Avalon Enters LOI to Acquire Leasehold in Vernon County

Avalon has entered into a letter agreement to acquire an undivided one hundred percent (100%) working interest in a 320-acre leasehold in Vernon County, Missouri. The leasehold contains over 70 wellbores, with over 20 wellbores equipped for production.

Vernon County, Missouri has produced oil since 1953. The Shell Oil Company, Phillips Petroleum and Humble Oil Company have all tested the Bluejacket and Warner Sandstones with various levels of success. In the early 1980's, a steam injection method was proven successful in extracting the heavy crude oil from the sandstone formations. A study of the effect of microbial treatments to enhance the recovery of oil and gas was performed by the University of Missouri-Rolla in 2004. Recently, Mega West Company and Colt Energy Company have been testing core samples from their leaseholds to prepare for steam injected oil enhancement recovery production units.

Oil has been produced from the Ida–Fauvergue leasehold in limited quantities since 1979, by utilizing a cyclic steam injection recovery system. The cumulative oil production to date is over 325,000 barrels of oil. Avalon has retained a petroleum engineer and microbiologist with extensive experience in evaluation and production of oil and gas from the Bluejacket and Warner Sandstones. They are currently reviewing core samples of the 65 wells drilled on the Ida–Fauvergue leasehold in the early 1980's, the lease production history, and production schematics from producing leaseholds in close proximity to the Ida–Fauvergue leasehold. Preliminary studies indicate there may be over 8,000,000 barrels of oil in the southwest and east-central portions of lease.