Xtreme Oil & Gas Inc. buys and operates distressed oil properties in Texas and Oklahoma.

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While most people were stressing out about high oil prices, Will McAndrew and his business partner Glen Kennedy saw it as an opportunity to make a profit. About two years ago, they formed Xtreme Oil & Gas Inc. , an Addison, Texas-based company that buys and operates distressed oil properties in Texas and Oklahoma. “We wanted to take advantage of $40 per barrel oil,” McAndrew explains.

Xtreme Oil & Gas Inc. is a niche player, focusing its efforts on the purchase of distressed oil properties primarily in Texas and Oklahoma to meet the growing demand for oil and gas. Distressed properties include properties with older non-functioning wells, abandoned wells – including those with unresolved “plugging obligations” where the costs can be managed – and properties that were previously in production or adjacent to producing properties, but have limited production or production has fallen below economic value due to neglect or inability to exploit with modern technologies, McAndrew explains.

The company acquires properties that have potential for oil production but have become unprofitable for the larger oil and gas companies to continue production. “We bring in new expertise and technology to these properties and bring them back into production,” he says. “We purchase 100 percent of the properties and use new technology to rework the wells, bringing up the oil reserves waiting to be produced. [The property has] a history of production so we know oil is there.

“The history of production says it can produce and it usually has been drilled by a major oil company.

“The company owns 2,400 acres, 100 oil wells and 30 to 50 drilling locations in Texas and Oklahoma,” McAndrew says. “It also has four engineering reports on properties and five million barrels of oil and gas reserves.” Five of its wells are approaching production of 100 barrels of oil per day, he adds. “We have a well stimulating right now and if it works, we’ll file for a new field discovery,” he says.

“With any type of risk, you have to be diligent in finding what you’re looking for,” he says.

“The good news is, you own it 100 percent,” he adds. “We’re debt-free on the property. We own the equipment and the opportunity. We take our time and we’re careful with what we acquire.”

Xtreme Oil has also acquired I.R.A. Oil & Gas LLC in Texas and Go Operating LLC in Oklahoma.

High Oil Demand
The past four generations of McAndrew’s family have all worked for Standard Oil Company/Exxon, he says. His first job came from his godfather at Hercules Drilling. Kennedy worked at Exxon and was managing partner of IRA Oil & Gas LLC before joining forces with McAndrew two years ago. “We are jarhead Marines who don’t know when to quit,” McAndrew says.

Even with the demand for alternative fuel, McAndrew says he sees the demand for oil continue to grow. “[People say] we need cleaner fuel, and that’s wonderful and great, but how are you going to replace [oil] in the short term?” he wonders. “There will always be a demand for oil.”

The demand for domestic oil production in the United States grew in the 1970s when Americans “woke up” and realized how much money they were investing in the Middle East, he says. “Once again, the high prices of oil today are serving to wake everyone up and that’s the direction we’re going,” he says. “The difference is, we have a better understanding of the limited role of oil, based on a finite amount of reserves, to provide a transition to other fuels. We have to produce oil in greater quantities to keep the economies running while the technology for the next generation of fuels is perfected.

“The demand will keep going up now that China and India are on board,” he continues. “The economy is going to continue to grow. It will always be high until a more affordable commodity comes on board.”

Finding alternative fuel sources will not become a reality until the public demands it, he says. “It’s going to take a lot of time and money,” McAndrew says. “Everyone has to be determined and committed.”

Successful Future
McAndrew says he expects Xtreme Oil & Gas will continue to have significant oil production. Achieving that goal means finding the right industry partners to work with, he stresses. “We turned down $10 million and $25 million [in capital financing] because we don’t want to do the heavy lifting just to get someone else’s [projects] in place,” McAndrew says. “We want to find the right partners who will allow us to exploit our talents and resources. That is in the best interest of our shareholders.”

Xtreme Oil also makes sure it practices what it preaches, he says. “Partners look at how we are as an operator,” he says. “We also do what we say we’ll do and we follow through.”

The company’s goal for the future is to produce 1,000 barrels a day by 2009, and raise that by 2,000 to 3,500 barrels a day in the following years. “We want to pay our company and shareholders a significant capital [return] from that success,” he explains.