HOUSTON, Oct. 14, 2004 (PRIMEZONE) -- Aztec Oil & Gas, Inc. (OTCBB:AZGS) announced today that Lee Keeling and Associates has prepared an appraisal of interests owned by Z2 LLC. Aztec Oil & Gas, Inc. owns a 31.283% interest in Z2 LLC. Z2 owns 100% of the working interest in over seven thousand (7,000) producing acres in the prolific Big Foot oil field in Frio County, Texas.
According to the appraisal, the estimated remaining net oil reserves in the Z2-owned area of the Big Foot field amount to 4,674,216 barrels of oil. The future net revenues were estimated to be $74,216,270 at what was then the price of oil. However, since the effective date of the Keeling appraisal (July 1, 2004), NYMEX crude oil prices have increased from $38.10 per barrel to as high as $53.88 per barrel earlier this week.(1) Future net revenue is the amount, exclusive of income taxes, which will accrue to the appraised interests from the continued operation of the properties to depletion.(2)
The total gross oil production remaining in the field is estimated to be 5,627,470, barrels (per the Keeling report) or $303.1 million at Wednesday's (10/13/04) NYMEX oil price.
Houston-based Lee Keeling and Associates was founded in 1959. Its reports are widely recognized by major financial institutions and oil companies around the world. The reports are often used as a basis for oil company mergers, purchases, sales, financing of projects, and for registration purposes with financial and regulatory authorities throughout the world. Lee Keeling and Associates' client base consists of major oil companies such as Exxon-Mobil (NYSE:XOM), Marathon Oil (NYSE:MRO) and leading financial institutions such as Bank of America (NYSE:BAC) and Bank One (NYSE:ONE).
For more information on Lee Keeling and Associates, visit www.lkaengineers.com.
Aztec Oil and gas has recently acquired a 31.283% interest in Z2, LLC, which owns 100% of the working interest in the 7,200+ acre Big Foot oil field in Texas. The field was first discovered by Shell Oil in 1949, developed in the 1950's and has yielded an abundance of oil (over 22 million barrels) over the past five decades. According to Maverick Energy, operator of the Z2 leases, there are up to 400 proven, underdeveloped well sites within the presently productive areas of the Z2 properties. Aztec Oil & Gas intends to facilitate the drilling of a significant number of these new drill sites, which is expected to increase oil production from the current 8,000 to 10,000 barrels per month level. The Company also plans to seek out other promising producing oil and gas properties with proven reserves.
Aztec's growth strategy is partially based on participation, as it intends to team up with outside participation investors who will assume the costs associated with the drilling of additional wells in exchange for a part of the revenues derived from the wells they finance. We expect that such investors will receive up to 75% of the working interest revenues from "their" wells until the hard costs are recovered, with the other 25% going to Aztec and other lease working interest holders. Once the hard costs are repaid to those participation investors, the working interest revenues will be split 50-50 between those participation investors, on the one hand, and Aztec and other lease interest holders, on the other hand. Implementation of this strategy will allow Aztec to drastically reduce the financial risks for Aztec in drilling new wells, while receiving income from present field production in addition to income from any successful new drilling.
Aztec may also choose to utilize its own capital resources (presently including profits from existing wells or lines of bank credit), to fund newly drilled wells, thereby keeping a larger percentage of the revenues generated from those wells. Z2, LLC has already secured a $15 million line of credit from Texas Capital Bank for workover and re-entry of existing wells.
For more information on Aztec Oil & Gas, Inc., visit www.aztecoil-gas.com.
(1) Source: Nymex.com, August 2004 contract on 7/1/2004, November 2004 contract on 10/13/2004, intraday high.
(2) Future new revenue should not be construed as a fair market or trading value.
The statements contained in this news release that are not historical facts may be statements regarding the Company's future that involve risks and uncertainties which could cause actual results to differ materially from those currently anticipated. For example, statements that describe the Company's hopes, plans, objectives, goals, intentions or expectations are all forward looking statements. Any such statements made herein about the Company's future are only made as of the date of this news release. Numerous factors, many of which are beyond the Company's control, may affect actual results. The Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.