TEXEN OIL AND GAS, INC. (OTCBB: TXEO)

Dear Reader, 

Ridiculous prices at the pump, OPEC’s monopolistic and suspiciously motivated price games, and winter heating oil needs are looming on the horizon - something’s gotta' give!  The collective American temper is rising in proportion to the cost of our transportation lifeblood oil and many of us are wondering out loud; "what’s next?"

Both oil and natural gas are trading at record highs with crude oil hitting $44 per barrel and natural gas trading close to $6 per MCF. Amid today’s global conflicts, the U.S. is more focused than ever on reducing its dependence on foreign oil.

Enter Texen Oil & Gas (OTCBB:TXEO) based in the home state of our president and armed with a wealth of visionary and practical experience in oil and natural gas.  Texen indeed, is on familiar turf when it comes to getting that 'Black Gold' and 'Texas Tea' out of the ground and off to market for a variety of uses ranging from automobiles to heating oil.  Considering the current oil and gas prices and where the energy sector is today, Texen may well be worthy of your review.  The company has been quietly reorganizing its management and operations to position itself to take advantage of the growing demands of the energy sectors.  Meanwhile, it continues to produce high quality crude and natural gas through its properties located in Southern Texas. 

Notably, the stock is trading near its 52-week low despite the rise in oil prices and the fact that the company is currently working on an immediate increase in production on its existing properties. Additionally, it is in negotiations to acquire additional oil and gas and coal bed methane leases and just recently added a top-tier management and advisory team.  We believe the market at large has not yet taken notice of any of these developments based on the current stock price.  But you have, dear reader, and our full profile is now in your hands for your perusal.
 

ABOUT TEXEN OIL AND GAS

Texen Oil and Gas, Inc. (OTCBB: TXEO) is a Houston-based oil and gas exploration and development (E&D) company with domestic producing crude oil and natural gas properties.  The company has positioned itself and its shareholders to take advantage of the supply needs in the energy sector by providing domestically produced resources.  The company currently holds approximately 6,000 acres of crude oil and natural gas properties with the majority of acreage in shallow formation fields advantageous for low cost exploration, drilling and production.  The Company owns and operates completion equipment which enables it to have low field operating and reworking costs. Engineering studies and well log analysis on the Company’s properties have identified many possibly productive zones and a re-work program is underway to re-develop these assets. 

Brookshire Salt Dome
The Brookshire Salt Dome covers 8,000 acres and is a relatively shallow piercement salt dome located approximately 35 miles from the Company’s headquarters in Houston. The wells drilled to date on Texen’s leases were concentrated on an area less than 40 acres and all were completed in the Miocene and Frio sands between 1,700 and 3,200 feet depth. This type of shallow formation allows for low cost exploration, drilling and production. Acquired in June, 2002, the Company’s wholly owned subsidiary, Texas Brookshire Partners, Inc., holds various working interests in 525 gross leasehold acres in the Brookshire Dome Field. The leases have been developed with 5 producing oil wells and 1 salt water injection well.

Helen Gohlke Field
During September 2002, Texas Gohlke Partners, Texen’s wholly owned subsidiary, acquired 4,800 leasehold acres with depths to approximately 8,200 feet in the Helen Gohlke Field which was discovered by Shell Oil in the 1950’s. Texas Gohlke Partners owns a 100 percent working interest with a 70-75% percent net revenue interest in the wells they acquired. There are numerous well bores, for potential rework and a 3D seismic database is available on 4,500 acres of this property.  Texen currently operates 7 oil and gas wells and 2 salt-water disposal wells on these leases. The Company has identified many re-completion zones based on engineering studies and well log analysis.

Recent Developments
Engineering studies have identified additional, possibly productive zones in the Company’s two properties. A rework program is currently underway to exploit these zones that could increase production and cash flow.
 

