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Through recent workovers and production optimization activities in the field, Avalon and KROG have doubled production since the acquisition of the property in July, 2006.




Janssen #1A - Karnes County, Texas

Avalon owns an undivided fifteen percent (15%) working interest in the Janssen #1A, Karnes County, Texas. The well was re-completed in the Roeder Sand (Wilcox Sand Series) in the existing vertical wellbore by a sidetrack drilling procedure at a depth of approximately 10,300 feet. The well was perforated with 6,000 feet of water fluid in the tubing. The well has been flowing at an average rate of 330 thousand cubic feet of gas per day and producing 10 to 20 barrels of high grade condensate. At present the well is flowing into the sales line without the need of a gas compressor.

The Janssen #1A has a gas sales contract that fluctuates monthly with the Houston Ship Channel price index and the liquid condensate will be sold at the monthly spot price for product in the regional Texas area. Avalon and the other participating partners received initial revenue distribution in July for the hydrocarbon products sold from the Janssen #1A well. This well should produce revenues for many years to come.

Total reserves are estimated to be 75,000 to 100,000 barrels of condensate and 3 to 4 BCF of Gas (billion cubic feet of gas). The well is located in an area that is very active in gas and oil production. There are several nearby wells that produce natural gas in excess of over 1 million cubic feet per day. Other working interest partners include Tradestar Resources (TSRR.PK), Hot Springs, AR, Bedford Energy (BFDE.PK) Oklahoma City, OK, and Penasco Petroleum, Austin TX). PROEX Energy Management (TSX: PXE) (PXEYF.PK) is the operator of the well.


Lake Washington Field - Plaquemines Parish, Louisiana

This property is comprised of three producing units currently making over 1,000 barrels of oil per day. Lake Washington Field is located Plaquemines Parish, Louisiana, about 60 miles south of New Orleans. Lake Washington was discovered in the 1930’s and is located around a shallow piercement salt feature. Since discovery almost 80 years ago, the field has produced approximately 350 million barrels of oil, putting it among the largest oil and gas fields in the United States.

Avalon acquired a 0.7% working interest in this property containing 3 producing units as well as like interests in surface production facilities and two salt water injection wells. Swift Energy Company (NYSE:SFY) is the operator of the field. Avalon will be evaluating additional drilling opportunities in the field next year.


Waters Well - Lipscomb County, Texas

Avalon owns a 5.0% working interest in the Waters well, located on a 1,280-acre leasehold.  This mature property produces at a rate of 1,200 MCF per day. There are 4 to 5 potential offset wells on the property.

Grace Wells - Lincoln County, Oklahoma

Avalon holds a 70% working interest in the 5 Grace wells, Grace #1, Grace #2, Grace #3, Grace #5A and Grace #6 in Lincoln County, Oklahoma.  This property covers 1,040 acres and includes a 50% interest in a salt water disposal well and 50% interest in two re-entry locations.  Initial production was 600 MCF of gas per day and 8 BOPD.  Projected reserves are $0.04 per share.