PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT , made as of this 19th day of September, 2008 (this “ Agreement ”), is by each of SOUTH TEXAS OIL COMPANY, a Nevada corporation (“ Company ”), and STO OPERATING COMPANY, a Texas corporation (“ STO Operating ”; STO Operating, together with Company are each referred to individually herein as a “ Pledgor ” and collectively as the “ Pledgors ”), in favor of VIKING ASSET MANAGEMENT, LLC, a California limited liability company, in its capacity as collateral agent for the benefit of the entities (the “ Buyers ”) identified on the Schedule of Buyers attached to the Purchase Agreement defined below (in such capacity, together with its successors and assigns in such capacity, the “ Pledgee ”).

A.   WHEREAS, Company and Buyers have entered into that certain Securities Purchase Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the " Purchase Agreement "), pursuant to which, among other things, Company is issuing to Buyers the Bridge Notes (as defined in the Purchase Agreement); 

B.   WHEREAS, pursuant to a Security Agreement of even date herewith (as amended, restated, modified or supplement and in effect from time to time, the “ Security Agreement ”), each Pledgor has granted to Pledgee, for its benefit and the benefit of the Buyers, a first priority security interest in, lien upon and pledge of its rights in the Collateral (as defined in the Security Agreement);

C.   WHEREAS, (i) Company legally and beneficially owns all of the issued and outstanding shares of Capital Stock (as defined in the Purchase Agreement) of each of STO Operating, Southern Texas Oil Company, a Texas corporation (“ Southern Texas ”) and STO Drilling Company, a Texas corporation (“ STO Drilling ”), and (ii) STO Operating legally and beneficially owns all of the issued and outstanding membership interests of STO Properties LLC, a Texas limited liability company (“ STO Properties ”, together with STO Operating, Southern Texas and STO Drilling and each other corporation or limited liability company, the stock or other equity interests of which is owned or acquired by a Pledgor and described on an addendum hereto from time to time executed by a Pledgor in form and substance satisfactory to Pledgee, is referred to herein as a “ Pledged Entity ” and collectively as the “ Pledged Entities ”); and

D.   WHEREAS, to induce Buyers to enter into the Purchase Agreement and to purchase the Bridge Notes, and in order to secure the payment and performance by each Pledgor of the Obligations (as defined in the Security Agreement), each Pledgor has agreed to pledge to Pledgee all of the Capital Stock, membership interests and other equity interests and securities of the Pledged Entities now or hereafter owned or acquired by a Pledgor, as collateral security for the Obligations.

NOW, THEREFORE , in consideration of the premises and in order to induce Buyers to purchase the Bridge Notes under the Purchase Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby agrees with Pledgee as follows:

1.   Defined Terms . Unless otherwise defined herein, all capitalized terms used herein shall have the meanings given them in the   Purchase Agreement.

2.   Pledge .

(a)   Each Pledgor hereby pledges, assigns, hypothecates, transfers, delivers and grants to Pledgee, for the benefit of itself and Buyers, a first lien on and first priority perfected security interest in (i) all of the Capital Stock, membership interests or other equity interests of the Pledged Entities now owned or hereafter acquired by such Pledgor (collectively, the “ Pledged Shares ”, which include, without limitation, the owned shares described on Exhibit A attached hereto), (ii) all other property hereafter delivered to, or in the possession or in the custody of, Pledgee, in substitution for or in addition to the Pledged Shares, (iii) any other property of a Pledgor, as described in Section 4 below or otherwise, now or hereafter delivered to, or in the possession or custody of a Pledgor, and (iv) all proceeds of the collateral described in the preceding clauses (i), (ii) and (iii) (the collateral described in clauses (i) through (iv) of this Section 2 being collectively referred to as the “ Pledged Collateral ”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. All of the Pledged Shares now owned by a Pledgor which are presently represented by stock certificates or membership interests certificates are listed on Exhibit A hereto, which stock certificates or membership interest certificates, with undated stock powers duly executed in blank by the applicable Pledgor and irrevocable proxies, are being delivered to Pledgee simultaneously herewith. Upon the creation or acquisition of any new Pledged Shares, Pledgor shall execute an Addendum in the form of Exhibit B attached hereto (a “ Pledge Addendum ”). Any Pledged Collateral described in a Pledge Addendum executed by Pledgor shall thereafter be deemed to be listed on Exhibit A hereto. Pledgee shall maintain possession and custody of the certificates representing the Pledged Shares and any additional Pledged Collateral.

