Avalon Oil & Gas, Inc. (OTCBB: AOGN)
Avalon Oil & Gas, Inc., is an independent domestic oil and natural gas producer. The Company’s strategy is to use efficient reservoir maintenance and innovative technology to generate stable cash flows and production by acquiring a portfolio of oil and gas leases to generate asset growth, and to deliver a sustainable rate of return for our shareholders.
The current market environment for crude oil and natural gas has created an opportunity for the United States to reduce its dependence on unstable foreign sources of energy. Avalon is currently evaluating producing leases in southern Kansas, Oklahoma, Texas and Louisiana.
Overview
The price of crude oil and natural gas is the engine that drives the energy industry. In the late 1990’s, in the wake of the Asian economic downturn, oil prices sank to $10.00 per barrel. The slump drove many small independent oil and gas producers out of business and many of the large independent producers merged, resulting in a downturn of drilling activities. Oil service companies had fewer rigs to service, pipeline and storage companies had less oil and gas to transport and store, and refineries produced less gasoline and other petroleum products.
The global economy has rebounded in the new millennium. Demand for crude oil, natural gas and petroleum based products has soared in the United States, China and India. This increased demand for energy and the political turmoil in oil-producing regions has caused energy prices to soar and the industry has rebounded. The higher prices have reached most of the industry - producers, refiners, pipeline companies, equipment makers, oil field service providers, and gas station operators - which have all enjoyed new profits. Leading the charge are the world's largest integrated oil companies: Exxon Mobil, BP and Royal/Dutch/Shell. But aggressive domestic independent production companies, such as Avalon Oil & Gas, are also well-positioned to take advantage of improving prices.
Avalon Oil & Gas, Inc. focused on acquiring mature, oil and gas wells in Kansas, Oklahoma, Texas and Louisiana.
The Department of Energy's Office of Fossil Energy has reported there is the potential to meet the demand for an energy thirsty nation by recovering over 43 billion barrels of additional oil from currently stranded oil reserves and mature oil and gas wells in the United States. www.fossil.energy.gov
Developing these resources will provide significant revenues to state treasuries, provide thousands of additional domestic jobs, and improve the U.S. trade balance by reducing imports.
Properties
E.A. Chance #1 & #2 - Camp County, Texas
Avalon Oil & Gas owns a fifty percent working interest in the E.A. Chance #1 and #2 wellbores, and associated 40 acre lease in Camp County, Texas. This is mature property, and these wells were drilling in the 1950’s. The #1 well is currently producing from the Sub-Clarksville zone, within an active waterflood area. The #2 is temporarily shut-in pending evaluation of a tubing leak, and further consideration of conversion into a Saltwater Disposal Well. These properties are operated by KROG Partners, LLC, a Kilgore, TX based operator. The largest offset operator in this area of Camp County is Basa Resources, a Dallas based independent oil and gas company.
TECHNOLOGY
Avalon's technology group acquires and develops oil production enhancing technologies from early stage licensing partners. Through its relationship with UTEK, Inc., Avalon is building an asset portfolio. Its business model is to evaluate the commercialization potential as to technology and market viability, and if merited, proceed to rapid prototype development and field test of licensed technologies.Through relationships with targeted marketing partners, system design considerations will be tailored for market acceptance and adoption.
Oil Market Opportunity
Global market conditions present an attractive investment opportunity for proven technologies which will expand oil production efficiency in established fields. New supply solutions are not sufficient to offset declining production in the US. This has led to redevelopment of shut-in wells and prematurely abandoned wells by new market entrants such as Avalon Oil & Gas. Avalon has the advantage of preferential access to the company's field test beds for evaluating prototype technologies for oil production enhancement. In addition, Avalon's industry relationships can be leveraged in developing marketing partnerships for strategic technology commercialization.
Strategic Alliance with UTEK, Inc.
UTEK is a leading, market-driven technology transfer company that enables companies to rapidly acquire innovative technologies from universities and research laboratories worldwide. UTEK has operations in the United States, United Kingdom and Israel and trades on the American Stock Exchange (AMEX) in the US and on the LSE (AIM) in London under the ticker symbol "UTK". Through its strategic alliance with UTEK, the technology commercialization team at Avalon has access to early identification of promising oil production enhancement innovations, and the capability to finance their acquisition in exchange for equity.
Technology Asset Portfolio
Avalon is in the process of acquiring a portfolio of new technologies for the oil and gas industry which have been identified through its partner UTEK; and were developed at leading universities and research labs. The initial technologies licensed by Avalon are described below: Paraffin Wax Mitigation Technology , developed by researchers at the University of Wyoming; and Borehole Casing Technology , developed by the Lawrence Livermore National Laboratory.
