SOURCE: Xtreme Oil and Gas

Xtreme Oil and Gas

November 11, 2011 08:30 ET

Xtreme Oil & Gas Announces Revenue of $2.3 Million for the Nine Month Period Ended September 30, 2011

Management Provides Shareholder Update

PLANO, TX--(Marketwire - Nov 11, 2011) - Xtreme Oil & Gas, Inc. (OTCQB: XTOG) (OTCBB: XTOG), an independent energy company engaged in the exploration, development, acquisition, and production of crude oil and natural gas, announced today third quarter and nine month financial results for the period ended September 30, 2011.

"Throughout the third quarter and first nine months of 2011, management has been dedicated to building a strong foundation of growth for the fourth quarter and beyond," stated Willard G. McAndrew III, CEO of Xtreme Oil & Gas, Inc. "We now have the capital to expand our drilling operations into Kansas, enhance our saltwater disposal well, and move our West Thrifty Fry Sands, Ellenberger Wells and Hancock into production and continuing to produce the Robinson well into production. Going forward, management remains committed to our long term growth strategy and to building shareholder value."

Mr. McAndrew III continued, "In addition to completing our oil projects in Texas and Oklahoma (we have already begun recovering oil from these sites) we are mobilizing a drilling rig into Kansas for the first of two wells to be drilled. The Company experienced success in our high-margin saltwater disposal business by signing LOIs for up to 15,000 barrels of saltwater per day from AMEREX and Southern Wellhead. With newly drilled sites producing returns on investment and management moving towards large scale commercialization of our saltwater disposal operations, we expect that 2012 will generate expanded margins, increased top line revenue and strong earnings. Additionally, management recently received a third party private valuation that concluded Xtreme was worth over $102 million. The valuation was performed using several methods including discounted cash flow, price to earnings based on market comparable data and book value. Recent operational achievements coupled with the numerous opportunities that lay ahead, position us to become a market leader within the independent energy market."

2011 Company Highlights

  • Signed a Letter of Intent from AMEREX Resources and Southern Wellhead, resulting in up to $7 million for disposal of 15,000 barrels per day of saltwater in Xtreme's Oklahoma commercial disposal well.
  • Announced that drilling on the Hancock well has been completed, and is drilled to the Hunton formation, adjacent to a well that has produced 18,000 barrels of oil in the previous 9 months.
    • The site is located within a mile of the Company's Robinson well which has produced over 38,000 barrels of oil in the past 12 months.
  • The Company announced three new completed wells on its West Texas property passed final testing with the Railroad Commission of Texas allowing us to begin injecting water into our 5-Star Well project.
  • Xtreme's Saltwater Disposal Well has completed the final testing required by the Oklahoma Corporate Commission and finished acidizing and fracking the formation to accept saltwater.
    • The well exhibits unique characteristics for a prolonged period of revenue generation of up to 20 years and stable margins
  • Announced results at the Robinson well in Oklahoma achieved initial production of over 300 barrels of oil and 850,000 cubic feet of gas per day.
    • Current regular production has settled in at approximately 200 barrels of oil and 1,000,000 cubic feet of gas per day.

Three Month Financial Results for the period ended September 30, 2011

For the three months ended September 30, 2011, net revenue was $122,766 an increase of approximately $98,000 from $24,628 for the three months ended September 30, 2010. The increase was principally due to sale of working interest in the West Thrifty Unit that resulted in $115,000 in revenue. Revenue for oil sales for the three months ended September 30, 2011 was $7,766.

Oil production costs for the three months ended September 30, 2011 totaled $50,389, a decrease of $1,477 from $51,866 for the three months ended September 30, 2010. The decrease is due to reduced maintenance activities on all of our properties. Production costs exceeded oil and gas revenues because of higher costs operations.

General and administrative expenses totaled $593,519, for the three months ended September 30, 2011, a decrease of $776,332, from $1,369,851 for the three months ended September 30, 2010. This reduction in general and administrative expense is largely driven by reduction in expenses for services delivered. These expenses, incurred in 2011, included salaries, utilities and rent, consulting fees, and presentation fees.

For the three months ended September 30, 2011, Xtreme had net loss of $4,082,873 compared with a net loss of $1,411,447 for the three months ended September 30, 2010. This increase in net loss was primarily due to $3.4 million in accounting charges taken for derivative instruments during the period ended September 30, 2011. Xtreme Oil & Gas reported a loss of $0.09 per share for the quarter versus a loss of $0.03 per share during the same quarter in 2010.

Nine Month Financial Results for the period ended September 30, 2011

For the nine months ended September 30, 2011, net revenue was $2,393,989 an increase of $2,321,510 from $72,749 for the nine months ended September 30, 2010. Increase in revenue was due primarily to income from sale of working interest of $2,336,078 for the nine months ended September 30, 2011.

Oil production costs for the nine months ended September 30, 2011 totaled $144,221, a decrease of $52,602 from $196,823 for the nine months ended September 30, 2010. The decrease is due to reduced production costs on all of our properties. Production costs exceeded oil and gas revenues because of higher costs of maintenance and continued additional operations to increase future production on certain wells in Texas.

General and administrative expenses totaled $1,528,679 for the nine months ended September 30, 2011, a decrease of $3,012,907, from $4,541,586 for the nine months ended September 30, 2010. These general and administrative expense differences are largely driven by a reduction in professional services expenses. These expenses, accrued in 2011, included salaries, utilities and rent, consulting fees, stock-based compensation, and presentation fees.

For the nine months ended September 30, 2011, Xtreme had a net loss of $2,933,828 compared with a net loss of $5,084,003 for nine months ended September 30, 2010. This decrease in net loss was due primarily to income from sale of working interest during the period ended September 30, 2011.

For the nine months ended September 30, 2011, Xtreme's net loss per share on a basic and diluted basis was $0.07 compared to a loss of $0.12 per share for the nine months ended September 30, 2010. Without the non-cash charges for debt discount amortization, gain of debt extinguishment and derivative losses on convertible debt Xtreme would have had net income per share on a basic and fully diluted basis of $0.01 per share.

The Company believes it is useful for the Company and investors to consider this non-GAAP measure as it excludes significant onetime accounting charges related to the Notes and Warrants we issued during the third quarter.

Xtreme Oil & Gas
Xtreme Oil & Gas, Inc. is a rapidly growing Dallas-based independent energy company engaged in the exploration, development, acquisition, and production of crude oil and natural gas with operations producing oil and gas from properties it owns and operates in Texas and Oklahoma.

Forward Looking Statements
Statements included in this release related to Xtreme Oil & Gas, Inc. constitute or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties such as the inherent uncertainty of finding and developing oil and gas properties, the technological and financial difficulties inherent in these activities, the price of hydrocarbons and the Company's ability to estimate accurately net revenues due to variability in size, scope and duration of projects. Further information on potential risk factors that could affect the Company's financial results can be found in the Company's reports filed with the Securities and Exchange Commission.

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