Jason Griffith  resigned  as  the  Chief  Financial
Officer  and  member  of the Board of Directors of the Company to focus on  the
development of his Accounting  practice. He will continue to offer his services
as an advisor and consultant to  the  Company  as  needed.  In the interim, Mr.
Conradie, President and CEO of South Texas Oil Company will additionally assume
the  position  of Principal Financial Officer.  Mr. Griffith has  not  had  any
disagreements with  management  or  the  company  on any matter relating to the
company's operations, policies or practices.

On February 6, 2006, there was a special meeting of  the  majority of the Board
of Directors in which the Board approved the appointment of  Edward  Shaw  as a
Board Member of the Company to replace Mr. Griffith on the effectiveness of his
resignation.

NOTE 13 - UNAUDITED SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION

The  following supplementary information is presented in compliance with United
States Securities and Exchange Commission ("SEC") regulation and FASB Statement
No.   69,   "Disclosures   About   Oil   and  Gas  Producing  Activities."  The
supplementary  information  is  not a required  part  of  the  basic  financial
statements and therefore not covered by the report of the Company's independent
auditors.
Proved oil and gas reserves are the  estimated quantities of crude oil, natural
gas, and natural gas liquids which geological  and engineering data demonstrate
with  reasonable  certainty  to  be  recoverable  in future  years  from  known
reservoirs under existing economic and operating conditions.   Proved developed
oil  and  gas  reserves are reserves expected to be recovered through  existing
wells with current  equipment and operating methods.  The reserve data is based
on  studies  prepared  by   the   Company's  independent  consulting  petroleum
engineers.  Reserve estimates require  substantial  judgment  on  the  part  of
petroleum  engineers  resulting  in imprecise determinations, particularly with
respect to new discoveries.  Accordingly,  it is expected that the estimates of
reserves will change as future productions and  development  information become
available.  At December 31, 2005, the Company's proved oil and gas reserves are
located in Texas.





                                     F-16
<PAGE>

                            SOUTH TEXAS OIL COMPANY
                      SUPPLEMENTARY INFORMATION REGARDING
                       OIL AND GAS PRODUCING ACTIVITIES
                FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
                                   UNAUDITED

      The  following  supplementary  oil  and  gas  information is provided  in
accordance with Statement of Financial Accounting Standards No. 69, Disclosures
about Oil and Gas Producing Activities (SFAS 69). The Company has properties in
only one reportable geographic area, all of which are oil properties.

1. CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES

                                         2005      2004
                                         ----      ----

  Proved oil and gas properties        $ 150,768  $  29,892
  Unproved oil and gas properties             --
  Support equipment, proved properties   249,082      9,722
                                       ---------  ---------
                                         399,850     39,614
  Accumulated depreciation and
   depletion                              12,122      1,150
                                       ---------  ---------
  Net capitalized costs                $ 387,728  $  38,465
                                       =========  =========

2. COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES FOR ABOVE REFERENCED
PERIODS

                                     2005   2004
                                     ----   ----

  Acquisition of proven properties   $  0   $  0

  Exploration costs                     0      0

3. RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES FOR THE ABOVE
REFERENCED PERIODS
             				    2005         2004
             				----------   ----------

  Oil Sales - 100%			$  467,246   $  351,386
  Oil Sales - Royalty Share      	  (188,430)    (155,732)
             				----------   ----------
  Oil and gas sales 			   278,816 	195,654
  Lease operating income       			 - 	      -
  Production taxes			   (14,491)     (23,503)
  Production costs			  (128,296)    (131,067)
  Exploration expenses				 -            -
  Depreciation and depletion		  (110,472) 	(98,886)
  Income tax expense				 -            -
             				----------   ----------
  Results of operations for oil
   and gas producing activities
   (excluding corporate overhead
   and financing costs)			$   25,557   $  (57,803)
					==========   ==========

                                     F-17
<PAGE>

4.  RESERVE QUANTITY INFORMATION

      The  following  estimates  of  proved  developed reserve  quantities  are
estimates only, and do not purport to reflect  realizable values or fair market
value  of the Company's reserves. They are presented  in  accordance  with  the
guidelines established by the S.E.C. and disclosure requirements promulgated by
SFAS 69.  The Company emphasizes the reserve estimates are inherently imprecise
and that estimates  of  new  discoveries  are  more  imprecise  than  those  of
currently  producing  oil  and gas properties. Accordingly, these estimates are
expected  to  change  as future  information  becomes  available.  All  of  the
Company's reserves are located in southern Texas.

       Proved  reserves   are   estimated  reserves  of  crude  oil  (including
condensate  and  natural gas liquids)  and  natural  gas  that  geological  and
engineering data demonstrate  with  reasonable  certainty  to be recoverable in
future  years  from  known  reservoirs  under  existing economic and  operating
conditions.  Proved  developed  reserves are those  expected  to  be  recovered
through existing wells, equipment,  and operating method.  The Company's proved
developed and undeveloped reserves and  changes  in them during the periods are
as follows.