Paraffin Wax Mitigation Technology
This license provides Avalon with exclusive rights to paraffin wax removal technology for improving oil production efficiency. The technology utilizes ultrasonic waves to mitigate deposits of paraffin wax from crude oil. In this process, a series of varying ultrasonic frequency generating devices are positioned in production tubing walls as a means to inhibit the wax from attaching to the pipes. This technology helps prevent precipitate from forming on the pipes and breaks wax bonds, helping operators to maintain optimal oil viscosity thereby increasing flow rates and production efficiency.
Why this matters. Wax deposition in crude oil pumping equipment is an enormously expensive problem for nearly all oil producers around the world. In the field, production tubing is often plugged by paraffin wax that deposits on the walls of the tubing and surface flow equipment. The deposition of the paraffin wax leads to a significant fall in the oil production rates from the affected well. The wax deposits occur when the temperature and pressure in the tubing move below the cloud point of the oil. These cloud point fluctuations cause paraffin wax crystals to form in the oil and collect within the tubing. They also cause viscosity to increase, further choking off flow-lines.
How it works. Ultrasonic frequency generating devices are positioned adjacent to the production tubing walls, producing at least three optimal ultrasonic frequencies to prevent precipitation. At least one frequency is tuned to disintegrate any of the wax that forms. The second frequency is designed to break down the wax by forming molecules into smaller molecules, and the third frequency employed inhibits the wax from attaching to the production tubing walls. Variations in frequencies can be applied to better prevent the wax buildup in specific installations.
Borehole Casing Technology
The second technology license acquired by Avalon is from researchers at Lawrence Livermore National Laboratory. This technology involves 'smart oil well borehole casings' for oil recovery. The smart borehole casing technology uses a densely spaced network of casing sensors to monitor critical parameters in a subsurface oil reservoir. Data from a range of sensor types are combined with data fusion technology to yield real-time knowledge of the reservoir and processes such as primary and secondary oil recovery. Sensors located deep within the reservoir are much more sensitive than sensors located on the surface. Types of sensors that can be customized in installation include seismic sensors, electrical resistance tomography electrodes (ERT), electromagnetic (EM) induction tomography coils and thermocouples.
Applications include real-time mapping and monitoring of subsurface fluid composition and distribution in deep oil reservoirs to maximize oil recovery without interfering with normal well operations. Hydrocarbon recovery and well locations can be optimized. Bypassed oil and fluid-flow barriers can be identified; and fluid saturation changes can be effectively mapped.
Management
Chief Executive Officer: Kent Rodriguez
Mr. Rodriguez joined the Company as President, and Chief Executive Officer in January, 1997. Since 1995, he has been the Managing Partner of Weyer Capital Partners, a Minneapolis-based venture capital corporation. From 1985 to 1995, he was employed by the First National Bank of Elmore, Elmore, Minnesota, in various capacities. He has a B.A. degree from Carleton College.
Vice President: Jill Allison
In leading Avalon's new technology initiatives, Ms. Allison brings over 20 years of diversified management experience in business development and technology commercialization. Prior to joining Avalon, she managed a technology strategy consulting practice with focus in the market convergence of physical and IT security industries. Her venture development background includes market leadership positions with Monsanto, Iridian Technologies, Pinkertons and Cylink Corporation. She holds a B.A. in Economics from Gustavus Adolphus College; a Master's in International Management (MIM) in Marketing from the American Graduate School of International Management (Thunderbird), Glendale, AZ; and an MBA in Strategic and Entrepreneurial Management from the Wharton School of the University of Pennsylvania, where she focused on strategic alliances and management of technology.
Directors
Douglas Barton
Mr. Barton has served as a Director of the Company since December 2005. He was a Director of XDOGS.COM from 1998 to February 2005. From 1987 to the present, he has been the President and sole owner of Venture Communications, Inc., a private promotion, and marketing consulting firm. He has a B.S. degree in Economics/History from the University of Minnesota.
Thad Kaplan
Mr. Kaplan has served as a Director of the Company since December 2005. He is currently an independent food and beverage industry consultant. From 1997 to 2002, Mr. Kaplan was the owner of BS Holdings, Inc., a food and beverage industry holding company. Mr. Kaplan is a director of Universal Property Development and Acquisition Corporation (OTCBB: UPDA), a holding company that provides funding through joint ventures with owners of proven oil and gas reserves and cutting edge technologies. Mr. Kaplan holds an Associates degree from Sullivan County Community College,
New York with studies in Food Service, Restaurant Management and the Culinary Arts.
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