PEXCON, Inc. Acquires Interest in 2,673,445 MCF Natural Gas Well
Monday March 21, 9:30 am ET
Cites Five-Year Revenue Target of $1.7M, Updates Prior Acquisitions
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--March 21, 2005--PEXCON, Inc. (OTC:PXCN.PK - News), an oil and gas exploration and development company, is pleased to announce that the company has signed a letter of purchase for working interests in oil and gas projects owned by Cherokee Production Company. Cherokee is a private oil and gas produced based in Goliad, Texas.
PEXCON will be acquiring an interest in the Whatley well. The Whatley is a revenue-producing property with total reserves of 2,673,445 mcf of natural gas. The reserves were cited in a report completed by RW Dirks Petroleum Engineers, an independent consulting firm. PEXCON's revenue projections contained in this release rely on that report, completed January 24, 2005, based on a natural gas price of $6.21/mcf at that time.
Under the terms of the agreement PEXCON will purchase incremental units of the Whatley Well with the initial transaction completed within one week. Initial revenues from the Well will begin at $750 and will increase up to $15,000 monthly as PEXCON purchases additional working interests. Furthermore, PEXCON believes that as a result of recent financing activities, it is reasonable to project that the company will increase its interest in the Whatley to $500,000 within the next two months.
PEXCON has also agreed to drill an offset on the Whatley Well which would increase monthly revenue to $27,000. Provided the company drills the offset and will purchase the maximum interest as offered in the agreement, the Whatley Well will be producing revenue for PEXCON for approximately five years and will offer a total revenue opportunity of more than $1,700,000.
PEXCON calculates a total return on investment in just over 22 months, making this a compelling opportunity for the company and its shareholders. PEXCON and Cherokee Production are currently discussing other opportunities for both companies, including joint ventures and interests in other wells.
PEXCON Chairman Gerald Dunne stated, "In a very short time, PEXCON has made tremendous strides in enacting our business plan. We have strong financing partners who have both a professional and financial incentive to see us succeed. We are happy to be working with Cherokee Production and believe this relationship will be fruitful for both parties."
Cherokee Production President Bill Parmley added, "I am looking forward to working with PEXCON as they bring to us the ability to raise capital and complete several of the projects we have under lease agreements."
PEXCON would also like to update the status of the two prior announced working interests, announced January 3 and January 11, respectively. These transactions were subject to, among other things, due diligence and the availability of financing. Unfortunately, negotiations for these projects were both terminated after it was deemed it was not in the best interest of PEXCON or its shareholders that they proceeded.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made on behalf of the company. All such forward-looking statements are, by necessity, only estimates of future results and actual results achieved by Pexcon, Inc. may differ materially from these statements due to a number of factors. Pexcon, Inc. assumes no obligations to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements. You should independently investigate and fully understand all risks before making investment decisions.
Contact:
PEXCON, Inc.
Peter McGoldrick, 516-825-6516
Fax: 516-825-2254
Source: PEXCON, Inc.