Proved Developed and Undeveloped Reserves:

                                               Oil             Gas
                                              (BBLS)          (MCF)
                                              ------          -----
Purchase of Minerals in Place(02/22/00)      698,290            -
     Production, 2000                        (10,270)           -
     Production, 2001                        (11,283)           -
     Production, 2002                         (5,554)           -
                                             -------          -----
     Reserves at December 31, 2002           671,183            -
     Revisions of Previous Estimates        (435,092)           -
     Purchase of minerals in place                 -            -
     Production, 2003                         (7,586)           -
                                             -------          -----
     Reserves at December 31, 2003           228,505            -
                                             -------          -----
     Revisions of Previous Estimates          (2,337)           -
     Purchase of minerals in place                 -            -
     Production, 2004                         (4,972)           -
                                             -------          -----
     Reserves at December 31, 2004           221,196            -
                                             -------          -----
     Revisions of Previous Estimates               -            -
     Purchase of minerals in place                 -            -
     Production, 2005                         (5,258)           -
                                             -------          -----
     Reserves at December 31, 2005           215,938            -
                                             =======          =====








                                     F-18
<PAGE>
(cont)

Proved Developed Reserves:
                                               Oil             Gas
                                              (BBLS)          (MCF)
                                              ------          -----
Purchase of Minerals in Place (02/22/00)      95,640        	-
     Production, 2000                        (10,270)           -
     Production, 2001                        (11,283)           -
     Production, 2002                         (5,554)           -
                                             -------          -----
     Reserves at December 31, 2002            68,533            -
     Revisions of Previous Estimates         (28,192)           -
     Purchase of minerals in place                 -            -
     Production, 2003                         (7,586)           -
                                             -------          -----
     Reserves at December 31, 2003            32,755            -
     Revisions of Previous Estimates          (2,337)           -
     Purchase of minerals in place                 -            -
     Production, 2004                         (4,972)           -
                                             -------          -----
     Reserves at December 31, 2004            25,445            -
                                             -------          -----
     Revisions of Previous Estimates               -            -
     Purchase of minerals in place                 -            -
     Production, 2005                         (5,258)           -
                                             -------          -----
     Reserves at December 31, 2005            20,187            -
                                             =======          =====

      Based on a revised Evaluation of Proved Reserves by Bommer Engineering on
November 23, 2004 and January 31, 2005, the proved  reserves  have been revised
to  account  for  changes  in  economic  factors  and  the  historical net  oil
production generated.  The engineer's report analyzed the historical production
and investments made by the company during the period since the last report and
then along with evaluating the current economic factors the report  was revised
accordingly.  In 2002, the Company's production declined significantly,  as the
Company  was  in  a  transition  period  between pumper's.  As a result of this
decline the reserve estimates have been adjusted  downward  to reflect how this
decline  would  affect  the  reserves  if production continued at  the  reduced
levels.  When determining the estimated  reserves,  the  corresponding costs of
drilling  and  completing  new  wells  are also included.  Since  the  original
reserve  study  of 2000, the cost of drilling  and  completing  new  wells  has
significantly increased,  whereas  the  price  of  oil used for determining the
future net revenue rose only $2.55 from $30 in 2000  to  $32.55  in the current
study.   The  increase  in  costs  for drilling and completion, along with  the
relatively minor oil price increase and the low level of production during 2002
and 2003 resulted in a significant decline  in  the  value for proved developed
and undeveloped reserves.

 5.  STANDARDIZED MEASURES OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES
THEREIN RELATING TO PROVED OIL AND GAS RESERVES AT THE ABOVE REFERENCED DATE

       Statement of Financial Accounting Standards No.  69,  "Disclosures about
Oil  and  Gas  Producing  Activities,"  prescribes  guidelines for computing  a
standardized measure of future net cash flow and changes  therein  relating  to
estimated proved reserves. The Company has followed these guidelines, which are
briefly discussed in the following paragraphs.


                                     F-19
<PAGE>

       Future  cash  inflows  and  future  production and development costs are
determined  by  applying  year-end  oil  prices  and  costs  to  the  estimated
quantities of oil to be produced. Estimated future  income  taxes  are computed
using current statutory income tax rates including consideration for  estimated
future  depletion.  The  resulting future net cash flows are reduced to present
value amounts by applying a 10% annual discount factor.

       The assumptions used  to  compute  the  standardized  measure  are those
prescribed  by  the  Financial Accounting Standards Board and, as such, do  not
necessarily reflect the Company's expectations of actual revenues to be derived
from those reserves nor  their  present  worth. The limitations inherent in the
reserve  quantity  estimation  process, as discussed  previously,  are  equally
applicable to the standardized measure  computations  since these estimates are
the basis for the valuation process.

       The  following summary sets forth the Company's future  net  cash  flows
relating to proved  oil  and  gas  reserves  based  on the standardized measure
prescribed in Statement of Financial Accounting Standards No. 69:


                                 	    2005             2004
Future cash inflows          		$ 6,945,299     $  7,224,115
Future production costs         	   (960,782)      (1,089,078)
Future development costs      		 (3,146,000)      (3,146,000)
Future income tax provision     	   (184,436)        (198,927)
                             		-----------     -------------
Future net cash flows           	  2,654,081        2,790,110
  Effect of 10% discount factor 	 (2,918,026)      (2,974,620)
                             		-----------     -------------
Standardized measure of discounted
  future net cash flows       		$   263,945     $   (184,510)
                            		===========     ============

Year-end oil prices used in calculating the standardized  measure of discounted
future net cash flows were $32.55 per barrel.