(b)   Pledgor shall cause each Pledged Share consisting of either (i) a membership interest in a Person that is a limited liability company or (ii) a partnership interest in a Person that is a partnership (if any) to be “securities” governed by Article 8 of the UCC (as defined below) at all times. Pledgor shall cause the applicable Persons to issue certificates evidencing such membership interests or partnership interests (if any) to Pledgor. Pledgor shall not cause and shall not permit any Pledged Entity which is not a corporation to “opt-out” of Article 8 of the UCC. Pledgor shall not take, and shall not permit any Pledged Entity which is not a corporation to take, any actions to cause the Capital Stock, membership interests, partnership interests or similar equity interests of such Pledged Entity to cease to be classified as “securities” governed by Article 8 of the UCC.

(a)   Exhibit A sets forth (i) the authorized Capital Stock or membership interests of each Pledged Entity, (ii) the number of shares of Capital Stock or membership interests of each Pledged Entity that are issued and outstanding as of the date hereof, and (iii) the percentage of the issued and outstanding shares of Capital Stock or membership interests of each Pledged Entity held by a Pledgor. Each Pledgor is the record and beneficial owner of, and has good and marketable title to, the Pledged Shares owned by it, and such shares are and will remain free and clear, subject to Permitted Liens, of all pledges, liens, security interests and other encumbrances and restrictions whatsoever, except the liens and security interests created by this Agreement;

(b)   except as set forth on Schedule 4.1(d) of the Purchase Agreement, there are no outstanding options, warrants or other agreements with respect to the Pledged Shares or any of the other Pledged Collateral;

(c)   this Agreement is the legal, valid and binding obligation of each Pledgor, enforceable against such Pledgor in accordance with its terms, except and to the extent that such enforceability is subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and moratorium laws and other laws of general application affecting enforcement of creditors’ rights generally, or the availability of equitable remedies, all of which are subject to the discretion of the court before which an action may be brought;

(d)   the Pledged Shares have been duly and validly authorized and issued, are fully paid and non-assessable, and the Pledged Shares listed on Exhibit A constitute all of the issued and outstanding Capital Stock of the Pledged Entities;

(e)   no consent, approval or authorization of or designation or filing with any Governmental Authority on the part of any Pledgor is required in connection with the pledge and security interest granted under this Agreement;

(f)   the execution, delivery and performance of this Agreement will not violate any provision of any applicable law or regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, or of the articles of incorporation, bylaws or any other similar organizational documents of any Pledgor or any Pledged Entity or of any securities issued by any Pledgor or any Pledged Entity or of any mortgage, indenture, lease, contract, or other agreement, instrument or undertaking to which a Pledgor or any Pledged Entity is a party or which purports to be binding upon a Pledgor or any Pledged Entity or upon any of the assets of a Pledgor or any Pledged Entity, and will not result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of a Pledgor or any Pledged Entity, except as otherwise contemplated by this Agreement;

(g)   the pledge, assignment and delivery of the Pledged Shares and the other Pledged Collateral pursuant to this Agreement creates a valid first lien on and perfected first priority security interest in, subject to Permitted Liens, such Pledged Shares and Pledged Collateral and the proceeds thereof in favor of Pledgee, subject to no prior pledge, lien, mortgage, hypothecation, security interest, charge, option or encumbrance nor to any agreement purporting to grant to any third party a security interest in the property or assets of a Pledgor, which would include the Pledged Shares or any other Pledged Collateral. Until this Agreement is terminated pursuant to Section 11 hereof, each Pledgor covenants and agrees that it will

defend, for the benefit of Pledgee, Pledgee's right, title and security interest in and to the applicable Pledged Shares, the other Pledged Collateral and the proceeds thereof against the claims and demands of all other persons or entities; and

(h)   Neither Pledgor nor any Pledged Entity (i) will become a person whose property or interests in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) will engage in any dealings or transactions prohibited by Section 2 of such executive order, or (iii) will otherwise become a person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other Office of Foreign Asset Control regulation or executive order.

