CHICAGO, Oct. 4, 2004 (PRIMEZONE) -- American Stellar Energy, Inc (Pink Sheets:AMRS): The Company is pleased to provide an update on Phase one's first successful well, named "1B McKinney." Armen Energy Corp., the project operator, stated that the Utility Company has recently provided electrical service to the site location and subsequently Armen has received an independent production test.
Currently "1B McKinney" is producing at the rate of 21.3 barrels of fluids per day. Of this, 10.65 barrels of oil were recovered and 10.65 barrels of "work-over" water. Work-over water is related to Drilling, cleaning, and infiltration from the Wolf City, which occurred when the Bridge Plug between the Wolf City and the Pecan Gap was blown out while fracing the formation. Now that the well is operating continuously, the water will be worked off over the next several days and result in 90% or better, of all fluids produced, being oil.
Furthermore, estimates of monthly operating expenses have been provided by the operator. Each well should operate at approximately $27.00 / Day, or less then 1 barrel / Day at $40.00 / Barrel.
Additionally, the second and third wells have been successfully drilled to the Pecan Gap at a depth of 1700 feet. The wells have been logged with indications on the first well of approximately 12 feet of oil bearing rock and 15 feet on the third well. With these positive results, electrical service has been run to both locations, which are scheduled to be completed over the next several days.
With the target depth now being 1750 feet. This will result in significantly reduced drilling and completion costs, which are now estimated at approximately $80,000 and may be further be reduced by "project of scale" economics.
The current capital structure of American Stellar Energy as of September 13, 2004 is 49,970,669 Outstanding, with 25,325,300 being classified as Common Free Trading and 24,645,369 being Restricted. There are currently no Preferred Shares, Warrants, or Options.
With continued success, 20 to 50 addition wells could be drilled on the existing acreage. American Stellar Energy intends to fully develop its interests in this prospect.
Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical complications which may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above.