HOUSTON, Dec. 2, 2004 (PRIMEZONE) -- Aztec Oil & Gas, Inc. (OTCBB:AZGS) announced today that the Big Foot 2004-1 Drilling Program LP has commenced the drilling phase on four (4) new infield oil wells to be drilled on the Z2 LLC properties, in which Aztec holds a 31.283% working interest. Drilling of all four new wells is presently projected to be completed by the end of this year, subject to weather, availability of equipment, etc. These four (4) wells are the first wells funded in accord with Aztec's business model that calls for participation from outside investors to assume the cost of drilling wells in exchange for a part of the revenues derived from the wells they finance.
The Drilling Program received approximately $500,000 in November from two investment groups affiliated with shareholders of Aztec to fund the drilling of the four new wells. The investment groups have also agreed to provide additional funds for the subsequent well completion phase necessary to bring the new wells "on-line." The investment groups will receive 75% of the working interest revenue from the wells until the costs are recovered. Thereafter, working interest revenues would be split 50-50 between the investor groups, on one hand, and Z2 LLC, with Aztec being entitled to 31.283% of any such proceeds to Z2 LLC.
Earlier this year, Aztec Oil and Gas acquired its 31.283% interest in Z2, LLC. Z2, LLC 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.
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 should increase oil production from the current level of approximately 9,000 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 initially 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 well 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 both Z2 and Aztec would still be 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.
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. Also, the price Aztec Oil & Gas, Inc. and the other parties involved in the Z2 properties receive for the oil produced on their properties may be less than quoted NYMEX prices at any given time.