Aztec Oil & Gas to Complete Four New Wells

Aztec Oil & Gas reports that the Big Foot 2004-1 Drilling Program LP has completed the drilling phase on four (4) new infield oil wells being drilled on the Z2 LLC properties, in which Aztec holds a 31.283% working interest. The completion phase of all four new wells is presently underway and is projected to be concluded over the next 30-45 days, subject to weather, availability of equipment, etc. The early drilling and logging reports indicate that the production outlook for the four new well is very favorable. According to Maverick Energy, operator of the Z2 leases, the yield from these four wells will likely be on parity with many of the better wells already producing on the Z2 LLC properties.

These four (4) new wells are the first wells funded in accord with Aztec's business model. Aztec's model, which has proceeded on schedule, calls for participation from outside investors by their assuming the total cost of drilling wells in exchange for a part of the revenues derived from the wells they finance. The two investment groups that funded the drilling phase of these first four wells are also providing the funds required for the completion phase of the four wells, which is necessary to bring the new wells ``on-line.'' The investment groups will receive 75% of the working interest revenue from the wells until the costs are recovered. Thereafter, working interest revenues would be split 50/50 between the investor groups, on one hand, and Z2 LLC, with Aztec being entitled to 31.283% of any such proceeds to Z2 LLC.

Last year, Aztec Oil and Gas acquired its 31.283% interest in Z2, LLC. Z2, LLC owns 100% of the working interest in the 7,200+ acre Big Foot oil field in Texas. The field was first discovered by Shell Oil in 1949, developed in the 1950's 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.

According to Maverick Energy, there are still up to 400 proven, underdeveloped well sites within the presently productive areas of the Z2 properties. Aztec Oil & Gas intends to facilitate the drilling of a number of these new drill sites, which should increase oil production from the current level of approximately 9,000 barrels per month.

As stated, Aztec's growth strategy is partially based on participation, as it intends to team up with outside participation investors who will assume the costs associated with the drilling of additional wells in exchange for a part of the revenues derived from the wells they finance. Participation investors would possibly initially receive up to 75% of the working interest revenues from ``their'' wells until the hard costs are recovered, with the other 25% going to Aztec and other lease working interest holders.

Once the well hard costs are repaid to those participation investors, the Company expects that any working interest revenues would be split approximately 50-50 between those participation investors, on the one hand, and Aztec and other lease interest holders, on the other hand. The Company expects that implementation of this strategy should allow a reduction in the financial risks for Z2 and Aztec in drilling new wells, while both Z2 and Aztec would still be receiving income from present field production in addition to income from any successful new drilling.
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