Australis Oil and Gas Limited (ASX: ATS) today provided the market update for its reserve and resource position in the Tuscaloosa Marine Shale onshore USA.
The company holds 110,000 net acres in the TMS Core which has been estimated at Proved Developed Producing Reserves (PDP) of 3.93 MMbbls with a Net Present value (NPV) of US$82.8 million.
The company informed that this report only assessed 38% of the total acreage position due to an assumed modest development program within the maximum 5-year development timeframe and it was all allocated a reserve category.
Net oil Reserves after royalties were estimated to 31.9 MMbbls at Proved Reserve category (1P) and 49.7 MMbbls and 89.2 MMbbls at Probable (2P) and Possible (3P) reserve category, respectively. In aggregate, TMS Reserves increased from 158 MMbbl at Year End 2017 to 197 MMbbl at Year End 2018.
These estimates were made by petroleum consultant Ryder Scott Company with an effective date of 31 December 2018. As per the company’s information, Ryder Scott has used a subset of 25 of Australis wells to generate three production type curves for a Proved, Probable and Possible case. Australis operates 34 wells and has interests in a further 17 wells operated by others in the play most of which have been on production for at least four years.
Net contingent oil resources based on the remaining undeveloped acreage in the TMS core were estimated to 195.4 MMbbls of high estimate (3C), 107.8 MMbbls of best estimate (2C) and 6.9 MMbbls of low estimate (1C).
Australis believes that consistent with industry experience in onshore North American oil shale assets these remaining contingent resources will convert to reserves when assessed for development.
While generating the estimates, Ryder Scott has assumed that oil price stands at a flat realised price of US$69.25/bbl. Ryder has further considered that the drill, complete and tie (D, C & T) well costs range from US$10.7 to US$12.1 million, depending on well length with an incremental average cost of US$337k per well for shared infrastructure assuming 8 wells in a unit and 4 to 6 wells on each surface pad. Moreover, the development plan was drawn on the assumption that it takes 31 day period to drill new wells and has assumed drilling a total of 184 gross well locations that are all deemed commercial.
Australis’ business strategy is to accumulate oil in the ground at accretive leasing prices within the TMS Core in Mississippi and Louisiana. This reserve and resource update by Ryder Scott reflects the impact of this strategy as the consultant has reported that the resource base continues to grow over time significantly and substantial contingent resources are converted to reserves as the development program progresses.
With this update, ATS shares surged up by 8.824% to close at A$0.370 on 6 February 2019. The stock last traded at PE of 121.430 x with a market capitalization of A$304.62 million. But over the past 12 months, ATS has fallen by 5.56% including a negative price movement of 12.82% over the past three months.
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