American O&G Cites Strong Initial Production from Completed Sims Well

American Oil & Gas announced that the Sims 7-25 well (SWNE Sec 25-T33N-R71W Converse County, WY), the most recently drilled well in the Fetter Field project, was completed and fracture stimulated in the Frontier formation on December 30, 2008.

From January 4 through January 14, 2009 the well flowed up casing on a 12/64 choke and produced a total of 14.6 million cubic feet of natural gas and 972 barrels of high gravity oil (which equates to 20.4 million cubic feet of natural gas equivalent -- "mmcfe") into the sales line, for an average rate of approximately 1.85 mmcfe per day. During this time the well also returned significant amounts of frac fluid used in the completion process. Production tubing has been installed in the well which is now currently producing at restricted rates, and for the last 24 hours the well produced 1.95 mmcfe (1.427 mcf of natural gas and 86.7 bbls of oil) with 2,540 psi of flowing tubing pressure on a 12/64ths choke.

Pat O'Brien, CEO of American, commented, "We are extremely pleased with the strong initial production response we are seeing from the Sims 7-25 well. The completion and frac design on this well incorporated several significant changes to what we have done on past vertical wells in the field and as a result, this well is yielding far better initial rates and pressures than those previous wells demonstrated. We are obviously encouraged by what we are seeing and by the implications of what these new completion procedures may hold for future wells in the field."

The Sims 7-25 well was drilled and cased to its planned total depth of 11,958' in only 19 days. Drilling, completion, stimulation, and surface facilities costs have totaled approximately $2.9 million, a substantial improvement over the cost to drill, complete and equip prior vertical wells. The Sims 7-25 well has been initially completed and is currently producing from the Frontier formation. Future plans may include completing and producing this and future wells in both the Frontier and the Niobrara formations. American owns a 69.375% working interest and a 56.04% net revenue interest in the Sims 7-25 well.