AED to Begin Production Testing at Brown Well

American Energy (AED) has successfully finished the well completion and installed production equipment on the Brown #2-12 Well, with preparations underway to commence with production testing.

AED is targeting Niagaran oil reef structures on the Dansville prospect by selecting drill locations from AED's vast Michigan database of 12,300 acres of 3-D seismic. The Brown #2-12 is the first of a series of planned wells on the prospect, with the two next planned wells having had the respective drill sites surveyed and bonded, with permits issued by the State of Michigan allowing for drilling.

Following the completion of the drilling stage, AED ran geophysical logs to better understand the properties of the well. Interpretation and analysis of the data from the mud and geophysical logs on the Brown #2-12 indicate to us that the well has the proper density, porosity and permeability required for a good producing Niagaran reef.

Using the data from the logs, work commenced to complete the well by initially perforating two different zones, in order to increase potential oil production. The well was then swabbed to clean up the well. The swabbing results lead us to believe that the well has good oil deliverability and a good oil saturation, with a low oil/water contact at base of the cement at the packer.

After completion of the swabbing stage, downhole production equipment was installed. Rods and a downhole pump were run into the well, along with a surface pumping unit installed on a concrete pad at the wellhead. Permits required for the commencement of the production test have been approved by the State of Michigan, and production testing will commence imminently.

On the basis of data gleaned from logs, swabbing results and analysis against analogue wells in the area, we believe that the original well, drilled in 1972 into the same structure, has reduced well pressure, but not hindered the estimated ultimate recoverable oil from the reef structure, which is currently anticipated to be up to 650,000 barrels of oil.

Herold Ribsskog, President of American Energy Development Corp., said, "I am very pleased with the progress to date of AED's operations in Michigan. Each stage has gone safely and efficiently, from the permitting and preparation of the drill site, to the drilling and completion phases - despite poor and muddy conditions. I eagerly anticipate the commencement of the production test period, and look forward to releasing further positive news to our shareholders in the near future."

Historical records of the Niagaran reef production in Michigan, confirm over 4,200 wells being drilled, targeting reef formations and producing a total of 472 MMBO and 2.8 TCF gas, with development of reef trends in the area driven by Royal Dutch Shell, BP and ExxonMobil. According to a recent USGS report on the basin, the recoverable reserves are in excess of 1.8 billion barrels of oil and 17 trillion cubic feet of natural gas.

Joel Felix, Chief Financial Officer of American Energy Development Corp., said, "We are delighted that we are closing in on our first revenues from this project. As a young energy company, we believe our growth to date has been aggressive and our goal of delivering value to our shareholders is rapidly becoming a reality."