Energytec Increases East Texas Acreage

Energytec has acquired two properties with a total of 35 oil wells near Kilgore, Texas, increasing the number of wells the Company owns in the East Texas Field by 70% to a total of 85 wells. The acquired properties are near the Company's other holdings in East Texas (Talco, Trix-Liz, Sulphur Bluff and Redwater). The 30 wells now producing on the existing properties are netting the Company approximately $40,000 per month, after royalty, taxes and operating expenses. An additional 55 wells will require only minor remedial work to place them back on production. The project is under the direct supervision of the Company's new Chief Engineer, William Albert, and work on all 55 wells is expected to be completed by year- end 2004. The Company owns a 100% working interest (84% average net revenue interest) in the newly acquired wells and a 100% working interest (87.5% average net revenue interest) in the others.

Energytec recently hired a full-time manager for its East Texas projects. Previously, he worked as a full-time consultant to the Company to acquire new properties and improve the East Texas Field operations. After completing the recent 35-well acquisition, the Company hired a crew to operate a Company- owned well service unit, which will be used to place the shut-in wells back on production.

President Frank W Cole commented, "This is an acquisition program on which the Company had previously completed an extensive study. Several additional offers have been made to acquire a number of additional wells." He added, "Although this project probably does not have the large potential reserves of several projects now under way, notably the Trix-Liz, the Wyoming thermal recovery project and the Redwater Pipeline project. Nevertheless, the East Texas Field Project is expected to contribute significantly to net income, while incurring small risks and controlled capital expenditures."

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