       The principal sources of changes in the standardized measure of
discounted future net cash flows are as follows for the period from December
31, 2004 to December 31, 2005:


                                                    2005       2004

Standardized measure, beginning of period        $(184,510)  $ (79,435)
Purchase of reserves in place                            0           0
Sales of oil produced, net of production costs    (150,520)    (64,587)
Net changes in prices and production costs          71,085     (40,488)
Net change in estimated future development costs         0           0
Net change in income taxes                               0           0
Revisions of previous quantity estimates                 0           0
Accretion of discount                                    0           0
Other                                                    0           0
                                                 ---------   ---------
Standardized measure, end of period              $(263,945)  $(184,510)
                                              	 =========   =========

                                     F-20
<PAGE>


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

      None.

ITEM 8A.  CONTROLS AND PROCEDURES.

      Our  Chief  Executive  Officer  (CEO) and Chief Financial  Officer  (CFO)
evaluated  the  effectiveness of our disclosure  controls  and  procedures  (as
defined in Rules  13a-15(e)  and  15d-15(e)  of  the Securities Exchange Act of
1934, as amended) as of the end of the period covered  by  this  report.  Based
upon  their  evaluation, the CEO and CFO concluded that the disclosure controls
and procedures  are  effective in ensuring all required information relating to
South Texas Oil Company is included in this annual report.

      We also maintain  a  system  of internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f))  designed  to  provide reasonable
assurance regarding the reliability of financial reporting and  the preparation
of  financial  statements  for external purposes in accordance with  accounting
principles generally accepted  in the United States of America. During our most
recent fiscal quarter, there have  been no changes in our internal control over
financial  reporting  that  occurred  that  have  materially  affected  or  are
reasonably likely to materially affect  our  internal  control  over  financial
reporting.

ITEM 8B.  OTHER INFORMATION.

      None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Directors and Executive Officers

      The  following  table  sets  forth  information  regarding  our executive
officers, certain other officers and directors as of December 31, 2005:

      Name                  Age   Position/Office        Served Since

      Murray N. Conradie    39    Chairman/President/CEO April 1999
      Jason F. Griffith     27    CFO/Director           June 2002
      Edward Shaw           44    COO                    December 2005
      Conrad Humbke         71    Director               November 2004

      The  following is a brief description of the business background  of  the
directors and executive officers of South Texas Oil Company:

Murray N. Conradie - President/CEO and Chairman of the Board

      Mr. Conradie has been the CEO and Chairman of the Board and a Director of
South Texas  Oil Company since April 1999.  He was also the CEO and Chairman of
the Board and a Director of Datascension, Inc., a public company trading on the
OTCBB, since April  1999,  the parent company of South Texas Oil Company, prior
to the spin-off.  He resigned  from Datascension Inc, on April 1, 2005 to focus
more attention on South Texas Oil  Company.   Mr. Conradie has several years of
experience in creating and developing start-up enterprises and has a background
in Law and Accounting.
                                      32
<PAGE>

Jason F. Griffith - CFO/Director

      Mr. Griffith was the CFO and a Director of  South  Texas Oil Company, and
the prior CFO and Director of Datascension, Inc., a public  company  trading on
the  OTCBB,  which was the parent company of South Texas Oil Company, prior  to
the spin-off.  Mr.  Griffith  held  both  these positions from June of 2002. He
resigned from Datascension Inc, on April 1,  2005  to  focus  more attention on
South Texas Oil Company. Prior to that, Mr. Griffith was the accounting manager
for a CPA firm in Henderson, Nevada starting in August of 2001.  Before  taking
on  this  position,  he  worked  for Arthur Andersen in Memphis, Tennessee from
December 1998 until his move to Nevada  in the summer of 2001. Prior to joining
Arthur  Andersen,  Mr.  Griffith  was  in  the   process   of   completing  his
undergraduate degree and Masters in Accounting from Rhodes College  in Memphis,
Tennessee.  Mr.  Griffith  is  a  licensed CPA in both the state of Nevada  and
Tennessee.  He  is  a  member of the American  Institute  of  Certified  Public
Accountants, The Association  of  Certified  Fraud  Examiners, The Institute of
Management Accountants, along with being a member of  the  Nevada and Tennessee
State Society of CPAs.

Mr.  Griffith  resigned  as  CFO  and  Director of South Texas Oil  Company  on
February 7, 2006 in order to focus more  attention  on  his  growing accounting
practice.  (See South Texas Oil Company's report on Form 8-K dated  February 7,
2006 items 5.02 and 9.01.)

