HOUSTON, Sept. 20, 2007 (PRIME NEWSWIRE) -- Index Oil and Gas, Inc. (OTCBB:IXOG) ("Index" or "the Company") today announced its estimate of the net resource potential for the Fiscal Year 2008 (ending March 31, 2008). The estimate shows a substantial increase over the Company's 2007 Fiscal Year ("FY 2007"), as a result of Index's strategic addition of a group of high-potential prospects to its risk-balanced exploration and production drilling portfolio.
The Company estimates the net resource potential for its seven (7) current prospects to be 5.7 million barrels of oil equivalent ("mmboe") for the FY 2008 portfolio. This compares to a net resource potential portfolio of 0.14 mmboe for the FY 2007 portfolio, using the same measurement criteria. The approach for obtaining this estimate is discussed below.
Fiscal Year 2008 Strategy
In FY 2008, Index has focused on acquiring a number of much larger reserve potential prospects, after drilling relatively low-risk wells in prior years to establish reserves, cash flow and to verify its business model. The Company believes this portfolio of larger, high impact prospects is prudently balanced to better manage individual well risks while accelerating the Company's growth by efficiently applying capital using industry standard portfolio risk-and-value management techniques.
Index has committed to drilling 6 high impact wells and one production well (Ducroz 1 in Cow Trap) during this period, including a carry-over well from FY 2007 (Ilse 1). Drilling has commenced and operations are ongoing for 4 of these wells: Ilse 1, George Cason 1, Shadyside 1 and Outlar 1.
The current status of all 7 wells was described in Index's press release of September 4, 2007 and is summarized again below.
Approach For Estimating Net Resource Potential
To estimate the net resource potential of the FY 2008 portfolio, each prospect has been characterized in terms of (i.) Estimated Ultimate Recovery ("EUR"), (ii.) reserves range, (iii.) cost, and (iv.) value. For all discoveries, a third party audit using the Securities and Exchange Commission's ("SEC") standards has been conducted and reserves are reported as trailing metrics in our SEC filings. Index's policy is to report against these trailing metrics rather than comment on individual pre-drill EUR's, which are subject to outcomes ranging from a failure case to a broad range of minimum-to-maximum potential success cases.
The range of outcomes for a single prospect is subject to uncertainty and risk. However, the Company believes that while individual prospects are difficult to accurately predict in terms of volume, a prudently balanced portfolio of prospects provides a greater degree of confidence when estimating potential volumes.
Summary of Index's FY 2008 Portfolio
As discussed in previous press releases:
Ilse 1 is the first high impact well to be drilled by Index. Details about the well will be made available once it has been fully evaluated. Refer to Index press release dated September 4, 2007. Index has a six percent (6%) net revenue Interest ("NRI") after pay out ("APO").
Cason 1 has reached a total planned depth of 11,164 feet, has been logged, cased, tested and is currently awaiting to be put on production. Refer to Index press release dated September 18, 2007. Index has 13.77% NRI APO.
Shadyside 1 is currently drilling and is Index's second largest prospect from a gross EUR pre-drill perspective. Index has 9.715% NRI APO. The well has reached total depth and has been logged. Following log analysis a decision will be made whether to complete and test the well or abandon it.
Outlar 1 in the West Wharton prospect is in the final stages of its planned program Index has 6.99% NRI APO. The well has reached total depth with analysis currently underway.
Ducroz 1, a production well in the Cow Trap prospect, is waiting to spud as planned and according to a third party audit has 4.1 billion cubic feet (BCF) gross EUR (683,000 barrels of oil equivalent (BOE), as audited by a third party. The Company believes there is additional exploration upside in the well. Index has 5.25% NRI.
Supple Jack Creek well, (formerly referred to as the West 1) the operator has conducted and completed additional studies and should begin drilling in late calendar year 2007. Refer to press release dated September 4, 2007. Index has a 14.71% NRI.
Alligator Bayou, a recently announced well, is by far the largest Index prospect based on the mid success case EUR pre-drill gross volumes and drilling is expected to start in early (calendar year) 2008. Refer to press release dated July 17, 2007. Index has 3.5% NRI.
Overall Outlook
The management of Index believes it has assembled a prudently balanced portfolio of high impact projects for FY 2008 and is excited by their potential. The Company also continues to review and evaluate further high impact prospects in order to continue this investment focus and approach.
Lyndon West, CEO of Index, said, "It is important that investors understand that our portfolio approach focuses on the total outcome of all wells, and is not dependent on any individual well."
About Index Oil and Gas
Index is a gas-biased oil and gas exploration and production company, with activities primarily in Texas, Louisiana, and Kansas. Index has offices in Houston, Texas and Bath, England. Index is focused on efficiently building a broad portfolio of oil and gas producing properties that it believes has significant upside potential. The Company believes it has an excellent drilling record and intends to grow its existing asset base and revenues through further investment in the United States. Index 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 Inc. (OTCBB:IXOG), visit our website at www.indexoil.com, where a presentation reviewing the Company's current portfolio is also available.
The statements in the press release that relate to the Company's expectations with regard to the future impact on 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. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, such statements should not be regarded as a representation by the Company, or any other person, that such forward-looking statements will be achieved. 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. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of the foregoing, readers are cautioned not to place undue reliance on such forward-looking statements.
Pursuant to a September 1, 2007 agreement, Consulting For Strategic Growth 1, Ltd. ("CFSG1") provides the Company with consulting, business advisory, investor relations, public relations and corporate development service, for which CFSG1 receives cash and/or stock compensation.