American Energy Reports Year-End Results and Domestic Exploration and Development Program for This Fiscal Year.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Oct. 23, 2001

The American Energy Group, Ltd. (OTCBB:AMEL) has reported results for the fiscal year ended June 30, 2001 as filed with the Securities and Exchange Commission in its Form 1O-K.

We recorded a net loss for fiscal 2001 of $13,274,092, or $0.25 per share, versus a net loss of $2,361,175, or $0.024 per share, for fiscal 2000.

Oil revenues for the 12 months were $1,806,335 with an average price of $29.11. The prior year's revenues were $1,823,276 with an average price of $24.91. We had a 16% decrease in production (62,052 BBLS from 73,195 BBLS) but an increase of $219,255 in lease operating and production costs from the previous year. We experienced the decrease in production and the increase in costs while Northern Lights Energy controlled operations under the May 9, 2000 sales agreement. This was due in part to additional water hauling costs and Northern Lights' use of field equipment on other non-company properties. We also set aside in favor of Northern Lights 25% of gross production for the last nine (9) months of the year for repayment of the $750,000 advance made by Northern Lights under the May 9, 2000 sales agreement. The Northern Lights loan was repaid in full shortly after year end. Our allocation of this 25% of gross production to repayment of the loan had an adverse effect on our cash flow because the portion allocated did not bear proportionate operating expenses.

An adjustment in the net revenue in 2000 and 1999 was made in fiscal year ended June 2001. The adjustment was made because we previously capitalized the dry hole costs associated with the unsuccessful drilling activities in Pakistan, rather than deducting them as an expense in the year incurred. This adjustment affects the previously reported losses for the period ending June 30, 1999 by increasing those losses by $5,216,832 from $754,349 to $5,971,181 and affects the previously reported losses for the period ending June 30, 2000 by decreasing those losses by $9,922,073 from $12,283,248 to $2,361,175. New accounting procedures have been implemented to effect proper treatment of such costs in future operations.

The large increase in Other General and Administrative Expenses from $555,227 in the previous year to $4,853,820 for the current year is based largely upon the 6,050,000 shares of Common Stock issued to members of management in November, 2000. The values attributed to these shares in the Financial Statements for purposes of calculating these expense line items were determined based upon the market value of the shares on the date of issue. During the same period, there were 11,075,000 warrants to purchase common stock held by management and former management which we canceled.

As we previously reported, our new management of American Energy Operating Corp. regained control of the Texas-based oil and gas leases and equipment upon settlement of the lawsuit with Northern Lights. At that time we elected to withdraw these assets from the sales market and design and implement a program to increase productivity and make them self sufficient during this current fiscal year. Since July 1, 2001, the Company has drilled one (1) new well (Blakely B-72) which was completed as a producing oil well and is currently flowing 20 BOPD. Continued testing is ongoing at present and additional potential oil zones revealed in the tests performed on this well will be explored in the future. In addition, our saltwater disposal well in the Blue Ridge Field has been repaired and will soon be put on line after regulatory approval. Our saltwater disposal well in the Boling Field has been repaired and is presently in use. When both of these saltwater disposal wells are activated, we will no longer incur third party costs associated with hauling and disposing of saltwater from operations resulting in a savings of $15,000 to $20,000 per month, which will considerably lower our lifting costs. Presently we are reworking and recompleting wells in the Boling Field which will increase our production by approximately 150 BOPD.

Our domestic operating budget for the coming fiscal year includes the drilling of 6 new wells, 30 recompletions, 24 workovers, 2 soak programs and 2 disposal wells. We are also planning to acquire 1 vacuum truck, 14 reconditioned motors, 2 equipment and storage buildings, 20,000 feet of tubing and 10,000 feet of sucker rods. This budget is based upon oil prices remaining stable.

Field production has increased by approximately 100 BOPD since July 1, 2001 which is a 27% increase from 4th quarter 2000-2001 to the 1st quarter of this fiscal year. We anticipate that our domestic fields will continue to experience increases in average daily production as additional existing wells are reactivated and new developmental wells are drilled.

The American Energy Group, Ltd. is an independent oil and gas exploration, drilling and production company based in Houston, Texas, engaged in international exploration projects.

Certain matters described above are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those projected.