EXHIBIT 99.1
On August 17, 2005, the Registrant issued the following news release:
"American Oil & Gas Provides Second Quarter
Financial Results and Operations Update
DENVER - American Oil and Gas, Inc. (AMEX: AEZ) today announced oil and gas
revenues of $1,239,042 and net income of $159,412, or less than one cent per
share basic and diluted, for the quarter ended June 30, 2005, as compared to oil
and gas revenues of $79,763 and a net loss of $188,705, or one cent per share,
for the quarter ended June 30, 2004. For the six months ended June 30, 2005, the
Company had oil and gas revenues of $1,925,769 and net income of $221,074, or
one cent per share basic and diluted, as compared to oil and gas revenues of
$147,677 and a net loss of $350,704, or two cents per share, for the six months
ended June 30, 2004.
During the quarter ended June 30, 2005, the Company sold 22,233 barrels of
oil at an average price of $50.97, resulting in oil revenues of $1,133,297, and
sold 16,094 Mcf of natural gas at an average price of $6.57 per Mcf, resulting
in gas revenues of $105,745. During the corresponding quarter of the prior year,
the Company sold 815 barrels of oil at an average price of $37.47, resulting in
oil revenues of $30,527, and sold 11,228 Mcf of natural gas at an average price
of $4.39 per Mcf, resulting in gas revenues of $49,236.
During the six month period ended June 30, 2005, the Company sold 35,958
barrels of oil at an average price of $48.92, resulting in oil revenues of
$1,759,034, and sold 26,163 Mcf of natural gas at an average price of $6.37 per
Mcf, resulting in gas revenues of $166,735. During the corresponding six month
period of the prior year, the Company sold 1,587 barrels of oil at an average
price of $34.37, resulting in oil revenues of $54,548, and sold 23,361 Mcf of
natural gas at an average price of $3.99 per Mcf, resulting in gas revenues of
$93,129.
The Company incurred increases in general and administrative expenses for
both the quarter and six months ended June 30, 2005 as compared to the prior
year periods. The increase in the quarterly period is primarily from an increase
in salaries of $251,000, primarily from the acquisition of Tower Colombia
Corporation. In addition, the Company paid a $75,000 listing fee to the American
Stock Exchange, paid a management fee of $15,000, and recorded an increase in
directors' expense of $48,000, which was associated with the value of common
stock paid to an independent director. The increase in the six month period is
primarily from an increase in salaries of $279,000, primarily from the
acquisition of Tower Colombia Corporation, together with the $75,000 listing fee
paid to the American Stock Exchange, a management fee of $90,000, and an
increase in directors' expense of $79,000. The remaining increases in both the
quarterly and six month periods result from costs associated with expanding
operations.
At June 30, 2005, the Company had working capital of $2,987,778, of which
$2,799,273 was in cash and cash equivalents, $11,224,699 in total assets, a long
term asset retirement obligation of $44,425, and $10,220,104 in stockholders'
equity. There are currently 35,788,702 common shares outstanding.
Operationally, at the Company's Fetter project, the sidetracked wellbore on
the Sims 16-26 well has been drilled into the Niobrara formation, approximately
260 vertical feet above the Frontier formation, where the well has encountered
significant pressures and intermittent natural gas flows. Current operations
include stabilizing the well in preparation to continue to drill toward the
Frontier formation, which is the primary objective of this well. After drilling
the remaining 260 feet, the wellbore will be conditioned in preparation for
running and cementing 5 1/2 inch casing. Once casing has been set, the
conventional drilling rig will be removed and a snubbing unit will be rigged up
to drill the high angle, under-balanced drilling portion of the well into the
Frontier. The conventional drilling rig will be mobilized to the Hageman 16-34
well location, the second of the planned initial two well program at Fetter.
The snubbing unit that will be used to drill the under-balanced portion of
the Sims well is designed to operate under the types of surface pressures and
flow rates encountered on the well's first penetration into the Frontier
formation last month. Reservoir information and operational experience obtained
from the initial effort indicate that utilizing a snubbing unit may facilitate
achieving the lateral penetration objectives on this well and help overcome some
of the mechanical challenges encountered from drilling the Frontier formation
with the conventional drilling rig.
