THE WOODLANDS, Texas, May 24, 2005 (PRIMEZONE) -- PEXCON, Inc. (Pink Sheets:PXCN), an oil and gas exploration and development company, is pleased to announce that the Company has signed a letter of intent to acquire the operations of Orlando based Tekoil & Gas Corporation. Tekoil is a private technology company focused on developing unique and proprietary products and processes to service the global oil and gas industry.
According to the Department of Energy (DOE), the United States currently has 457,000 marginal wells - defined as a well that produces 15 barrels a day or less. These wells collectively represent 1.2M barrels per day of annual production, and account for nearly 20 percent of the total oil production in the United States; this is roughly the same amount we import from Saudi Arabia. Since 1993, America's well producers have plugged and abandoned approximately 150,000 marginal wells and 150M barrels of crude oil. This was often done when world oil prices were depressed and it would cost producers more to run a marginal well than they'd recover in revenue. The result was a loss of over $3.5B in economic output for the US and over $500M in lost earnings for US producers.
PEXCON, through the acquisition of Tekoil, is now poised to enter a billion dollar market for acquisition, stimulation, rehabilitation, and asset improvement of small to medium-sized oil and gas fields and marginal wells throughout North America, with plans to expand internationally. The company will still be engaged in acquiring working interests in oil and gas projects, but will also possess proprietary and unique technologies to increase yield and total recovery of oil and gas reserves. Tekoil has provided PEXCON management with their earnings projections as follows:
FY2006: $3,100,000 FY2007: $18,100,000 FY2008: $46,600,000
Upon closing of this acquisition, PEXCON will change its name to Tekoil & Gas Corporation to better reflect the core focus of the combined company. The company expects the acquisition to close within (45) calendar days. The acquisition is subject to due diligence, agreement of financial terms, and attorney review.