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American Oil & Gas Inc.

Mon, 15 Dec 2008|

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Automatically Generated Transcript (may not be 100% accurate)

Thanks for being here this afternoon analysts describe it along we can in the last two days have been very long days I know when the market appreciate you listening in in either getting an update on American oil and gas are listening to us. A new introduction. -- perjury before looking statements disclosure that we have in this presentation. Company overview. We are focused on large resource potential projects in the Rocky Mountains. The management team that we have each have over thirty years experience. But we have three current focus areas and -- currently building a fourth. 20% of our stock. It's held by insiders recent asset sales. Result -- strong cash position we currently have. Between thirty and 35 million in cash and I just checked our our market capital market -- -- just shy of fifty million dollars so. With a very high percentage of our market yet in cash and we have no long term debt we only have the normal accounts payable. Action that should read no -- just accounts payable. The focus there is that we'll talk about today are Goliath project which is primarily a -- in focus -- Willis and base in North Dakota. -- Douglas project is a project that we have in converse county Wyoming -- inside the Douglas project is -- -- area. In -- -- -- project is in Niagara county Wyoming that's -- project it's targeting the productive potential of the Mallory shale. If you're familiar at all with American owned -- you -- recognize the Fetter project this is an area that that we've been focusing on now for about four years and and actively drilling out here for the last two and a half years. The history in this field goes back fifty years and about a dozen different operators that have tried to drill and make this -- successful and what keeps. Bringing operators back is the potential for a large resource primarily in the -- for a and frontier formations. Our drilling history out here has been. In addition to the -- -- Nyberg formations deeper formations Dakota and Mallory. There are at a number of prospective formations out here to to shallow formations teapot Portman formations are shallow and -- -- formations. The Niagara frontier money Marion Dakota formations are -- over pressured formations. Most of our work in most of our focus has been in the frontier formation but the drilling activity that we've accomplished over the last couple years. Has given us a lot of information on the other formations as well. One of the ways that a company like American owned gas can move these projects for these very big challenging projects is the partnership -- the relationships that we create and and we did create a relationship with that ray technology alliance. RT -- became our partner recently earned in interest in this area. And here in its interest by paying 100%. Three test wells to horizontal wells that were designed to -- horizontally into the frontier formation. And a third well that was designed to drill vertically and obtain information on all five of those formations that we had in the last slide. We were carried through the tanks in the form in these three wells that no financial exposure -- for about 23%. Halliburton energy services is that this project manager of fear and in return for providing and paying for that drilling activity. RT 125%. Working interest in the secrets position American. Controlled about 92 and a half percent prior to our -- earnings and Americans still controls compelling almost 7% working interest out here. These are the three wells that -- -- -- paid for and in drilled two wells on the top there. Are the two horizontal wells that we drilled in the area and one of the challenges. In this area historically has been. The high pressure highly fractured. Formations that that are gas charged and the challenge that drillers have and drilling in this area balancing that drilling fluids drilling fluids. Provide have a lot of different. Services are or are applications when you're drilling well one of them is to hold information back in and prevents blowouts and prior to current technology. Drillers and of attempted to drill out here. Were forced to drill with -- -- that are a little bit heavier than need to be to hold back the formation. It's tight -- walk so typically drillers. Don't want to hear on the side of drilling with drilling -- that's too light. Resulting in a blow out they tend to go over a little bit and what that causes. In a lot of times is what losing -- -- into the formation. And that's typically what's happened after historically. Drillers have drilled and lost thousands of drilling barrels -- drilling fluid in the formation. -- Halliburton brought out here was what they called moderate pressure drilling and that's drilling with -- would purposely a little bit lighter than it needs to be. To hold back the formation and with that results in -- You're actually producing -- drilling and those colors that you see on the slide. Or flares. In excess of forty million cubic feet a day there's gas processing plant that's -- in New Fairfield. And -- wells were tied into the -- to the gas processing plant and we were able to sell gas at times while we were drilling. This was a significant accomplishment for us because for the first time we were able to get -- well that was completed in action that we design. In order to understand additional potential out here -- did agree to drilling deep vertical well and test all five of those formations on that last slide. And that was accomplished with the Wallace six point three well. Because of the the activity -- or keep pace for the did -- the working interest in this area and they are now working interest partner with -- point 5% ownership. This is a summary of the results of that program both The Sims an argument well we're from two. Wells drilled horizontally into the frontier formation only metric week. -- reserve estimates about three -- the FBD. Wallace well. Falling after me in just two of the formations the two lowest formations Dakota and Mallory. That provided going metric -- -- about two -- yet -- so the resource out here is very compelling. But the challenges still remain. We currently own about. 