Subiaco-based energy company Australis Oil & Gas has announced an $80 million expansion of its shale acreage in the southern US, amid plans for a $100 million raising.
The acreage, bought from Encana Oil & Gas, is in the Tuscaloosa Marine Shale zone, and includes 29 producing wells.
That’s along the border of Louisiana and Mississippi, neighbouring an existing 38,000-acre block Australis holds in a joint venture.
The company said it had received commitments for a conditional placement of 435 million shares at 23 cents, each for a total of $100 million, which would add to cash reserves of around $30 million.
Australis undertook two major raisings in 2016.
The first, in May, picked up $10 million, and then a further in July brought in $30 million.
Australis chairman Jonathan Stewart said the acreage acquisition was transformational.
“We’ve looked at many opportunities, have remained patient and in our view nothing we have seen compares to the fundamental value and considerable upside potential that this transaction delivers,” he said.
“We see many parallels to the early days of the Eagle Ford (a shale rock formation in Texas).
“Australis will become the largest holder in one of the few remaining undeveloped oil producing shale basins in the United States and our large position is in the productive oil rich core of the TMS.
“This acquisition also meets the strategic objectives we set at establishment of the company and reconfirmed at IPO.
“The assets have existing production, positive cashflow, large undeveloped resources, control over timing and amount of capital expenditure and solid and improving economics.”
Shares in Australis were up 14 per cent to 28.5 cents each at the time of writing.