Edward Shaw - COO

       Effective  December  1,  2005  Mr.  Edward  Shaw  was appointed as Chief
Operating Officer of South Texas Oil Company to head field operations in Texas.
Mr. Shaw is qualified as both a mechanical and electrical engineer with over 10
years  of  experience in Saudi Arabia and has spent the last  4  years  in  New
Zealand where he was researching and developing methods of monitoring oil wells
to optimize  production,  including  using  existing  products  integrated with
emerging telemetry technologies.

Conrad Humbke - Director

       Mr. Humbke has many years experience in the oil and gas industry and has
served  both  as  a  director  and officer of oil and gas companies which  also
included oil and mining exploration.  Mr. Humbke has been in retirement for the
past 5 years.

Significant Employees

       South Texas Oil Company has  not  identified  any employee who is not an
executive who is expected to make a significant contribution to the business.

Family Relationships

      There are no family relationships among the directors, executive officers
or persons nominated or chosen by South Texas Oil Company  to  become directors
or executive officers.








                                      33
<PAGE>

Legal Proceedings

      None  of  South  Texas  Oil  Company's  directors, executive officers  or
nominees for such office have been involved in any legal proceedings related to
bankruptcy  of  an  entity  where  they  held such positions;  nor  charged  or
convicted in any criminal proceedings; nor  subject  to any order, judgment, or
decree permanently or temporarily enjoining, barring,  suspending or other wise
limiting  their  involvement  in  any type of business, securities  or  banking
activities; nor found in any manner  whatsoever  to  have violated a federal or
state securities or commodities law.

      None of South Texas Oil Company's officers or directors, nor to the
knowledge of South Texas Oil Company, any of South Texas Oil Company's control
persons, has:

      -    had  any  bankruptcy petition filed by or against  any  business  of
           which such  person was a general partner or executive officer either
           at the time of  the  bankruptcy  or  within  two years prior to that
           time;

      -    been convicted in a criminal proceeding or is  subject  to a pending
           criminal  proceeding  (excluding traffic violations and other  minor
           offenses);

      -    been subject to any order,  judgment,  or  decree,  not subsequently
           reversed,   suspended   or   vacated,  of  any  court  of  competent
           jurisdiction,  permanently   or    temporarily  enjoining,  barring,
           suspending or otherwise limiting his  involvement  in  any  type  of
           business, securities or banking activities; or

      -    been   found  by  a  court  of  competent  jurisdiction  (in a civil
           action),  the  Securities  and  Exchange Commission or the Commodity
           Futures  Trading Commission to have  violated  a  federal  or  state
           securities  or  commodities  law,  where  the  judgment has not been
           reversed, suspended or vacated.

Committees

      South  Texas  Oil  Company  does  not  have any audit, compensation,  and
executive committees. Because the Board of Directors currently consists of only
three members, South Texas Oil Company does not  have  a  standing  nominating,
compensation  or audit committee. Rather, the full Board of Directors  performs
the functions of these committees.  South Texas Oil Company does not believe it
is necessary for  its Board of Directors to appoint such committees because the
volume of matters that  come  before  its  Board of Directors for consideration
permits each Director to give sufficient time  and attention to such matters to
be involved in all decision making.

Conflicts of Interest

      The officers and directors of South Texas  Oil Company are now and may in
the future become shareholders, officers or directors  of other companies which
may be engaged in business activities similar to those conducted by South Texas
Oil Company. Accordingly, additional direct conflicts of  interest may arise in
the future with respect to such individuals acting on behalf of South Texas Oil
Company or other entities. Moreover, additional conflicts of interest may arise
with respect to opportunities which come to the attention of  such  individuals
in  the performance of their duties or otherwise. South Texas Oil Company  does
not currently  have  a  right of first refusal pertaining to opportunities that
come to management's attention  insofar  as  such  opportunities  may relate to
South Texas Oil Company's proposed business operations.
                                      34
<PAGE>

      The officers and directors are, so long as they are officers or directors
of  South  Texas Oil Company, subject to the restriction that all opportunities
contemplated by South Texas Oil Company's plan of operation which come to their
attention, either  in  the  performance of their duties or in any other manner,
will be considered opportunities  of,  and be made available to South Texas Oil
Company and the companies that they are  affiliated  with  on an equal basis. A
breach  of  this requirement will be a breach of the fiduciary  duties  of  the
officer or director.  If  South Texas Oil Company or the companies in which the
officers and directors are  affiliated with both desire to take advantage of an
opportunity, then said officers  and  directors  would abstain from negotiating
and voting upon the opportunity. However, all directors  may still individually
take advantage of opportunities if South Texas Oil Company should decline to do
so.  Except  as set forth above, South Texas Oil Company has  not  adopted  any
other conflict of interest policy with respect to such transactions.

Compliance with Section 16(a) of the Exchange Act

      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 (referred to as "reporting persons"),
to  file  with  the  Securities  and  Exchange  Commission  initial  reports of
ownership  and  reports  of  changes  in  ownership of common stock.  Reporting
persons are required by Commission regulations to furnish us with copies of all
Section 16(a) forms they file.

      Based solely upon a review of Forms 3,  4  and  5 furnished to us, we are
not aware of any person who at any time during the fiscal  year  ended December
31, 2005, was a director, officer, or beneficial owner of more than ten percent
of our common stock, who failed to file, on a timely basis, reports required by
Section 16(a) of the Securities Exchange Act of 1934 during such fiscal year.

