AUSTEX OIL LIMITED Highlights: | SEPTEMBER QUARTER
SUBSEQUENT TO QUARTER END STRONG CASH POSITION FOR SNAKE RIVER DEVELOPMENT AND CORPORATE OPPORTUNITIES |
ASX: AOK OTCQX: ATXDY | |
Level 11, 2 Bligh Street, Sydney NSW 2000 ACN 118 585 649
Telephone: +61 2 9238 2363 Facsimile +61 2 8088 7280 www.austexoil.com
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AusTex's September 2015 Quarter
The Board of AusTex Oil Limited (AusTex or the Company) (ASX: AOK - OTCQX: ATXDY) is pleased to provide its Quarterly Activities Report for the quarter ending 30 September 2015.
Significant Events During the September Quarter
1
Presentation to the Noosa Mining Conference
16 July
2
Release of Half Yearly Report and Accounts
31 August
3
Release of Half Year Reserve Report
31 August
Table 1: Summary of Significant Events during the September 2015 Quarter.
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Operations Overview
The Company's primary focus will continue to be on oil and gas exploration, development and production at its 100% owned Snake River Project in Kay County, Northern Oklahoma targeting the liquid rich Mississippi Lime formation.
With the Company's focus on producing oil and gas in Oklahoma, AusTex only retains a legacy tail of production in Kansas contributing around 1 to 2% to the Company's overall production. Consistent with its strategy outlined over the last year, AusTex is no longer pursuing any additional activities in Kansas and proposes to allow its Cooper, Colby and Ellsworth Leases to expire where the acreage is not presently held by production (refer Table 6 for a summary of the Company's acreage position in Kansas which has decreased significantly in the past year).
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Production and Revenue
As announced in the last quarterly activities report, in late June the decision was made to commence releasing the casing pressure constraints on the Company's wells and it has been pleasing to note across the September quarter that production from constrained wells has slowly but favourably rebounded. With the volatility in the oil price, the release of casing pressure was done incrementally, and at various times halted, to ensure both preservation of oil in the formation by not releasing the pressure too rapidly and also to match production with the Company's hedging requirements as best as could be achieved. This strategy will continue in the near term with the Company continuing to monitor oil prices, and revisit the strategy should the forward curve steepen from current levels.
The Company's 7 month drilling hiatus which began in the middle of December 2014 in response to the rapid decline in the oil price ceased in mid-July with the first well drilled for 2015, the Wyckoff #29-6, which was drilled into the Mississippian formation in the south western quadrant of the Snake River field. Consistent with the company's communicated operational focus, the spud to sales cycle for the well was reduced to 56 days. The well is still in the early stages of production, within the 90 day flow back period, and is currently producing approximately 25 BOE/D including 15 BBL/D of oil. An additional two wells were fracced during the quarter, the Detten #33-1 and the Detten #33-3 with both wells now on pump.
The current oil price environment means that a robust program of drilling at this point is not in the best interests of shareholders. Drilling will continue only when selling oil from new wells into the forward curve presents a favourable return. If the current commodity price environment persists, AusTex will seek to drill wells opportunistically to enhance its understanding of the complicated Mississippian geology, enabling a higher quality and more consistent drilling program once oil price rebounds. The Company's overall strategy is dependent on oil and gas prices remaining at levels where drilling new wells provides an attractive return.
The Board is confident that its strategy is appropriately conservative, given the current environment, to ensure the long term creation of shareholder value. As of September 30 there was a small increase in the Company's cash position from the previous quarter. The September quarter's production saw only a modest decline on the previous quarter. Production numbers by month for 2015 to date are shown in Table 2 with the quarterly total in Table 3.
Month
Monthly Production (BOE)
Average Daily Production (BOE)
Change from Previous Month
Cumulative Calendar Year Production ('000BOE)
January
39,313
1,268
-7.6%
39.3
February
31,999
1,143
-9.9%
71.3
March
36,794
1,187
3.9%
108.1
April
31,829
1,060
-10.7%
139.9
May
30,616
1,020
-3.8%
170.5
June
29,200
973
-4.6%
199.7
July
31,625
1,020
4.8%
231.3
August
28,768
928
-9.1%
260.1
September
25,690
856
-7.8%
285.8
Table 2: Monthly Production and Cumulative Annual Total for 2015.
Quarter Ending
Total Production ('000BOE)
Change from Previous Quarter
Cumulative Calendar Year Production ('000BOE)
31 March
108.1
-14.4%
108.1
30 June
91.6
-15.3%
199.7
30 September
86.1
-6.0%
285.8
Table 3: Quarterly Production and Cumulative Annual Total for 2015.
A summary of the Company's producing and pre-production wells at Snake River at the end of the September quarter is shown in Table 4 below.
Well Count as of:
31 March 2015
30 June 2015
30 September 2015
Pumping - Non Operated
4
4
4
Pumping - Operated
71
71
66
Flowing / Testing
2
2
1
Drilled and Fracced only
2
2
1
Drilled only
5
5
4
Current Shut-In
0
0
9
Total Wells
84
84
85
Table 4: Wells by stage of production process for the previous three quarters.
Well Count as of:
EoP 30
June:
New inflow
Xfer to Frac
Xfer to Flow
Xfer to Pump
Xfer to Shut-In
EoP 30
Sept.:
Pumping - Non Operated
4
0
0
0
0
0
4
Pumping - Operated
71
4
0
0
0
9
66
Flowing / Testing
2
0
0
0
1
0
1
Drilled and Fracced only
2
0
0
0
1
0
1
Drilled only
5
0
0
0
1
0
4
Current Shut-In
0
0
0
0
0
0
9
Table 5: Summary of Producing and Pre-Production Wells at Snake River as at 30 September, 2015 showing movement of wells across categories from 30 June 2015.
Net Revenue from operations for the September quarter was USD $3.8m (net to AusTex after royalties and taxes of USD $0.6m). Capital investments made during the quarter for development were USD $0.7m. Cash and cash equivalents on hand at the end of quarter was USD $24.0m.
- Oklahoma
The Snake River Project is located in Kay County, Northern Oklahoma, is the Company's primary focus and is expanding both its acreage position and, during favourable oil price environments, it's drilling commitments through the execution of its vertical well development strategy. The centre of the project lies approximately 5 miles south west of Ponca City and the general area hosts significant infrastructure including an oil refinery, gas gathering facilities, gas sales lines and a compression and liquids stripping plant owned by other companies.
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