HOUSTON, March 31, 2005 (PRIMEZONE) -- Aztec Oil & Gas, Inc. (OTCBB:AZGS) announced today that the final steps necessary for four (4) new infield oil wells, recently drilled by the Big Foot 2004-1 Drilling Program LP on the Z2 LLC properties (in which Aztec holds a 31.283% working interest) to begin production, is expected within the next 2-3 weeks. 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.
Maverick Energy, operator of the Z2 leases, has indicated that oil services firm Schlumberger LTD (NYSE:SLB) is scheduled to frac the first two of the four new wells next week and the remaining two wells within the next 2-3 weeks. Maverick also reported that all of the infrastructure and perforation on the wells has been completed and that the pumps are in place to begin pumping as soon as Schlumberger finishes fracing each well. All four wells, which were drilled to an average depth of approximately 3,800 feet, have already received final permit clearance from the Texas Railroad Commission and thus are cleared to begin production of oil (and possibly producing gas) once completed.
"Aztec is pleased that the first new wells are about ready to go online. We believe that there are significant petroleum resources still to be tapped in the Big Foot field and are anxious to be moving forward with the drilling program. As crude prices continue to hover above $50 dollars a barrel and we move closer to the peak summer season, the demand for crude oil and gasoline typically jumps significantly. This is precisely the time that oil operators want their production to pick up. With four new wells coming online in April and workover efforts on other existing wells in process, Aztec hopes to boost its overall production at this optimal time of the year," comments Dr. Kenneth Lehrer, Chief Financial Officer of Aztec Oil & Gas, Inc.
The Drilling Program received funds from two investment groups affiliated with shareholders of Aztec to fund the drilling and completion phases of the four new wells, which was necessary to bring these new wells "on-line." Accordingly, 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 the Z2 LLC net.
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, 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 current levels.
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. 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. The Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.