SOURCE: AAA Energy Inc.

April 16, 2007 10:34 ET

AAA Energy Inc. Signs Letter of Intent on Jiyuan Oilfield in China

RENO, NV -- (MARKET WIRE) -- April 16, 2007 -- AAA Energy Inc. (OTCBB: AAAE), an energy exploration company focused on discoveries in emerging energy frontiers and horizons, is pleased to announce that it has entered into a Letter of Intent ("LOI") with its strategic partner, the Fangzhou Petroleum Group ("Fangzhou"), on the Jiyan Oilfield (Huan County) concession located in the Ordos Basin.

The Jiyuan Oilfield concession (exploration permit number: 0200000430186), located on the western edge of the Ordos basin in Huanxian, Gansu Province, is comprised of 14 contiguous claim positions totaling 1046.44 square kilometers. Multiple development, completion and production wells are present in and within the vicinity of the concession area.

Under the terms of the LOI, AAA Energy is granted the right to conduct a due diligence review of Jiyuan, including receiving access to production data on producing wells in the concession area as well as data generated through prior aeromagnetic, geophysical, geochemical and seismic work conducted by the Chinese side on the concession area. If merited following the Company's due diligence review, AAA can then delineate its area of interest within the Jiyuan Oilfield and subsequently enter into a formal Sino-foreign cooperative joint venture with Fangzhou, whereby AAA can earn up to a 70% interest in such targeted area of interest.

The Jiyuan Oilfield is located in the Ordos Basin, the second largest sedimentary basin in China, with reported overall oil reserves topping 8.588 billion tons of oil, 10.7 trillions cubic meters of natural gas, and 3.98 trillion tons of coal. The Basin has been dubbed the country's "energy bank for the 21st century" and plays an important role in China's economic development, supplying 4.75 billion cubic meters of natural gas to over 15 cities, including Beijing, Tianjin, Nanjing and Shanghai.

The Ordos Basin is a typical cratonic basin developed on the Archean granulites and lower Proterozoic greenschists of the North China block. Two hydrocarbon systems are present in the basin: the Paleozoic gas and the Mesozoic oil systems. In the Paleozoic gas system, the Lower Ordovician marine carbonates and Pennsylvanian-Lower Permian coal measures serve as source rocks. The Lower Ordovician karst-modified dolomites and Pennsylvanian bauxitic mudstones form a significant reservoir-seal association, and the Pennsylvanian-Lower Permian deltaic sandstones and Upper Permian lacustrine mudstones form another effective reservoir-seal association. In the Mesozoic oil system, the Upper Triassic lacustrine mudstones are mature source rocks. The Upper Triassic deltaic sandstones and overlying shallow-lacustrine and swamp mudstones form a reservoir-seal association, and the Lower Jurassic fluvial sandstones and overlying shallow-lacustrine and swamp mudstones form another reservoir-seal association. In both hydrocarbon systems, the stratigraphic variations provide the principal traps. The Ordos basin is characterized by a stable tectonic setting that controls the distribution of depositional systems and the development of erosional surfaces, ultimately governing the distribution of oil and gas fields and trap types.

The Fangzhou Petroleum Group is a diversified energy group principally owned by Shaanxi regional government entities, with core holdings in the Basin, substantial investment in the energy supply and service sectors, and an associated company of the Shaanxi Yangchang Petroleum Group Co., Ltd. ("Yangchang"), the fourth largest oil and gas company in China.

Management is currently planning to undertake a technical due diligence trip to China in May to review the Jiyuan Oilfield as well as other opportunities presented to the Company in Lanzhou, Qinghai Province. Further Information

Please feel free to call investor relations toll-free at 1-877-990-1122 to receive a full corporate investor's package. Investors should take note that some of the key players within the Chinese frontier include but are not limited to; Apache, BP plc, Royal Dutch Shell plc, Chevron Corporation (Unocal), ENI SpA, Exxon Mobil Corporation, ConocoPhillips, Anadarko Petroleum Corporation, TOTAL Group, Kerr-McGee Corp., Husky Energy Inc, and Devon Energy Corp.

About AAA Energy Inc.

AAA Energy Inc. is a publicly traded natural resource exploration company with headquarters in Vancouver, BC and oncoming exploration offices in Calgary, Alberta and Xian, China. AAA Energy Inc. aims to secure and develop a portfolio of oil and gas properties in the People's Republic of China. The company is strategically positioning itself in China's Ordos Basin and will soon be ready to begin exploration of prime oil and gas land holdings in the basin. AAA Energy Inc. trades on the OTC BB under the ticker symbol: AAAE.

On behalf of the Board

Albert Au, Director

Forward-Looking Statements

Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Words such as "expects," "intends," "plans," "may," "could," "should," "anticipates," "likely," "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management, including, but not limited to, the Company's belief that AAA Energy Inc. can identify and successfully negotiate leases for oil and gas properties in China, and that the Company can participate in the exploration of those properties. Actual results may differ materially from those currently anticipated due to a number of factors beyond the reasonable control of the Company. Additional information on risks and other factors that may affect the business and financial results of the Company can be found in filings of the Company with the U.S. Securities and Exchange Commission.

Contact Information

  • Contacts:
    AAA Energy Inc.
    Investor Relations
    Toll Free: 1-877-990-1122