BUSINESS

Domestic   American Energy develops domestic onshore oil and natural gas properties on behalf of end users such as refiners, utility companies and cogeneration companies and itself. Our objective is to reduce the cost of supply and to provide long-term sources of oil and gas for the end user through the selective development and purchase of properties meeting specific guidelines. We undertake the necessary geological, engineering and economic studies to determine the value of the properties; all final technical studies are subsequently confirmed by outside, third party independent consultants. We also introduce financing for the purchase of properties, as required. When it is possible to do so, we further increase the value of the properties by both accelerating oil and gas producing rates and increasing the volume of gas reserves through well workovers and additional drilling. Our areas of activity are generally confined to those major producing onshore regions where oil and natural gas pipeline systems service the end user.

International   American Energy develops horizontal drilling and recompletion programs primarily for Russian oil companies that own licenses for certain oil areas but do not have the capital, source of financing or sufficient equipment to develop the reservoirs. Our partners in these programs are primarily Western refiners and other oil companies. We undertake the necessary geological, engineering, economic and financing studies to determine the development feasibility of a potential program. All final technical studies are subsequently confirmed by outside, third party independent Western consultants. American Energy’s programs are generally funded under the protection of U.S. Government financial institutions where most of the required development capital is provided under non-recourse, guaranteed financing and the remainder of the investment is protected by U.S. Government-backed insurance. In certain projects the Western company partner of American Energy may operate the drilling and production phases of the program under a joint venture contract with the Russian oil company and American Energy. In such cases, the Western company partner, which may be a Western refiner or other oil companies, retains the majority ownership in the program.