Code of Ethics

      We have adopted a code of ethics that applies to our executive  officers,
including our Chief Executive Officer and Chief Financial Officer.

Indemnification of Directors and Officers.

The  By-laws  of  South  Texas Oil Company state that to the extent allowed  by
Nevada State law, as same may be amended, and subject to the required procedure
thereof, the corporation shall indemnify any person who was or is a party of is
threatened to be made a party  to  any threatened, pending or completed action,
suit or proceeding, whether civil, criminal,  administrative  or  investigative
(other than an action by or in the right of the corporation) by reason  of  the
fact  that  he  is  or  was  a  director,  officer,  employee  or  agent of the
corporation,  or  is  or  was  serving at the request of the corporation  as  a
director, officer, employee or agent of another corporation, partnership, joint
venture,  trust or other enterprise,  against  expenses  (including  attorneys'
fees), judgments,  fines and amounts paid in settlement actually and reasonably
incurred by him in connection  with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation,  and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself, create a  presumption  that the person did not
act in good faith and in a manner which he reasonably believed  to be in or not
opposed  to  the  best  interests of the corporation, and with respect  to  any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
                                         35
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION.

Compensation of Executive Officers

      The following table  sets  forth  the aggregate cash compensation paid by
South Texas Oil Company for services rendered  during  the periods indicated to
its directors and executive officers:

                       SUMMARY COMPENSATION TABLE

Name & Position      Fiscal Year     Salary       Bonus     Other Compensation
---------------      -----------     ------       -----     -----------------
Murray N. Conradie     2003            -0-         -0-            -0-
Chairman/CEO           2004         24,000         -0-            -0-
                       2005        150,000         -0-            -0-

Jason F. Griffith      2003            -0-         -0-            -0-
CFO                    2004         12,000         -0-            -0-
                       2005         12,000         -0-            -0-

Edward Shaw            2003            -0-         -0-            -0-
COO                    2004            -0-         -0-            -0-
                       2005         $4,000         -0-          100,000
shares(1)
      (1) Mr. Shaw received 100,000 shares of restricted  common stock of South
Texas Oil Company as an incentive payment as part of his Employment Agreement.

Common Stock

      The Officers have not received any common stock in compensation for their
services, other than the unpaid salary they have converted to common stock.

Employment Agreements

      On  April  1, 2004, we entered into an employment agreement  with  Murray
Conradie. The term  of  employment  is  five  (5) years. Mr. Conradie serves as
President, CEO, Chairman and Director. We agreed  to  pay  Mr.  Conradie a base
salary of $24,000 per annum for the first year of employment, increasing  based
on  performance  of  South  Texas  Oil Company and time devoted solely to South
Texas Oil Company. In addition to the cash compensation earned by Mr. Conradie,
we  granted Mr. Conradie an option to  purchase  shares  of  our  common  stock
according to the Executive Stock Option Plan.

      On  April  1,  2004,  we  entered into an employment agreement with Jason
Griffith. The term of employment  is  five  (5)  years.  Mr. Griffith serves as
Chief financial Officer, Secretary/Treasurer and Director. We agreed to pay Mr.
Griffith a base salary of $12,000 per annum for the first  year  of employment,
increasing  based  on  performance of South Texas Oil Company and time  devoted
solely to South Texas Oil  Company. In addition to the cash compensation earned
by Mr. Griffith, we granted  Mr.  Griffith  an option to purchase shares of our
common stock according to the Executive Stock Option Plan.

On December 1, 2005, we entered into an employment  agreement with Edward Shaw.
The term of employment is five (5) years. Mr. Shaw serves  as Chief Operational
Officer. We agreed to pay Mr. Shaw a base salary of $48,000  per  annum for the
first  year of employment, increasing based on performance of South  Texas  Oil
Company  and time devoted solely to South Texas Oil Company. In addition to the
cash compensation  earned  by  Mr.  Shaw,  we granted Mr. Conradie an option to
purchase shares of our common stock according  to  the  Executive  Stock Option
Plan.
                                      36
<PAGE>


Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Values

      The following table sets forth the options granted in 2004 to each of the
directors and executive officers:

     Option/SAR Grants in Last Fiscal Year (Individual Grants):

                      Number of      Percent of total
                      Securities       Options/SARs
                      Underlying        granted to                  Exercise or
                     Options/SARS      employees in    base price   Expiration
    Name               Granted         fiscal year     ($/Share)        date
    -----            ------------   ----------------   ----------   -----------

Murray N. Conradie      150,000           18.2           $0.46        4/1/09
                        200,000           24.2           $0.50        4/1/14

Jason F. Griffith       100,000           12.1           $0.46        4/1/09
                        100,000           12.1           $0.50        4/1/14

Edward Shaw             100,000           12.1           $0.46       12/1/10
                        100,000           12.1           $0.50       12/1/15

Conrad Humbke            75,000           9.09           $0.46       11/2/09

      There  were  options  issued  to officers in April of 2004.  Compensation
cost for options granted has not been  recognized in the accompanying financial
statements because the exercise prices exceeded  the  current  market prices of
South Texas Oil Company's common stock on the dates of grant. The  options  and
warrants  expire in April 2010 and 2015 and are exercisable at prices from $.46
to $.50 per option or warrant, respectively.

