MINERAL WELLS, Texas, July 31, 2002 (PRIMEZONE) -- American Energy Production Inc. (OTCBB:AMEP) today announced the completion of the first oil and gas acquisition, Proco Operating Co. Inc. AMEP has acquired all of the oil and gas properties of Proco Operating Co. Inc., including the oil and gas leases and related oil and gas production equipment. These oil and gas leases cover over 3,000 plus acres and have a long history of production from several producing horizons. The Marble Falls formation on this lease has proven recoverable oil reserves of 2,400,000 barrels of oil and 3 billion cubic feet of natural gas. Proco Operating Co. Inc. will become a wholly owned subsidiary of American Energy Production Inc.
The Company has agreed to buy the Proco Operating properties with a Convertible $2,000,000 Debenture. The term of the Convertible Debenture will be five (5) years with a 6% interest rate. In 2007 the Convertible Debenture will convert to Preferred Stock and then, at the Company's option the Debenture and accumulated interest, can be paid with cash or converted to common stock at a set price of $1.00 per share.
The oil and gas leases, which is the subject of the acquisition, have a blanket Barnett shale formation about 150 feet thick. The first project American Energy Production Inc. will undertake is a fracture stimulation of an existing oil or gas well in the Barnett Shale. The Company's success in a re-completion of an existing well in the Barnett Shale formation will add substantial natural gas reserves to the American Energy Production Inc. assets.
The Board of Directors of American Energy Production Inc. voted on June 19, 2002 to declare a (one for five) stock dividend on its common stock having the effect of a 20% stock dividend. Stockholders of record on August 16, 2002 will be entitled to one additional share of 144 restricted stock, for each five shares of the company's stock held at that time.
Statements contained in this release, which are not historical facts, may be considered forward-looking statements and are based on current expectations and the current economic environment. We caution the reader that such forward-looking statements are not guarantees of the future performance. Unknown risk, uncertainties as well as other uncontrollable or unknown factors could cause actual results to materially differ from the result, performance or expectations exposed or unknown factors and could cause actual results to materially differ from the result, performance or expectations exposed or implied by such forward-looking statements.