HOUSTON, Sept. 11, 2006 (PRIMEZONE) -- Index Oil and Gas, Inc. ("Index" or "the Company") (OTCBB:IXOG), today announced that it has completed a US$7,097,898 private placement (the "Placement"). The net proceeds of the Placement (the "Funds") will be applied to the expansion of Index's operations in the U.S. as the company enters a busy drilling period over the coming 12 months.
The proposed application of the Funds is in line with Index's strategy to develop its activities to include higher upside, carefully risked opportunities appropriate to its financial resources and spread across a balanced and managed portfolio.
Index has previously stated that, given the Company's demonstrated drilling success, it intended to augment its drilling portfolio. The enhanced upside strategy is to:
-- Take higher working interests in wells at or around the
current risk profile;
-- Take significant working interests in opportunities
considered to have a higher upside;
-- Apply approximately US$2M to early stage, larger area Land
Plays which may have a significantly higher potential reward
profile.
More detail on this enhanced upside strategy is given below.
Higher working interests:
Index owns working interests in the range of 7.5% to 20% in its partnered exploration wells scheduled for drilling in 2006/7. Index has increased its working interests in some of these wells since the original working interests were taken, especially in those where the risk profile is considered to have diminished. In the event of commercial success and these wells being put into production, this increased equity would result in enhanced near term revenues from these prospects.
Materially higher upside opportunities:
Index is negotiating to participate in a higher risk, higher upside exploration opportunity in an established play. The first exploration well is intended to establish the viability of the entire play which, if proven, would likely be commercialised with multiple, lower risk, development wells.
As a result of its participation in the first well, Index would have the option to participate in what could be a significant portfolio of development wells.
Land Plays:
Index intends to lease relatively large areas in prospective regions with known partners and to develop prospects from new proprietary seismic shot on this land. This early stage exploration strategy, based on existing and new seismic data to be acquired, carries higher risks which would be managed by "farming out" (bringing in partners) as prospects are worked up. Potentially, these Land Plays offer the prospect of high rewards for Index, if successful.
Index believes that the proposed portfolio mix is appropriate to its financial resources. The Company is encouraged by the support shown for the Placement, which was taken up by existing and new institutional and private investors.
About Index
Index is a gas biased oil and gas exploration and production company, with activities in Kansas, Texas, Alabama and Louisiana. It has offices in Houston, Texas, and Bath, England. Index is focused on efficiently building a broad portfolio of producing properties with what it believes to be significant upside potential and intends to grow its existing asset base and revenues through further investment in the U.S. The company seeks to develop its activities in areas containing prolific petroleum systems set in stable political and economic environments.
To find out more about Index Oil and Gas (OTCBB:IXOG), visit our website at www.indexoil.com.
Forward-Looking Statements
The statements in the press release that relate to the company's expectations with regard to the future impact the company's results from acquisitions or actions in development are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements in this document may also contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Since the information may contain statements that involve risk and uncertainties and are subject to change at any time, the company's actual results may differ materially from expected results.