HOUSTON, Oct. 28, 2004 (PRIMEZONE) -- Aztec Oil & Gas, Inc. (OTCBB:AZGS) announced today additional details on its business model. 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 big Foot oil field in Atascosa and Frio counties in Texas.
Aztec's business model is based on purchasing interests in proven, producing oil & gas properties with underexploited drilling sites rather than taking on the very large expenses and high risks associated with traditional drilling and exploration.
Traditional oil & gas exploration involves leasing or purchasing exploration / drilling rigs to drill in an effort to discover that oil & gas. This process can be extremely expensive and time consuming. Additionally, there are no guarantees that the oil company will ever make a profit when costs for drilling a single well can run into the hundreds of thousands (or millions) of dollars. Also, a very high percentage of all traditional exploration wells drilled each year end up being dry holes.
As previously stated, 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 over 22 million barrels over the past five decades. According to a recent appraisal by Lee Keeling & Associates, the total gross oil production remaining in the field is estimated to be 5,627,470 barrels or $309.1 million at Wednesday's NYMEX oil price of $54.92.
According to Maverick Energy, operator of the Z2 leases, there are still 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 number of these new drill sites, which could 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. Participation investors would possibly receive up to 75% of the working interest 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 Company expects that any working interest revenues would be split approximately 50-50 between those participation investors, on the one hand, and Aztec and other lease interest holders, on the other hand. The Company expects that implementation of this strategy should allow a drastic reduction in the financial risks for Z2 and Aztec in drilling new wells, while still receiving income from present field production in addition to income from any successful new drilling.
Aztec believes its business model sets it apart and should significantly benefit the company, its shareholders and outside investors.
Aztec Oil & Gas is also in the process of seeking out other promising producing oil & gas properties with proven reserves. Aztec is looking for properties where it can acquire stakes in existing proven production and apply its unique strategy of leveraging the capital of outside investors to fund its drilling operations.
Aztec is also planning to leverage its status as a publicly traded company to possibly acquire other oil & gas companies in order to rapidly increase its size and market value. This strategy affords Aztec the ability to grow much faster than relying exclusively on the reinvestment of profits from its existing operations.
Aztec's press release on October 14th included a reference to a $15 million financing Z2 LLC had secured with a Texas financial institution. In clarification, that financing is a master bank note based on production, a portion of which is drawn down based on current production.
For more information on Aztec Oil & Gas, Inc., visit www.aztecoil-gas.com.
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.