BELLINGHAM, Wash., Sept. 29, 2004 (PRIMEZONE) -- Avalon Gold Corporation (OTCBB:AVGC) reports an update relating to its 0.70% (.70 of 1%) proportionate, reducible, Gross Overriding Royalty interest in the LAK Ranch Oil Project located in Newcastle, Wyoming. This royalty interest equates to $0.315 per barrel based on a price of $45.00 per barrel for Avalon.
The second round of cyclic steaming at LAK Ranch is on track, with steam being injected into the lower horizontal well and temperature data being gathered using the continuous fiber optic sensor installed in the upper horizontal well. The temperature data being gathered is being used to construct a computer model of the reservoir. This computer model will be updated on an ongoing basis and will be used as a basis for studying and planning future development of the oil reservoir.
After completion of the 3D seismic survey, Ivanhoe Energy (USA) Inc. (Nasdaq:IVAN), as operator, plans to drill additional delineation wells to prove up oil-in-place reserves and commerciality of full steam injection (SAGD) project. The seismic survey cannot begin until the wheat harvest has been completed on the surrounding ranch area and the cattle have been rounded up for the winter. In addition, the 3D seismic contractor must be able to fit the job into their schedule, with skilled seismic crews being at a premium. The survey is designed to provide the necessary detail for targeting future horizontal well development at the LAK Ranch, where two independent engineering reports have confirmed the potential for the project to contain at least 100 million barrels of oil in place.
Following completion of the pilot phase, the development program is scheduled to include additional horizontal producing wells, new steam injection and the extension of surface facilities. Ivanhoe has estimated that, at the low end of the recovery range, the initial development program could grow to more than 20 producing wells and production volumes in excess of 4500 barrels a day. As more acreage is identified through further development, optimum daily production rates could increase to 10,000 barrels a day.
Based on Avalon's ongoing agreement with respect to the LAK Ranch, if Derek sells any or all of its interest in the LAK Ranch Property, it will pay to Avalon, subject to adjustments, 7.5% of the net sales proceeds on the first USD$7,500,000 and 1% on any balance over and above USD$7,500,000.
/s/ Robert Waters Robert Waters, President
For further information contact: 1-888-488-6882 Visit our web site at www.avalongold.ws
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical fact are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays in testing and evaluation of products an other risks detailed from time to time in Avalon's filings with the Securities & Exchange Commission.