American Oil & Gas Inc (f/k/a AEZ)

[OilStockReport]

Building a new shelf around $9.50 - results were mixed but upside is apparent.

American reports a net loss of $119,266 (nil per share, basic and diluted) for the quarter ended September 30, 2010, as compared to a net loss of $3,400,573 (loss of seven cents per share, basic and diluted) for the quarter ended September 30, 2009. For the nine-month periods ended September 30, 2010 and 2009, American reports net income to common stockholders of $27,661,320 (income of 46 cents per share, basic and 45 cents per share, diluted) and a net loss to common stockholders of $8,892,054 (loss of 18 cents per share, basic and diluted), respectively. The approximate $36.6 million increase in net income in the nine-month period includes a $36.4 million pre-tax gain on the sale of substantially all of American's oil and gas interests in the Powder River Basin in Wyoming on March 31, 2010.

During the quarter ended September 30, 2010, American sold 73,112 barrels of oil at $64.64 per barrel and 17,040 mcf of natural gas at $4.74 per mcf for total oil and gas revenues of $4,806,383. For the corresponding quarter ended September 30, 2009, American sold 4,877 barrels of oil at $59.17 per barrel and 49,949 mcf of natural gas at $3.48 per mcf for total oil and gas revenues of $462,553. Lease operating expenses, including production taxes, for the quarters ended September 30, 2010 and 2009 were $912,493 ($12.01 per BOE) and $278,429 ($21.09 per BOE), respectively. Depreciation, depletion and amortization expense of oil and gas properties was $1,601,000 ($21.08 per BOE) for the current quarter and $212,001 ($16.06 per BOE) for the corresponding prior year quarter.

During the nine-month period ended September 30, 2010, American sold 119,374 barrels of oil at $64.25 per barrel and 68,324 mcf of natural gas at $6.06 per mcf for total oil and gas revenues of $8,083,918. For the corresponding nine-month period ended September 30, 2009, American sold 14,056 barrels of oil at $46.87 per barrel and 183,386 mcf of natural gas at $3.42 per mcf for total oil and gas revenues of $1,285,705. Lease operating expenses, including production taxes, for the nine-month periods ended September 30, 2010 and 2009 were $1,777,764 ($13.60 per BOE) and $848,354 ($19.01 per BOE), respectively. Depreciation, depletion and amortization expense of oil and gas properties was $2,551,000 ($19.51 per BOE) for the current nine-month period and $546,000 ($12.24 per BOE) for the prior year nine-month period.

For the quarters ended September 30, 2010 and 2009, American's general and administrative expenses were $2,804,686 and $1,198,188, respectively. Total costs increased approximately $1.6 million primarily due to (i) approximately $1.0 million paid for a third party fairness opinion in July 2010 of the then-proposed merger with Hess Corporation and (ii) a $0.5 million increase in legal fees and expenses, primarily relating to the merger, including the defense of lawsuits filed in connection with the merger. For the nine-month periods ended September 30, 2010 and 2009, American's general and administrative expenses were $6,168,688 and $4,242,539 respectively. Total costs increased by $1.9 million, primarily due to (i) an approximately $1.1 million increase in investment banking and legal fees and expenses, primarily relating to the merger, including the defense of lawsuits filed in connection with the merger and (ii) an approximately $0.8 million increase in employee compensation.

At September 30, 2010, American had $17.9 million in working capital which includes $15.5 million in cash and short-term investments, total assets of $151.1 million, a long-term asset retirement obligation of $225,099, deferred income taxes of $6.2 million, no long term debt and stockholders' equity of $126.3 million. There are currently 61,029,656 common shares outstanding.

For the nine-month period ended September 30, 2010, American's net cash used by operating activities decreased by $361,956 (from $3,057,074 net cash used for operating activity for the nine-month period ended September 30, 2009 to $2,695,118 cash used by operations for the nine-month period ended September 30, 2010). Cash received from oil and gas revenues in the 2010 period were approximately $2 million greater than for the 2009 period. Cash expenditures for general and administrative expenses for the 2010 period were approximately $2 million greater than for the 2009 period. In the 2010 period, net purchases of well equipment inventory held in third party yards were approximately $315,000 less than in the 2009 period.

American used a net $24.9 million in cash during the nine-month period ended September 30, 2010 as compared with $7.2 million of cash used by investing activities in the nine-month period ended September 30, 2009. The $17.7 million increase in cash usage is primarily due to (i) a $63.8 million increase in acquisition, exploration and development of oil and gas properties (primarily in the Goliath Project), less (ii) $46.2 million received in March 2010 on the sale of oil and gas properties in the Powder River Basin in Wyoming.

During the nine-month periods ended September 30, 2010 and September 30, 2009, the only financing activities were $804,150 in cash received in the 2010 period relating to exercises of stock options and a warrant.