A novel Bacillus licheniformis strain (DM-1) was isolated from a mature reservoir in Dagang oilfield of China. DM-1 showed unique properties to utilize petroleum hydrocarbons and agroindustrial by-product (molasses) for exopolysaccharide (EPS) production under oil recovery conditions. The DM-1 EPS was proven to be a proteoglycan with a molecular weight of 568 kDa. The EPS showed shear thinning properties and had high viscosities at dilute concentrations (<1%, w/v), high salinities, and elevated temperatures. Strain DM-1 could degrade long-chain n-alkanes up to C36. Viscosity reduction test have shown that the viscosity of the crude oil was reduced by 40% compared with that before DM-1 treatment. Sand pack flooding test results under simulated reservoir conditions have shown that the enhanced oil recovery efficiency was 19.2% after 7 days of in-situ bioaugmentation with B. licheniformis DM-1. The obtained results indicate that strain DM-1 is a promising candidate for in situ microbial enhanced oil recovery (MEOR).