HOUSTON, Nov. 11, 2004 (PRIMEZONE) -- Aztec Oil & Gas, Inc. (OTCBB:AZGS) announced today oil production at the Z2 properties, in which it holds a 31.283% interest, increased 10.1 percent in the month of October over the previous month. The property yielded 9,100 barrels of oil in October 2004 compared to 8,261 barrels (BBL) in September. 9,100 BBL at current market prices translates to approximately $450,000 per month or $5.4 million on an annualized basis.* At the end of October, 238 of the 257 existing wells on the Z2 properties were online and producing.
Earlier this month, the Company announced that it has retained the services of Doherty & Company, L.L.C., a firm specializing in acquisitions, specifically for the purpose of identifying acquisition targets. 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. With its retention of Doherty & Company, Aztec will begin looking at other potential proven, producing oil & gas properties in which it may have the potential to acquire working interests in an effort to boost its oil & gas properties portfolio and thus further increase its overall oil production capabilities.
Aztec Oil and Gas recently acquired its 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 reported appraisal by Lee Keeling & Associates, the total gross oil production remaining in the field is estimated to be 5,627,470 barrels, which would be $279.2 million of oil at Friday's (11/5/04) NYMEX closing oil price of $49.61.
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 might increase oil production from the current level to the 10,000 barrels per month level.
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 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.
For more information on Aztec Oil & Gas, Inc., visit www.aztecoil-gas.com.
(*) This calculation is based on the Friday 11/5/04 closing price on NYMEX for Light Sweet Crude. The price Aztec Oil & Gas and the other parties involved in the Z2 properties receive for the oil produced on their properties may be less than NYMEX prices at any given time.
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.