33000. Net acres it better to 55000. Plus or minus gross -- Position and you can see in the bottom that's like that gives us opportunities to drill. Hundreds if not upwards of a thousand locations upon success. -- 2009. We expect to continue to drill in the -- area. Now subsequent to the Wallace six point three what we did -- another vertical well. The -- 1122 well completed in just -- frontier formation. And we disclosed about three weeks ago. The results of that well that's about 600 MC -- a -- well. That was very expensive extra because it he would go down to lower formations. The focus for American and our partners in better. Will be to get very efficient and drilling vertical wells specifically designed to be completed in the frontier formation. And potentially than -- ever formation or go out here. -- to bring our drilling costs down to around the two and a half million dollar range. And to prove up. A B and a half plus between the -- -- and and -- -- formation we have a drilling rig under contract we will start drilling our next well it's better. Sometime within the next seven to ten days so. Although the commodity prices are very painful for a lot of companies right now. We view that is sort of an advantage for us because with lower commodity prices. Come -- service -- and in order to focus on efficiencies that we need to bring into play it better. It's been very helpful for us to have those who -- service costs -- or are receiving that come into play. The next project will talk about is our Bakken project that we call Goliath and you can see on the slide that Goliath it's just. East or just west -- that oblong circle there that's the -- and Anna Klein and we're. -- probably. Familiar with the partial feel that's kind of -- -- area in the North Dakota Willis and basin. We had a position in the elm coulee field which was the original field that unlocked the productive potential of the pocket. With the war zone drilling -- -- technologies we didn't -- a very large interest monetize our interest in elm -- And position into our interest Goliath and we did drill -- well at Goliath in 2006. We currently controlling interest in over 80000 gross acres here net two American that's about a 33000. Acre position. This is some of the activity that's going on in and around our acreage companies like XPO on -- Petro hunt -- Miller drilling along the -- and Klein. Of course you know players in the partial field. Them well I mention that we drove in 2006. Was drilled in a fashion that we were familiar with from the elm coulee field we drill that well. 101500 feet deep and and we didn't try lateral completion which is what -- -- familiar with -- who. The wells were -- the entire -- lateral was in was -- independently but the entire lateral slack -- at one time. That's not the way that the wells are being completed successfully. In the North Dakota side Willis and basin and one of data points that we have is a well that was successfully re completed by Brigham Exploration to the west side of the NASA and you can see and that's like. That -- with a 727 days producer. Brigham -- at the same thing we did they drilled this well in 2006. And it was moderately successful was about a ninety barrel a day well. And it was drilled in the same fashion that wells were drilled -- them -- It they didn't use a swell Packers -- -- system. Like coming back and -- completing that will utilize in the systems -- brought in ninety girl and a well over 700 girls today the well that we drilled in 2006. What about a 150 barrel a -- well it was a tri lateral well was very expensive. By changing the drilling completion approach out here we do anticipate that that will greatly increase the production coming out of this area. Because we are a small company these projects. Being very capital intensive were very careful in how we position ourself. We are able to bring -- -- into this project as well and we accomplish the very similar type of earning structure. What are TA has agreed to do is to come into the Goliath area and pay 100%. What could be ultimately a four well program they will carry American for 25%. In this program. It's a step -- earning fashion they have to drill two wells. To earn a 40% interest in half the acreage a third well earns them a 40% interest. In another quarter and a fourth well work earned them. A 40% interest in the final quarter so ultimately they can -- a 40% interest in this acreage position. American currently controls about 32000 net acres after -- earns American was still owned upwards of 191000 net acres out here. And Halliburton energy services book project managed before -- program. In our Halliburton does do a majority of the completions out there it's their swell Packers system so we have the right financial relationship in place. We have the right project manager in place. And we expect to start drilling for Spock and well before the end of this year. This is the planned drilling activity there's two well -- and on this slide in its I know it's difficult to