Message #14 From:
NewsBot Date: August 13, 2008 09:47:37 AM
AEZ Stock: American Provides Goliath Bakken, Fetter, West Douglas and Krejci Project Updates and Reports Second Quarter 2008 Financial Results
2nd Qtr 2008 Revenues Double That of 2nd Qtr 2007 and Proved Reserve Values Increase 188% Over Year-End 2007
DENVER, Aug. 11 /PRNewswire-FirstCall/ -- American Oil & Gas, Inc.
(Amex: AEZ stock) reports the following operational updates and financial results:
Operational:
Goliath Bakken Project - Williston Basin, North Dakota
Recent success by other operators on wells drilled on the west side of the
Nesson Anticline, in close proximity to American's Goliath Bakken acreage
position have provided valuable completion and stimulation data that will be
incorporated into planning for future wells. American is in the final stages
of planning the next phase of drilling that will target the Bakken at Goliath
and expects to commence drilling before year-end 2008.
In addition to Bakken drilling, permitting and location preparation are
complete and, subject to drilling rig availability, American expects to
commence drilling the next well targeting the Red River formation at Goliath
late in the third quarter or early in the fourth quarter of 2008. The Solberg
32-2 well (11.9% working interest), American's first Red River well at Goliath
that commenced production in May 2008 at rates averaging 1.45 mmcf/day of
natural gas and 75 bbls/day of oil, has recently been averaging rates of
approximately 1.8 mmcf/day of natural gas and 90 bbls/day of oil.
American's Goliath project is located in the Williston Basin of North
Dakota, primarily in Williams and Dunn Counties, and currently encompasses
approximately 80,000 gross acres. American owns a 50% working interest in
approximately 65,000 lease net acres within the 80,000 gross acre area.
Fetter Project - Powder River Basin, Wyoming
Production for most of the second quarter at the Fetter Project was
inconsistent due primarily to repairs and maintenance of the third-party
natural gas pipeline that connects the field to the Douglas natural gas
processing plant. However, pipeline repairs and testing have now been
completed allowing production to commence from wells in the field without
extended shut-in periods that have been common during the previous six months.
Plunger lifts have been installed in the Hageman 16-34HR well (a horizontal
Frontier formation completion) and the Wallis 6-23 well (a vertical well
currently undergoing extended testing from just the Frontier formation) that
are designed to assist in lifting the high gravity oil the Frontier formation
is producing. Both wells have initially shown favorable response relative to
prior production. The Sims 15-26H well (a horizontal Frontier completion),
which first went on production in the Fall of 2007, continues to produce at
rates recently averaging approximately one mmcfe/day. The State 4-36 well
(drilled in 2006 and completed vertically in an unstimulated 50 foot interval
within the Frontier formation) also continues to produce. Production
optimization efforts are ongoing on all four wells.
Also at the Fetter Field, American recently drilled and cased the vertical
Hageman 11-22 well to a depth of 12,945'. Completion operations are currently
ongoing and are planned to test the Dakota, Muddy, Mowry, Frontier and
potentially the Niobrara and Steele formations. While drilling the Hageman
11-22 well, mud log and electronic log analysis indicated potential oil pay in
the shallower, normally pressured Teapot and Parkman formations at depths of
approximately 7,710' and 8,200', respectively. As a result, American has
recently drilled and cased the Hageman 11-22UK well from the same drillsite as
the Hageman 11-22 well and completion operations are underway.
Pat O'Brien, CEO of American commented, 'We are finally in a position to
produce our wells in the Fetter Field on a consistent basis which enables us
to effectively manage the production methods we are using. We are
particularly pleased to see the Hageman 16-34HR and Wallis 6-23 wells
responding favorably to the plunger lift system installations. We are now
approaching a full year of intermittent production from the Sims 15-26H.
Based on the production to date and decline curve profile, we remain confident
that drilling short lateral horizontal Frontier wells in the Fetter Field will
likely be part of our broader field development plans. We have identified,
surveyed and permitted a number of drilling locations that would support
either vertical or horizontal wells and will continually evaluate the
appropriate drilling approach to maximize reserve and cash flow growth. We
expect the deep drilling rig that was released to another operator for a one
well program to return to Fetter late in the third quarter of 2008.'
