Australis Oil and Gas Limited (ASX: ATS) is an oil and gas company based out in Australia. It is engaged in the exploration and extraction of onshore oil and gas through its assets situated in the US and Portugal. It has the largest land holding in terms of acres in the Tuscaloosa Marine Shale (TMS), onshore Louisiana, and Mississippi. Australis has an area of 110,000 net acres within the TMS providing an estimated 410 net future drilling locations.
Today, the company has made a few announcements regarding the updates over the initial drilling program in the TMS. The plan is to drill 6 wells which can be extended after this initial program. The flowback operation had started on 29 December 2018 on the Stewart 30H-1 and Bergold 29H-2.
The Stewart 30H-1, completed with 20 fracture stimulation stages, had 19 stage isolation plugs all of which were drilled out. The initial production is in line with expectation, and it will take approximately 14 days to achieve the peak rates.
A single point of casing deformation with a reduced diameter prevented the isolation plugs from being drilled out on the Bergold 29H-1. But it is expected that the plugs may allow production through a restricted internal bore.
Main rig drilling operations over the second surface location, i.e., the Taylor/Williams pad, are currently running as per the schedule. The Williams 26H-2 has been drilled up to a depth of 11,867 ft. The rig skidded to the Taylor 27H-1 is presently at a depth of 11,100 ft.
The Saxby 03-10 2H, i.e., the fifth well, has been drilled at a depth of 3,220 ft with the sixth well, i.e., the Quin 31-30 3H to start with the drilling process.
The principal objective of the drilling program is to achieve averaged production results from the first set of new wells and adding to company production levels and securing acreage. All six wells are located within the TMS core. The selection of the well is made based on many factors such as the quality of the reservoir, access to roads and power, etc.
In the drilling updates of 20 December 2018 report, the fracture simulation over the Stewart 30H-1 and Bergold 29H-2 got completed with the anticipated first production data to be released in February 2019. The spudder rig which was used for drilling well 5 and will be used to drill well 6 arrived at the Saxby/Quin Pad. The Williams 26H-2 had been drilled 592 ft above the latest recorded depth of 11,867 ft.
The drilling program is being funded through ATS’s cash balance reported on 1 October 2018 of US$41 million along with the credit facility being provided by the Macquarie Bank for up to US$75 million. Based on ATS’s assumptions, this amount is appropriate for the planned ten-well drilling program.
During 2018, the scrip price has soared by 21.74% moving up from 23 cents at the beginning of the year to 28 cents on 31 December 2018. Today, the scrip has surged by 7.143% followed by the updates and is currently trading at $0.30 per share.