read but well on the right side is that by Al. In addition to -- and we do have and have established the potential for production from the red river formation and -- establish this through a successful well we. Drilled in conjunction with Whiting petroleum. We evaluated three seismic that -- created there target prominent -- found that same red river trend extends north and south. We acquired ten and half square mile -- acquisition interpreted that act was that data. And found that we have additional red river targets so that by -- well on there is a red river well it's a vertical wells drilled. That will be drilled about 141000 feet deep. Two up. Evaluate whether or not we have red river discovery. That Willis currently drilling that will started to drill last week and as soon as this well -- -- drilling. It's expected that this rig will move to the -- locations that. Archie will be -- In that program and that location on the slices -- -- anyone 34 that will has been -- to the -- well also so. We have. Primary focus out here from the Bakken and that'll be. Understood through -- program funded by RT eight. We have additional potential in the red river formation. The red river formation in this area that we have 3-D seismic. Is not part of the -- deal. We owned that independent -- we've carved out about a hundred square mile area that -- won't be a part of and that's that's this program. The joint program that -- TA will. Pay for is designed also to you give us. Information about other formations that are potential and the real exciting formation out here's three forks and mission. We based on our geological valuations we feel. Very excited about potential for three forks -- and the drilling program that -- will be funding is designed to gather. More information from the 34 -- -- and in court so. That is and it -- exciting component -- -- acreage position. Let's talk briefly about our preachy project this is a project that that we've had since we formed the company. About six years ago it's a very large acreage position about a 123000. Net acres are gross acres. Our current acreage position out here American is about 55000 net acres we're focusing on the -- formation it's the same marry that we have a better. Except here shower and it'll be mostly oil and -- normally pressure -- off a three wells were drilled in the sixties. Vertically that -- produced from the Mallory. Our approach out here is horizontal drilling Infrant technologies to unlock the potential of the marriage -- -- A terrific resource it actually sources a lot of production comes out of that. Powder river basin. It's also produced on its own but it's never really produced in -- predictable fashion we drilled five wells out here we've drilled five horizontal wells. We've had varying levels of success but no clear commercial success. Because of what we see in the Mallory. And what other companies in the marry there is a drilling program. By other companies now trying to accomplish what we've tried to accomplish so. -- -- -- -- -- Probably for the next six months is to sit back and watch other companies as they -- -- -- or five different operators. That are have drilling plans in the southern powder river basin. To try and get commercial production from the -- we know two wells that have been drilled and cased in the process of designing a completion so. Our approach with the Mallory. Is to to hand the ball off to another company to other companies and see if they knew the ball over the fuel -- so we won't be expanding. Any money any significant funds in the preachy project over the next six months while we watch other companies. Trying to accomplish what we try to accomplish success in the Mallory. Is is incredibly rewarding for American not only at preachy. Where we have the ability to -- over 750 wells in this area but also. Transitions over to or better feel that the Mallory -- better. It's also the very compelling and exciting formation and success by any of the other companies in the Mallory. Presumably would -- very well for American and both of these projects. So to summarize our net acreage position today that -- at 33000 net acres Goliath 191000. -- -- 55000. And the fourth project that I mentioned earlier is a project that we called -- We're still leasing out here and one of the claims to fame or that the reasons for American success is to be able to move in areas that are either out of favor. Or overlooked and we've built very large acreage positions in other areas and then through our drilling activity we've watched the value that was acreage position to increase. Tremendously. We expect to replicate that perfect -- project because -- still leasing out here we're not talking very much in detail about this area. But we have said is a shallow gas play in the rocky mountain region and you can see we currently control about -- 140000. Net acres out here. Over the next three to six months or expectation in -- is to continue or leasing program. We will do some test drilling and then once we get our acreage position establish will be able -- -- the morning until about this. So in summary again a strong cash position upwards. Thirty to 35 million currently in cash no debt. Continuing the progress and all four focus areas to which are gonna move forward without any -- on -- part. Bigfoot is an -- a huge camp X. Commitment on American. Better will be moving forward in a very defined. And very strategic fashion. Large resource potential 2009 continue to build reserves and cash flow. So again I thank you for hanging around late on Thursday afternoon and now hope be welcoming anybody and then break -- --

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