TEXEN HIGHLIGHTS Seven (7) producing wells and two salt-water disposal wells on Helen Gohlke Field.  Five (5) producing wells and one salt-water disposal well on the Brookshire property. Current drilling program underway to increase production from existing properties. Currently negotiating additional leases to increase the Company's asset base of oil and gas properties. Large 3-D seismic database on existing property.

TEXEN STRATEGY

Texen's current projects are in Texas, which provides a diversified mix of moderate and high impact oil and gas prospects combined with low risk infield development prospects.  The Company’s primary goal is to deliver shareholder value in a cost-effective manner. Key elements of the Company’s business strategy include: 
 

Increase oil and gas production in the Brookshire Salt Dome by drilling new wells and reworking existing wells to stimulate production. Increase oil and gas production in the Helen Gohlke Field by re-completing additional wells in shallower formations previously ignored by former operators. Increase the company asset base through the acquisition of crude oil and natural gas properties with low to medium risk re-completion targets.

THE OIL & GAS INDUSTRY

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Petroleum - The U.S. Department of Energy (DOE) Annual Energy Outlook published in January 2003, estimates total domestic petroleum production will increase from 7.7 million barrels per day (b/d) in 2001 to 8 million b/d in 2025.  Total petroleum demand is projected to grow at an average annual rate of 1.7% through 2025, reaching 29.17 million b/d.  Natural Gas – Driven by growth in natural gas demand, domestic natural gas production is projected to increase from 19.5 to 25.1 trillion cubic feet between 2001 and 2020. According to the DOE, total demand for natural gas is projected to increase from 22.7 trillion cubic feet to 34.9 trillion cubic feet, between 2001 and 2025, primarily due to the rapid growth in demand for electricity generation.

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What Lies Beneath
Photograph by Sarah Leen

The wellhead is just the tip of the iceberg at an oil storage cavern in Bryan Mound, Texas, where an employee of the Strategic Petroleum Reserve (SPR) does routine monitoring. Beneath the wellhead is an underground salt cavern the size of the Empire State Building. The SPR, the largest such reserve in the world, began operations in 1977 as an emergency crude oil storage site, ready to be drawn on should a disruption in commercial oil supplies pose a threat to the U.S. economy.  Located at four sites in Texas and Louisiana, the reserve can hold up to 700 million barrels of crude oil. Should the need arise, a maximum of 4.3 million barrels of oil a day can be tapped from the reserve for 90 days.  And delivery is swift.  Once the President gives the go ahead, oil can be on the U.S. market in 13 days. 

TEXEN EXECUTIVE MANAGEMENT TEAM AND KEY ADVISORS

Michael Sims - President and CEO 
Mr. Sims has been involved with Texen Oil and Gas in various capacities since its inception and formerly served as Vice President.  Mr. Sims was instrumental in the sourcing of the Company’s property assets and negotiating the leasehold agreements.   Mr. Sims has been involved in a diverse range of business opportunities in the oil and gas sector over the last thirty years.  His experience includes oil and gas drilling, exploration, production, manufacturing and transportation.  Mr. Sims has also assisted companies in attracting capital in both the private and public sectors.  The combination of his ability to attract capital and his deep network in the oil and gas industry will will assist the company in taking advantage of the strong energy marketplace. 

Larry Lenig - Strategic Consultant
Mr. Lenig served as CEO and president of Seitel, Inc., from 2002 to 2004 during which time the company restored strong positive cash flow and increased its recognized value by more than $100 million. Mr. Lenig also served as President of US and Canadian operations of Paradigm Geophysical, Inc. from 1999 to 2002 and served as CEO of Grant Geophysical from 1997 to 1999.  Before joining Grant Geophysical, Mr. Lenig was with Digicon Inc (now known as Veritas DGC, Inc.) from 1976 to 1993, the last five years as Chief Operating Officer. Other consulting clients of Mr. Lenig have included oil services companies, oil companies and several enterprises outside of the oilfield.  Mr. Lenig graduated from the University of Houston in 1971 with a BAA in Accounting. Mr. Lenig is a member of the Society of Exploration Geophysicists and serves on the Advisory Council to the Dean of the College of Natural Science and Mathematics at the University of Houston. 