Compensation of Directors

      There  were no arrangements pursuant to which any director of South Texas
Oil Company was  compensated through December 31, 2005 for any service provided
as a director. In  addition,  no  such  arrangement  is  contemplated  for  the
foreseeable  future as South Texas Oil Company's only directors are its current
executive officers.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Management and Certain Beneficial Owners

      The following  table  sets  forth  information  as  of  the  date of this
Registration  Statement  certain  information  with  respect  to the beneficial
ownership  of  the  Common  Stock  of South Texas Oil Company concerning  stock
ownership  by  (i)  each  director, (ii)  each  executive  officer,  (iii)  the
directors and officers of South  Texas  Oil  Company  as a group, (iv) and each
person known by South Texas Oil Company to own beneficially more than five (5%)
of the Common Stock.  Unless otherwise indicated, the owners  have  sole voting
and  investment  power  with  respect  to their respective shares.  The mailing
address for each of the persons indicated is our corporate headquarters.




                                      37
<PAGE>

      Beneficial ownership is determined  under the rules of the Securities and
Exchange Commission. In general, these rules  attribute beneficial ownership of
securities to persons who possess sole or shared voting power and/or investment
power  with  respect  to  those securities and includes,  among  other  things,
securities that an individual  has  the right to acquire within 60 days. Unless
otherwise indicated, the stockholders  identified  in  the following table have
sole  voting  and  investment  power  with  respect  to  all  shares  shown  as
beneficially owned by them.

Title of         Name and Address        Amount and Nature      Percent of
Class            of Beneficial Owner     of Beneficial Owner    Class

Common    Murray N. Conradie             President/CEO             8.82%
          6330 McLeod Drive, Suite 1     Chairman
          Las Vegas, Nevada 89120        431,179 Shares

Common    Jason F. Griffith              CFO/Director              2.80%
          6330 McLeod Drive, Suite 1     136,664 Shares
          Las Vegas, Nevada 89120

Common    Edward Shaw                    COO                       2.09%
          6330 McLeod Drive, Suite 1     102,000 Shares
          Las Vegas, Nevada 89120

Common    Conrad Humbke                  Director                   0.0%
          6330 McLeod Drive, Suite 1     0 Shares
          Las Vegas, Nevada 89120

Common    Officers and Directors
          as a Group                     669,843 Shares           13.70%

      Mr.  Conradie,  Mr.  Griffith, Mr. Shaw, and Mr. Humbke have  options  to
purchase a total of 425,000 shares of South Texas Oil Company's Common Stock at
$.46 any time before March 31,  2009; and a total of 400,000 shares at $.50 any
time before March 31, 2014.

      The  percentage  ownership  calculations  listed  above  are  based  upon
4,889,171 shares of common stock being  outstanding,  and  no  options  granted
being exercised as of December 31, 2005.

Persons Sharing Ownership of Control of Shares

      Management  has  no  knowledge  of  the  existence of any arrangements or
pledges of South Texas Oil Company's securities which may result in a change in
control of South Texas Oil Company.

      No person owns or shares the power to vote  ten  percent (10%) or more of
South Texas Oil Company's securities.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has a note payable to a shareholder, in the amount of $50,000 as of
December 31, 2005.  This obligation is due in 2006 and accrues  interest at 10%
annually.   The  accrued  interest  on  this  loan as of December 31, 2005  was
$13,417.   The amounts are considered short term  due  to  the  delinquency  of
payments on the accrued interest.



                                      38
<PAGE>

The Company has a note payable to a shareholder, in the amount of $20,000 as of
December 31,  2005.  This obligation is due in 2006 and accrues interest at 10%
annually.  The  accrued  interest  on  this  loan  as  of December 31, 2005 was
$4,500.  The  amounts  are  considered  short  term due to the  delinquency  of
payments on the accrued interest.

    Mr. Conradie received 100,000 shares of restricted  common  stock  of South
Texas Oil Company per Section 3(g) of his employment contract with Nutek  Inc.,
the  parent company, upon the spin-off of South Texas Oil Company as a separate
trading  entity.  (See Exhibit 10.16 Employment Agreement Murray N. Conradie of
Nutek Inc.)

    South Texas Oil Company also has a note payable to Murray Conradie, related
to the purchase  of  wells  during  the 2nd quarter as of December 31, 2005 for
$68,132.  This note is paid only from a percentage of production of the related
wells.

    South Texas Oil Company also has  a note payable to Jason Griffith, related
to the  purchase  of  wells  during  the  2nd  quarter   as   of   December 31,
2005  for  $34,066.   This note is paid only from a percentage of production of
the related wells.

      South Texas Oil Company recently moved its offices from 900 NE  Loop 410,
Suite E121, San Antonio, TX and relocated to 2881 CR 2880, Big Foot, TX.   This
property  is  owned  by  Mr. Conradie.  There has been no change to the monthly
rental amount payable by the company.

