Avalon to Acquire Stake in Louisiana Acreage

Grant Parish
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Avalon Oil & Gas, Inc., announced, through its relationship with KROG Partners, LLC , a Kilgore, Texas-based operator, that Avalon, KROG, Avalon's advisor, William Anderson DBA Anderson Oil & Gas, Inc., and another partner have jointly agreed to acquire 100 percent working interest in a six-well production property located in Grant Parish, La., from a company based in Lafayette, La. The letter of intent provides the opportunity for Avalon and its partners to conduct a sixty day test of the productive capability of the property, as well as customary due diligence, prior to the acquisition.

The property consists of five shut-in wells with production potential in the prolific Wilcox production interval and one salt-water disposal well. These wells were drilled in the early 1980s by an independent producer. Avalon believes that there is significant oil production potential in many of these wells, and that a minimal workover program is required to return the property to production. The salt-water disposal well is also anticipated to be capable of disposal of significant volumes of produced water, resulting in highly economic production of the anticipated 10% oil cut in this property.

Avalon and its partners will commence operations shortly on the testing, which includes lowering one of the pumps in a wellbore, in order to assure productive capability prior to acquiring the property. Upon successful test results, Avalon will have the opportunity to own an undivided twenty five percent (25%) working interest in the property, subject to a proportional reduction due to the retainage of a twenty five percent (25%) back-in by the existing owner upon payout of all of Avalon and its partner's capital costs. A due diligence evaluation has also commenced on the property.

Avalon and KROG are continuing their focus on enhancing operating synergies in the Southwest Arkansas, Northwest Louisiana and East Texas region through acquisition of other mature production in the area. The area immediately surrounding these new properties consists mainly of independent producers.

Avalon Oil & Gas, Inc. is an oil and gas company engaged in the acquisition of oil and gas producing properties with multiple enhancement opportunities.

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