Michael McAdams - Advisor to the President
Michael J. McAdams, Partner, has held senior level leadership positions in business, government and industry organizations and brings over 25 years of public affairs experience to the firm. His expertise, experience and extensive relationships with decision makers are invaluable in pursuing an integrated public affairs approach for clients in the areas of energy, environment and tax. 

Prior to joining the firm, Mr. McAdams was the Vice President of the Eastern United States and Associate Group Policy Advisor to the Chief Executive Officer of  British Petroleum (BP), Lord John Browne. In his role as policy advisor, McAdams was a key member of the BP team overseeing the Amoco and Arco mergers. Additionally, he played a pivotal role in the development of BP climate policy and fuels policy and in the negotiation of the largest New Source Review settlement in US history, impacting nine of the company's U.S. refineries. In his VP Eastern US management role, he supervised a staff of 45 and directed a state government and public affairs effort covering 32 states. 

As a lobbyist for British Petroleum, McAdams lead BP efforts on the Oil Pollution Act, developed Congressional testimony for oversight hearings and led the successful legislative effort to lift the 20 year ban on the overseas sale of Alaskan crude oil. He was also involved in shaping the 1990 Clean Air Act, as well as the low sulfur gasoline and the low sulfur diesel rule makings by the Environmental Protection Agency. 

TEXEN IN THE NEWS

Houston, Texas, July 30, 2004 – Texen Oil and Gas, Inc. (OTC BB: TXEO), a Standard and Poor’s listed company, continues its drive to refocus its field efforts and increase production. Texen just completed a successful week which saw the completion of a key saltwater disposal well on the Victoria lease, enabling the sale of over 1,000 barrels of quality crude. In addition the company completed working over the first of several wells on its Brookshire property. 

"I am pleased with the amount of progress and the focus and commitment of our new management team. With the years of experience and the assets we have available we are making positive strides on behalf of Texen in short order. With crude reaching 43 dollars a barrel, there could not be a better time to maximize production from our wells in the Brookshire field," states Michael McAdams. McAdams is the advisor to the new President and CEO, Michael Sims, and spent fifteen years as the policy advisor to John Browne, Chief Executive Officer of BP.

The first rework on Brookshire’s Dachshund #10 is complete and pumping fluid. The drilling rig has been moved to Brookshire’s Dachshund Well #11 for re-work to begin on the next well.

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SELECTED FINANCIAL HIGHLIGHTS

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Business History: Texen Oil & Gas, Inc. (formerly Palal Mining Corporation) (hereinafter "Texen" or "the Company") filed for incorporation on September 2, 1999 under the laws of the State of Nevada primarily for the purpose of acquiring, exploring, and developing mineral properties. The Company changed its name from Palal Mining Corporation to Texen Oil & Gas, Inc. on May 15, 2002 upon obtaining approval from its shareholders and filing an amendment to its articles of incorporation. The Company shall be referred to as "Texen" or "Texen Oil & Gas, Inc." even though the events described may have occurred while the Company's name was Palal Mining Corporation. The Company's fiscal year end is June 30. 

On July 1, 2002, Texen developed a plan for acquisition, development, production, exploration for, and the sale of, oil, gas and natural gas liquids and accordingly ended its exploration stage as a mineral properties exploration company. The Company sells its oil and gas products primarily to domestic pipelines and refineries. These acquisitions were accounted for using the purchase method Prior to this, Texen conducted its business as an exploration stage company, meaning that it intended to acquire, explore and develop mineral properties. The Company's wholly owned subsidiaries consist of Texas Brookshire Partners, Inc. ("Brookshire"), Texas Gohlke Partners, Inc, ("Gohlke"), Brookshire Drilling Services, Inc. ("Drilling"), Yegua, Inc. ("Yegua") and BWC Minerals, LLC ("BWC"). 
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