    A material relationship exists between JGM Oil  Investments, LLC from which
the Somerset leases were purchased on April 1, 2005 and South Texas Oil Company
in so far as both Mr. Conradie the President/CEO and  a Director of South Texas
Oil Company and Mr. Jason Griffith, the Chief Financial  Officer and a Director
of  South  Texas  Oil  Company have a combined majority ownership  of  JGM  Oil
Investments, LLC.

    A material relationship  exists  between  Horizon  Ridge  Oil  Company, the
operator of record with the Texas Rail Road Commission for the Somerset  leases
which were purchased on April 1, 2005 and South Texas Oil Company in so far  as
both Mr. Conradie  the  President/CEO   and  a  Director  of  South  Texas  Oil
Company and Mr. Jason Griffith, the Chief Financial  Officer  and a Director of
South  Texas  Oil Company own Horizon Ridge Oil Company.  A nominal  amount  is
paid  to Horizon  Ridge   Oil  Company  each  month  to  cover  the  Rail  Road
Commission  Surety  bond   for  these  leases   as   well   as   the  reporting
requirements  with  the  Rail  Road Commission. The amount to date has averaged
less than $1,000 per month.

    Other Material Transactions.

With  the  exception of the above mentioned transactions,  there  have  been no
material transactions,  series  of  similar transactions  or currently proposed
transactions   to  which  South  Texas  Oil Company or any  officer,  director,
their immediate  families  or  other  beneficial  owner  is a party  or  has  a
material  interest  in  which  the amount exceeds $50,000.









                                      39
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits.

      The  following  documents are included or incorporated  by  reference  as
exhibits
to this report:

Exhibit 3. Articles of Incorporation and Bylaws.

    3.1 Articles of Incorporation*
    3.2 Bylaws*

Exhibit 10.Material Contracts

   10.1 Letter of Intent to Purchase Selected Assets from Clipper Operating
	Company.*
   10.2 Purchase Agreement of Selected Assets from Nutek Inc.(1)
   10.3 Executive Compensation Agreement (Murray N. Conradie)(1)
   10.4 Executive Compensation Agreement (David Cummings)(1)
   10.5 Executive Compensation Agreement (Jason F. Griffith)(1)
   10.6 Executive Stock Option Agreement (Murray N. Conradie)(1)
   10.7 Executive Stock Option Agreement (David Cummings)(1)
   10.8 Executive Stock Option Agreement (Jason F. Griffith)(1)
   10.9 Executive Stock Option Agreement (Charles Snipes)(1)
   10.10 Qualified Equity Incentive Stock Option Plan(1)
   10.11 Contract for Services (Peter R. Maupin)(2)
   10.12 Contract for Services (Smitty's Pumping)(2)
   10.13 Executive Stock Option Agreement (Conrad Humbke)(3)
   10.14 Purchase Agreement - Mineral Acres(3)
   10.15 Executive Compensation Agreement (Edward B. Shaw)
   10.16 Executive Stock Option Agreement (Edward B. Shaw)

   (1) Previously filed as an exhibit to South Texas Oil Company's Form 10-SB,
       filed April 30, 2004.

   (2) Previously filed as an exhibit to South Texas Oil Company's Amendment
       No. 2 to Form 10-SB, filed September 3, 2004.

   (3) Previously filed as an exhibit to South Texas Oil Company's Current
       Report to Form 8-K, filed April 7, 2005.

Exhibit 23.Consent of Experts and Counsel

   23.1 Consent of Larry O'Donnell, CPA, P.C., Certified Public Accounts.

Exhibit 31.Certifications required by Rule 13a-14(a) or Rule 15d-14(a)

    31.1 Certification  of Chief Executive Officer pursuant to 18 U.S.C.ss.1850
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     31.2  Certification  of   Principal   Financial  Officer  pursuant  to  18
U.S.C.ss.1850 as adopted pursuant to Section  302  of the Sarbanes-Oxley Act of
2002.

Exhibit 32.Certifications  required by Rule 13a-14(b)  or  Rule  15d-14(b)  and
section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

    32.1 Certification of Chief  Executive Officer pursuant to 18 U.S.C.ss.1850
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
                                      40
<PAGE>

     32.2  Certification  of  Principal   Financial   Officer  pursuant  to  18
U.S.C.ss.1850 as adopted pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002.

(b)  Reports on Form 8-K

South  Texas  Oil  Company's report on Form 8-K dated April 7, 2005 items 1.01,
2.01, 3.02 and 9.01.

      On April 7, 2005,  South Texas Oil Company filed a Current Report on Form
8-K, relating to the Executive  Stock  Option  Agreement filed as Exhibit 10.13
with the Current Report detailing the options offered  to  Conrad  Humbke  as a
result of his Board Appointment.

