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STRATEGY
Domestic Operations
American
Energy believes that significant opportunities
exist for end users such as refiners and
utilities to develop oil and natural gas
properties with oil industry partners in mature
producing areas where the infrastructure is in
place to transport the production as directly as
possible to the end user’s facilities in order
to minimize costs. Our experienced reservoir and
production engineers utilize the following
strategy to locate and purchase potential
acquisitions on behalf of the end user partner:
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Concentrate on both undeveloped oil and gas
properties for drilling and those properties
containing proved developed producing oil
and natural gas reserves for purchase that
have a well established history of
performance.
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Select those properties with additional
upside potential, such as the possibility of
increasing of producing rates and remaining
reserves through workovers in existing
producing zones, in addition to the drilling
of horizontal recompletions in existing
zones, shallower recompletions and deeper
drilling potential.
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Focus on
those properties that are geographically as
close as possible to the end user’s
facilities to minimize transportation costs.
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Select those properties that produce
directly into pipeline systems that service
the end user partner to help eliminate
potentially costly trades.
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Bundle groups of properties in different
fields for purchase where the effective
purchase date would be approximately the
same for all wells in order to simulate a
larger, more efficient acquisition.
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Utilize the company’s proprietary oil and
gas well performance software that allows
the user to forecast future producing rates
and remaining reserves based on performance
data that otherwise may be lacking in amount
and quality.
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Conduct rigorous gas well field testing,
critical inspection of all records,
contracts and similar documents, in addition
to the close review of all legal and
environmental ramifications.
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Purchase those properties that may be
financed in order to help reduce the end
user partner’s cash exposure.
International Operations
Based
on American Energy’s successful operating
experience in Russia since 1991, we are
continuing to undertake the following strategy
on behalf of our Western end user partners:
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Locate
potential development projects in only those
mature producing areas that are serviced by
an active oil pipeline system.
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Maintain our focus only on those properties
that contain discovered oil reserves that
are generally partially developed, where the
oil produced may be shipped to the end
user’s facilities, such as refineries.
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In order to provide our investor partner the
most desirable financing possible, programs
may be funded by mid-term, non-recourse
loans that are provided and fully guaranteed
by the U.S. Export-Import Bank, the U.S.
Overseas Private Investment Corporation or
similar governmental institutions. Other
commercial banking sources are also
considered.
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In order to provide our investor partner
full investment protection, all program
loans may be fully guaranteed by, and the
non-loan portion of the investment may be
insured by U.S. Government institutions such
as the U.S. Export-Import Bank or the U.S.
Overseas Private Investment Corporation.
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Business transactions are conducted with
smaller Russian oil companies that own the
license to develop and produce hydrocarbons
pursuant to the Russian Underground
Resources Law. These companies generally do
not have the funds, personnel or equipment
to develop the oil properties within the
time limits specified by their license.
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The investor
partner has the option to operate both the
drilling and producing phases of the
program.
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