Message #10 From:
NewsBot Date: February 22, 2008 04:22:30 PM
American Oil & Gas Announces Fetter Well Reserve Estimates and Provides Douglas Project Completion and Production Updates
DENVER, Feb. 22 /PRNewswire-FirstCall/ -- American Oil & Gas, Inc. (Amex: AEZ) reports that the preliminary December 31, 2007 estimated ultimate gross proved reserves for three wells drilled during 2007 at American's Fetter project are as follows:
Natural Gas Oil Natural Gas Natural Well Name Equivalent (Bbls) Liquids Gas (Bcfe) (Bbls) (Mcf)
Hageman 16-34HR 2.924 89,384 97,015 1,805,249 (Horizontal completion in the Frontier Formation)
Wallis 6-23 1.989 61,041 67,051 1,220,815 (Vertical completions in the Dakota and Mowry Formations)
Sims 15-26H 3.275 102,065 94,609 2,095,170 (Horizontal completion in the Frontier Formation)
The estimates presented are based on production history and/or reservoir
data available through February 14, 2008 and are subject to future revisions
as additional production history becomes available. The current reserve
evaluation did not result in value being assigned yet to proved undeveloped
locations offsetting these initial wells due to the high costs associated with
drilling and completion operations to date. This was not unexpected as
considerable time and capital was expended on these early wells to obtain
geological and reservoir data that will not likely recur as additional
drilling and field development continues. Final results will be provided in
American's Annual Report on Form 10-K for the year ended December 31, 2007 to
be filed with the SEC in March 2008.
Andrew Calerich, President of American commented, 'the reserve estimates
for the wells drilled at our Fetter project firmly support moving to the next
phase of drilling that will focus on drilling efficiencies, maximizing
production and reserve enhancement. We applaud Red Technology Alliance for
the capital resources assigned and Halliburton Energy Services, Inc. and RTA
for the human and technology resources deployed. Without this commitment, the
Fetter Project could not have advanced to this level.'
American's estimated total proved reserves at December 31, 2007, are 2.21
billion cubic feet of gas equivalent ('Bcfe'), a 62% increase over its
December 31, 2006 proved reserves of 1.36 Bcfe. American's capitalized costs
of oil and gas properties are limited in the aggregate to a full-cost ceiling
that considers all projects' estimated proved reserves and recent oil and gas
prices but cannot consider expected prices, probable reserves or fair value in
excess of capitalized costs for unproved properties; therefore, American
expects to record a full-cost ceiling impairment at December 31, 2007 of
approximately $1.3 million, net of tax. The impairment amount may decrease or
increase due to future events occurring prior to American filing its 2007
Annual Report on Form 10-K in March.
Fetter Project
Hageman 16-34HR well: The Hageman well has been completed and has
commenced natural gas production into the sales line from the unstimulated
5,200 total feet of horizontal lateral that was drilled into the targeted
Frontier formation. The well is currently recovering several thousand barrels
of load water used to stabilize the well prior to completion operations.
American expects to report actual production rates after the load water is
recovered from the well.
Wallis 6-23 well: The Wallis well, which was drilled to a total depth of
13,000 feet, is the first vertical well to be drilled by American and partners
in the Fetter project and is designed to test multiple prospective formations
utilizing multi-stage frac technology. Production history from the Wallis
well will allow an economic and reserve recovery comparison to be made between
this type of vertical completion and that used on the Sims and Hageman wells
which are single zone (Frontier formation only) horizontal completions. To
date, the Wallis well has been completed and fracture stimulated in the Dakota
and Mowry formations. Preliminary testing and evaluation of the Mowry is
ongoing after which additional uphole formations, including the Frontier, will
be completed. Upon completion and preliminary evaluation of all prospective
formations in the well, the Dakota, Mowry and other zones of interest are
expected to be commingled, tested, and placed on production.
Sims 15-26H well: The Sims well continues to produce into sales from the
1,165 foot horizontal lateral that was drilled into the targeted Frontier
formation. Since January 1, 2008, the well has been on production for all but
six days and daily natural gas production has ranged from less than one
million cubic feet per day to over five million cubic per day. Over this
timeframe, daily production for the well has averaged approximately 1.7
million cubic of natural gas and 50 barrels of oil. Daily volumes have
continued to fluctuate as natural gas production from the well has been
affected by the relatively high volume of high gravity oil that is a natural
component of the reservoir. Although the oil is a benefit from a revenue
generating perspective, the high volume of oil production can prevent the well
from producing at optimum rates. This results in liquid (oil) loading and is
the subject of ongoing engineering, reservoir and production optimization
analysis. To date, the Sims well has cumulatively produced (into the sales
line and flaring during early testing) approximately .5 billion cubic feet of
natural gas equivalent during which time the well was often shut in or
restricted due to testing and routine completion activities. Because of the
high BTU content and inclusion of sales of natural gas liquids, which is
separate from the oil production, American received a price at the wellhead
for December natural gas sales of approximately $8.93 per mcf.
West Douglas Project
State Deep 7-16 well: Completion and preliminary testing of the Mowry
formation has recently concluded and information obtained from the Mowry and
deeper formations will assist with future drilling plans in the project area.
Completion and testing operations are now underway in the Frontier formation,
after which completion and testing of additional prospective formations above
the Frontier are currently planned.
American Oil & Gas, Inc. is an independent oil and natural gas company
engaged in exploration, development and production of hydrocarbon reserves
primarily in the Rocky Mountain region. Additional information about American
Oil & Gas, Inc. can be found at the Company's website:
http://www.americanog.com.
This release and the Company's website referenced in this release contain
forward-looking statements regarding American Oil & Gas, Inc.'s future plans
and expected performance that are based on assumptions the Company believes
to be reasonable. A number of risks and uncertainties could cause actual
results to differ materially from these statements, including, without
limitation, the success rate of drilling efforts and the timeliness of
development activities, the Company's dependence on future drilling success,
fluctuations in oil and gas prices, and other risk factors described from time
to time in the Company's reports filed with the SEC. In addition, the Company
operates in an industry sector where securities values are highly volatile and
may be influenced by economic and other factors beyond the Company's control.
The Company undertakes no obligation to publicly update these forward-looking
statements to reflect events or circumstances that occur after the issuance of
this press release or to reflect any change in the Company's expectations with
regard to these forward-looking statements or the occurrence of any
unanticipated events. This press release may include the opinions of American
Oil & Gas, Inc. and does not necessarily include the views of any other person
or entity.
Contact: Andrew Calerich, President Neal Feagans, Investor Relations 303.991.0173 Fax: 303.595.0709 Feagans Consulting, Inc 1050 17th Street, Suite 2400 - 303.449.1184