      Additionally  on  April  7,  2005,  South  Texas Oil Company reported the
purchase  of  the  leases,  farm-outs and mineral interests  held  by  JGM  Oil
Investments, LLC in Atascosa County. The total purchase price was three hundred
seven thousand four hundred twenty-six  dollars  ($307,426) made up as follows;
Purchase of all mineral acreage at a price of one hundred dollars ($100.00) per
acre.  Total price for the acreage was sixty nine thousand four hundred ten and
no/100 dollars  ($69,410). Purchase of all equipment was at a depreciated price
of forty five percent (45%) of the replacement value. Total price for equipment
was two hundred thirty eight thousand sixteen and no/100 dollars ($238,016).

South Texas Oil Company's report on Form 8-K dated April 14, 2005, item 3.02.

On April 14, 2005,  South Texas Oil Company filed a Current Report on Form 8-K,
relating to South Texas  Oil  Company  agreeing to April 27, 2005 as the record
date for the issuance of 957,349 shares  of  restricted  common  stock of South
Texas Oil Company that Datascension Inc. (the parent company prior to the spin-
off of South Texas Oil Company) had an interest in valued at $1,003,831.

South Texas Oil Company's report on Form 8-K dated August 1, 2005,  items  1.01
and 9.01.

      On August 1, 2005, South Texas Oil Company filed a Current Report on Form
8-K, relating to the entering into a funding agreement  from  institutional and
accredited investors with gross proceeds of $2,300,000, to be received  in  two
traunches.  The  first  traunch  of  $1,300,000  received upon execution of the
agreement and the remaining $1,000,000 within five  days  after  a  to be filed
registration  statement becomes effective, or sooner if certain milestones  are
achieved.

       The  funding consists of convertible securities which shall convert into
forty-five percent  (45%) equity of the fully diluted shares of South Texas Oil
Company if both traunches are received.

      South Texas Oil will use the net proceeds of the first traunch to perform
workovers on existing  wells,  drill  two  new  wells, capital expenditures and
working  capital.   The second traunch will be used  to  drill  additional  4-5
wells, if the milestones for the first traunch are met.

      Additionally, South  Texas  Oil  Company  entered into Lock-Up Agreements
with the following board members of South Texas Oil  Company;  Murray  Conradie
and  Jason  Griffith. In this Agreement, these board  members  agreed  not   to
sell  any  shares in South Texas Oil Company's Common Stock owned by them for a
period of 12 months, or  until  such time as certain milestones have been met.


                                      41
<PAGE>

South Texas Oil Company's report on Form 8-K dated December 14, 2005 item 8.01

      On December  14,  2005, South Texas Oil Company filed a Current Report on
Form  8-K,  relating  to  the   meeting   of  certain  milestones  set  by  the
institutional and accredited investors and  would receive the second traunch of
$1,000,000.

South Texas Oil Company's report on Form 8-K dated December 14, 2005 item 8.01

      On December 14, 2005, South Texas Oil Company  filed  a Current Report on
Form 8-K, stating that the company was to commence trading on  the OTC Bulletin
Board (OTCBB).

South Texas Oil Company's report on Form 8-K dated February 7, 2006  items 5.02
and 9.01.

       On  February 7, 2006, South Texas Oil Company filed a Current Report  on
Form 8-K, relating to the appointment of Mr. Edward Shaw as a Director of South
Texas Oil Company  along  with  the  resignation of Mr. Jason Griffith as Chief
Financial Officer and Director.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

      For the fiscal years ended December  31,  2005, South Texas Oil Company's
principal accountant billed $5,300, for the audit  of South Texas Oil Company's
annual  financial  statements and review of financial  statements  included  in
South Texas Oil Company's Form 10-QSB filings.  For the year ended December 31,
2004, South Texas Oil Company's prior accountant billed South Texas Oil Company
$5,300 for the annual audit of the financial statements.

Audit-Related Fees

      For the fiscal  years  ended  December 31, 2005 and 2004, South Texas Oil
Company's principal accountant billed  $0  and  $0, respectively, for assurance
and related services that were reasonably related  to  the  performance  of the
audit  or  review of South Texas Oil Company's financial statements outside  of
those fees disclosed above under "Audit Fees".

Tax Fees

      For the  fiscal  years  ended December 31, 2005 and 2004, South Texas Oil
Company's  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, 2005 and 2004, South Texas Oil
Company's principal accountant billed $0 and $0, respectively, for products and
services other than those described above.

Pre-approval Policies and Procedures

      Prior  to engaging South Texas Oil Company's  accountants  to  perform  a
particular service,  South  Texas  Oil  Company's board of directors obtains an
estimate for the service to be performed. The board of directors, in accordance
with  procedures for South Texas Oil Company,  approved  all  of  the  services
described above prior to the services being performed.
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<PAGE>

SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                  South Texas Oil Company

                                  /s/ Murray N. Conradie
                                  ----------------------
                                  Murray N. Conradie,
                                  President, Chairman and Director
                                  (Principal Executive Officer and
                                   Principal Financial Officer)

                                  Date: March 31, 2006

      Pursuant to the requirements of Section 12 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.

                                  /s/ Murray N. Conradie
                                  ----------------------
                                  Murray N. Conradie,
                                  President, Chairman and Director
                                  (Principal Executive Officer and
                                   Principal Financial Officer)

                                  Date: March 31, 2006




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