West Douglas Project - Powder River Basin, Wyoming
Completion and testing operations are continuing on multiple prospective
formations in the State Deep 7-16 well pursuant to a participation agreement
with Red Technology Alliance ('RTA'), whereby RTA has agreed to pay 100% of
the costs to drill and complete this well. American is being carried through
the tanks in this well and will own a 45% working interest. Upon completion
of this well, RTA will earn a 50% working interest in the undrilled
approximate 40,000 gross acres dedicated to the agreement, and American will
retain a 45% working interest.
Krejci Project - Powder River Basin, Wyoming
At the Krejci project, the Krejci Family Trust 32-1H well, the most recent
well drilled and horizontally completed in the Mowry formation, has been
placed on pump and is currently producing approximately 20 barrels of oil per
day as well as returning frac fluids. Oil production may improve as the well
cleans up. Information obtained from this well will be incorporated into
continuing efforts to optimize drilling, completion and stimulation methods
with the goal of commercially unlocking this large resource potential. Near
term plans by other operators to drill Mowry wells in the Powder River basin
are anticipated to accelerate the learning curve.
Financial:
Based on internal estimates, American's standardized measure of discounted
future net cash flows from its proved reserves at June 30, 2008, approximates
$15.6 million, compared with $8.3 million at December 31, 2007. On a barrels
of oil equivalent basis, at June 30, 2008 American's proved reserves increased
to 731,000 boe from 368,000 boe (99%) at December 31, 2007.
American reports revenues for the second quarter ended June 30, 2008
increased to $937,000 from $416,000 (225%) as compared to the second quarter
ended June 30, 2007. Revenues for the six month period ended June 30, 2008
increased to $1,445,000 from $812,000 (178%) as compared to the six month
period ended June 30, 2007.
For the quarter ended June 30, 2008, American reports a net loss to common
stockholders of $945,094 (loss of two cents per share, basic and diluted), as
compared to a net loss to common stockholders of $695,083 (loss of two cents
per share, basic and diluted) for the corresponding quarter ended June 30,
2007. For the six-month period ended June 30, 2008, American reports a net
loss to common stockholders of $2,265,519 (loss of five cents per share, basic
and diluted), as compared to net loss to common stockholders of $1,560,442
(loss of four cents per share, basic and diluted) for the corresponding
six-month period ended June 30, 2007.
During the quarter ended June 30, 2008, American sold 4,866 barrels of oil
at an average price of $114.91, resulting in oil revenues of $559,135, and
sold 34,712 Mcf of natural gas at an average price of $10.90 per Mcf,
resulting in gas revenues of $378,226. During the corresponding quarter of the
prior year, American sold 4,501 barrels of oil at an average price of $59.40,
resulting in oil revenues of $267,365, and sold 23,695 Mcf of natural gas at
an average price of $5.77 per Mcf, resulting in gas revenues of $136,725.
During the six-month period ended June 30, 2008, American sold 7,894 barrels
of oil at an average price of $102.23, resulting in oil revenues of $806,966,
and sold 63,928 Mcf of natural gas at an average price of $9.98 per Mcf,
resulting in gas revenues of $638,199. During the corresponding six-month
period of the prior year, American sold 8,835 barrels of oil at an average
price of $55.47, resulting in oil revenues of $490,094, and sold 50,715 Mcf of
natural gas at an average price of $6.10 per Mcf, resulting in gas revenues of
$309,496.
For the quarters ended June 30, 2008 and 2007, American's general and
administrative expenses were $1,101,105 and $1,168,960, respectively. For the
six-month periods ended June 30, 2008 and 2007, American's general and
administrative expenses were $2,491,313 and $2,301,802, respectively. The
major changes in general and administrative expenses for the six-month periods
were a $411,000 increase in employee compensation largely due to additional
personnel and a $185,000 decrease in external accounting, auditing and legal
expenses relating to compliance with SEC reporting requirements.
At June 30, 2008, American had $7.8 million in working capital,
$88.8 million of total assets, $5.0 million of current liabilities and
stockholders' equity of $83.5 million. There are currently 47,811,049 common
shares outstanding, which includes 1,141,992 shares resulting from the
automatic conversion on July 22, 2008 of all outstanding convertible preferred
shares into common shares.
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