4.   Stock Dividends, Distributions, Etc.   If, while this Agreement is in effect, a Pledgor shall become entitled to receive or shall receive (i) any stock certificate (including, without limitation, any certificate representing a stock dividend or a stock distribution in connection with any reclassification, increase or reduction of capital, or issued in connection with any reorganization, merger or consolidation), or any options or rights, whether as an addition to, in substitution for, or in exchange for any of the Pledged Shares or otherwise, each Pledgor agrees, in each case, to accept the same as Pledgee's agent and to hold the same in trust for Pledgee, and to deliver the same promptly (but in any event within five days) to Pledgee in the exact form received, with the endorsement of the applicable Pledgor when necessary and/or with appropriate undated assignments separate from certificates or stock powers duly executed in blank, to be held by Pledgee subject to the terms hereof, as additional collateral security for the Obligations. The applicable Pledgor shall promptly deliver to Pledgee (i) a Pledge Addendum with respect to such additional stock certificates, and (ii) any financing statements or amendments to financing statements as requested by Pledgee. Each Pledgor hereby authorizes Pledgee to attach each such Pledge Addendum to this Agreement. In case any distribution of capital shall be made on or in respect of the Pledged Shares or any property shall be distributed upon or with respect to the Pledged Shares pursuant to the recapitalization or reclassification of the capital of the issuer thereof or pursuant to the reorganization thereof, the property so distributed shall be delivered to Pledgee to be held by it as additional Pledged Collateral. Except as provided in Section 5(b) below, all sums of money and property so paid or distributed in respect of the Pledged Shares which are received by Pledgor shall, until paid or delivered to Pledgee, be held by Pledgor in trust as additional Pledged Collateral.

5.   Voting Rights; Dividends .

(a)   So long as no Event of Default (as defined in the Bridge Notes) has occurred and is continuing, each Pledgor shall be entitled (subject to the other provisions hereof, including without limitation Section 8 below) to exercise its voting and other consensual rights with respect to the applicable Pledged Shares and to otherwise exercise the incidents of ownership thereof in any manner not inconsistent with this Agreement or the Purchase Agreement and the other Transaction Documents. Each Pledgor hereby grants to Pledgee or its nominee, an irrevocable proxy to exercise all voting and corporate rights relating to the Pledged Shares in any instance, which proxy shall be effective, at the discretion of Pledgee, upon the occurrence and during the continuance of an Event of Default.   After the occurrence and during

the continuance of an Event of Default and upon request of Pledgee, each Pledgor agrees to deliver to Pledgee such further evidence of such irrevocable proxy or such further irrevocable proxies to vote the Pledged Shares as Pledgee may request.

(b)   So long as no Event of Default shall have occurred and be continuing, Pledgor shall be entitled to receive cash dividends or other distributions made in respect of the Pledged Shares, to the extent permitted to be made pursuant to the terms of the Purchase Agreement or the Bridge Notes. Upon the occurrence and during the continuance of an Event of Default, in the event that a Pledgor, as record and beneficial owner of certain Pledged Shares, shall have received or shall have become entitled to receive, any cash dividends or other distributions in the ordinary course, such Pledgor shall deliver to Pledgee, and Pledgee shall be entitled to receive and retain, for the benefit of Pledgee, all such cash or other distributions as additional security for the Obligations.

(c)   Subject to any sale or other disposition by Pledgee of the Pledged Shares, any other Pledged Collateral or other property pursuant to this Agreement, upon full payment in cash, satisfaction and termination of all of the Obligations and the termination of this Agreement pursuant to Section 11 hereof of the liens and security interests hereby granted, the Pledged Shares, the other Pledged Collateral and any other property then held as part of the Pledged Collateral in accordance with the provisions of this Agreement shall be returned to the applicable Pledgor or to such other persons or entities as shall be legally entitled thereto.

(d)   Pledgor shall cause all Pledged Shares to be certificated at all times while this Agreement is in effect.

6.   Rights of Pledgee .   Pledgee shall not be liable for failure to collect or realize upon the Obligations or any collateral security or guaranty therefor, or any part thereof, or for any delay in so doing, nor shall Pledgee be under any obligation to take any action whatsoever with regard thereto. Any or all of the Pledged Shares held by Pledgee hereunder may, if an Event of Default has occurred and is continuing, without notice, be registered in the name of Pledgee or its nominee, and Pledgee or its nominee may thereafter without notice exercise all voting and corporate rights at any meeting with respect to any Pledged Entity and exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any of the Pledged Shares as if it were the absolute owner thereof, including, without limitation, the right to vote in favor of, and to exchange at its discretion any and all of the Pledged Shares upon, the merger, consolidation, reorganization, recapitalization or other readjustment with respect to any Pledged Entity or upon the exercise by any Pledged Entity, a Pledgor or Pledgee of any right, privilege or option pertaining to any of the Pledged Shares, and, in connection therewith, to deposit and deliver any and all of the