HOUSTON, May 5, 2005 (PRIMEZONE) -- Aztec Oil & Gas, Inc. (OTCBB:AZGS) announced today that it has taken a minority participation working interest in the McCoy No. 2 well in the Barnett Shale play, north of Fort Worth, Texas. This well is the first in a planned program to exploit oil and gas reserves from leasehold interests held in the Barnett Shale play located in Cooke, Wise and Montague Counties, Texas.
The Barnett Shale is the largest natural gas play in Texas. It is presently producing 900 MMCF of gas per day and is considered one of the largest U.S. domestic natural gas plays with sizable, remaining resource potential. The first Barnett Shale wells were drilled and completed in the early 1980s by Mitchell Energy of Houston, Texas. According to an in-depth 2004 sector report on the Barnett Shale, developed by Morgan Stanley (NYSE:MWD), the Barnett Shale play is estimated to hold reserves in the non-core area that could be as high as 150 BCF per 1,000 acres. The report estimated that because of the amount of gas available in the area, successful wells in the Barnett Shale should be economically viable in almost any gas price environment. There are 75 rigs currently operating in the area.
Under the terms of the participation agreement with Rife Energy Operating, Inc. (the program's operator), Aztec Oil & Gas has acquired a minority working interest (approx. 4.167%) in the drilling and completion of one well (McCoy No. 2) that has already been drilled to an approximate depth of 8,800 feet. This well is now in the completion stage and is expected to go on-line in approximately 45 days. The total cost for drilling and completion of the McCoy No. 2 well is anticipated to be approximately $1.3 million.
"Petroleum and natural gas production in the Barnett Shale play has been increasing steadily year after year. This is by far one of the most active and prolific gas fields in America right now and as such is garnering a lot of attention all the way from the oil patch to Wall Street. The group that we have joined in this Barnett Shale drilling program is affiliated with one of the major stakeholders in the area with scores of wells already in production. We are very confident in their proven ability to locate the best drilling sites in the area and to efficiently tap the vast gas resources held in Barnett Shale. This project is one of several next steps in Aztec Oil & Gas' ongoing program to build a diverse portfolio of promising oil and gas properties and prospects. We plan to continue pursuing other promising prospects that should help us build a diverse portfolio with long-term value for our shareholders," says Dr. Kenneth Lehrer, Chief Financial Officer of Aztec Oil & Gas, Inc.
In addition to the above-referenced Barnett Shale program, Aztec Oil & Gas recently acquired a minority interest in two Deep Lake well prospects in Cameron Parish, Louisiana; the first well of which is nearing completion of the drilling phase. Also, in late 2004, Aztec acquired its 31.283% interest in Z2, LLC. Z2, LLC owns 100% of the working interest in the 7,200-plus acre Big Foot oil field in Texas. The field was first discovered by Shell Oil in 1949, developed in the 1950s 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.
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.