The Fetter project area consists of approximately 51,000 gross acres
within American's 103,000 gross acre Douglas project. Subject to the terms of
existing agreements with partners, American is paying 15% of the costs on the
Sims 16-26 well and owns a 26.25% interest. On the Hageman 16-34 well, American
will pay 37.5% of the costs and will own a 45% interest. On all remaining wells,
with the exception of three locations, American owns and will pay the associated
costs of its 56.25% interest.
At the Big Sky Project, American currently owns working interests
aggregating .86 net well in a total of 16 gross producing wells. The Company's
share of production from this project is now approximately 250 barrels of oil
per day. The Company is on schedule to participate in the drilling of up to nine
additional wells during the remainder of 2005.
At the Krejci oil project, targeting the Mowry shale, American has
permitted several new drill sites and is in the process of securing a drilling
rig with the goal of commencing a multi-well horizontal drilling program later
this year. Discussions are ongoing with several potential industry partners.
At the West Rozel heavy oil project in Utah and the Bear Creek Coalbed
methane project in Montana, the Company is in advanced stage discussions with
potential industry partners with the goal of entering into some form of
participation agreement, farm out or sale of the properties.
Selected Financial and
Operating Data Three Months Ended Six Months Ended
6/30/05 6/30/04 6/30/05 6/30/04
------- ------- ------- -------
FINANCIAL RECAP:
- ---------------
Revenues $1,239,042 $ 79,763 $1,925,769 $ 147,677
Net income (loss) $ 159,412 $ (188,705) $ 221,074 $ (350,652)
Net income (loss) per common share-
basic $ -- $ (0.01) $ 0.01 $ (0.02)
Net income (loss) per common
share-diluted $ -- $ (0.01) $ 0.01 $ (0.02)
OPERATING DATA:
- ---------------
Net oil production (Bbl) 22,233 815 35,958 1,587
Oil revenues $1,133,297 $ 30,527 $1,759,034 $ 54,548
Average oil price per Bbl $ 50.97 $ 37.47 $ 48.92 $ 34.37
Net gas production (Mcf) 16,094 11,228 26,163 23,361
Natural gas revenues $ 105,745 $ 49,236 $ 166,735 $ 93,129
Average gas price per Mcf $ 6.57 $ 4.39 $ 6.37 $ 3.99
Barrels of oil equivalent produced
("BOE") 24,915 2,686 40,319 5,480
Lease operating and production taxes $ 57,400 $ 14,710 $ 94,503 $ 34,922
LOE and production taxes per BOE $ 2.26 $ 5.48 $ 2.34 $ 6.37
Depreciation, depletion and
amortization-oil and gas properties $ 373,874 $ 19,305 $ 517,695 $ 38,597
DD&A per BOE $ 15.01 $ 7.18 $ 12.84 $ 7.04
General and administrative expenses $ 665,303 $ 233,625 $ ,132,010 $ 422,813
American Oil and Gas, Inc. is an independent oil and natural gas company
engaged in exploration, development and production of hydrocarbon reserves
primarily in the Rocky Mountain region. Additional information about American
Oil and Gas, Inc. can be found at the Company's website:
www.americanoilandgasinc.com.
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# # #
This release and the Company's website referenced in this release contain
forward-looking statements regarding American Oil and Gas, Inc.'s future plans
and expected performance that are based on assumptions the Company believes to
be reasonable. A number of risks and uncertainties could cause actual results to
differ materially from these statements, including, without limitation, the
success rate of drilling efforts and the timeliness of development activities,
fluctuations in oil and gas prices, and other risk factors described from time
to time in the Company's reports filed with the SEC. In addition, the Company
operates in an industry sector where securities values are highly volatile and
may be influenced by economic and other factors beyond the Company's control.
This press release may include the opinions of American Oil and Gas, Inc. and
does not necessarily include the views of any other person or entity."