American Oil & Gas to Close on Douglas Acreage Sale

American Oil & Gas expects to close on the sale of non-core acreage within its Douglas Project the week of October 27, 2008. In August of this year, American entered into a definitive agreement with a major independent natural gas producer to sell 36,000 net acres in its 128,000 gross (70,000 net) acre Douglas project area for approximately $27 million. Of the 36,000 net acres, 33,000 net acres are located in the West Douglas and Douglas project areas and 3,000 acres are located on the far western edge of the Fetter project area. Included in the sale is American's carried interest in the State Deep 7-16 well at West Douglas.

Within American's Fetter project, The Hageman 11-22 well, a vertical well drilled to 12,945', is currently producing from the Frontier formation after being fracture stimulated with a slick water frac design that had not
been used at Fetter on previous wells. Frac sand has recently been cleaned out of the well bore and production tubing has been run. The well is currently producing at rates of approximately 600 mcf per day with 30 to 50
barrels of oil. American owns a 69.375% working interest and 55.3% net revenue interest in the well.

Based on the favorable slick water frac response seen in the Hageman 11-22 well, the Wallis 6-23 well, a vertical well that has been undergoing long term production testing from the Frontier formation, was recently
re-fraced in the Frontier formation using a similar slick water frac design to that used on the Hageman 11-22 well. The well is currently producing up recently installed production tubing at rates of approximately 400 mcf with five to ten barrels of oil per day, while flowing back approximately 100 barrels per day of frac fluid that was used in the completion process. American owns a 23.125% working interest and 18.9% net revenue interest in
the well.

Also at Fetter, the Hageman 11-22UK well, a vertical well drilled to test the oil potential of the shallower Teapot and Parkman formations, has yielded non-commercial results. American owns a 69.375% working interest in
the well.

Pat O'Brien, CEO of American commented, "While we are very encouraged with the early production response we have seen from the slick water frac designs used on the Frontier formation in the Hageman and Wallis wells, we recognize there are still improvements that we will work towards with respect to drilling efficiencies, gathering system design and production optimization. Given that there are up to five formations that are
prospective in this area and that the recent tests are exclusive to the Frontier formation, we continue to be optimistic about the long term potential within this field."