HOUSTON, April 25, 2005 (PRIMEZONE) -- Aztec Oil & Gas, Inc. (OTCBB:AZGS) announced today that the drilling of the first well in the two-well drilling program in the Deep Lake Field in Cameron Parish, Louisiana (state lease 18346), in which Aztec has a minority participation interest, has already passed a drill depth of 8,650 feet. The targeted total depth for this first well is approximately 13,900 feet.
Under the terms of the participation agreement announced earlier this month, Aztec will participate in a minority interest in drilling and completion of two wells in excess of 13,000 feet each. This first well, which is expected to cost approximately $3 million to drill to a vertical depth of approximately 13,900 feet, had a spud (start) date of April 15, 2005. The second well is planned to be drilled to an approximate vertical depth of 13,200 feet and is planned to be drilled shortly after the first well. According the program's operator and several consulting geologists, both well sites are targeted at formations that are considered to contain very high volumes of natural gas plus some condensate. The Deep Lake field has already produced in excess of one trillion cubic feet of gas to date.
"Aztec is encouraged by the brisk pace of drilling on this first Deep Lake well. We have joined with some very powerful industry players in this drilling program and are looking forward to the results this relationship and these wells can produce. Aztec is forging ahead with its plans to diversify its holdings, with plans to acquire interests in a variety of promising oil and gas properties and prospects. Although this is the first participation drilling project funded internally by Aztec, we are working diligently to build on this strategy to achieve our long-term portfolio diversification goals and to build long-term value for our shareholders," says Dr. Kenneth Lehrer, Chief Financial Officer of Aztec Oil & Gas, Inc.
Additional to the above referenced Deep Lake wells, in late 2004, 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.
Aztec's growth strategy for the Z2 Big Foot field 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 approximately 75% of the working interest revenues from "their" wells until the hard costs are recovered, with the other approximate 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.