Australis raises A$100m for US shale buy

PERTH (miningweekly.com) – ASX-listed Australis Oil and Gas has raised A$100-million to fund the acquisition of US shale assets.

Following shareholder approval, the company placed some 434.7-million new shares at 23c each, to raise the capital.

The funds will be used to settle a transaction with US-based Encana Oil & Gas for all of its Tuscaloosa marine shale (TMS) assets, which Australis said was one of the last remaining emerging oil producing shale basins.

Encana’s TMS assets include a working interest in 31 operated and producing wells, and 16 nonoperated producing wells; 62 000 acres leased within the production defined TMS core area, and within permitted drilling units; a further 60 000 acres within the TMS core area outside of existed permitted drilling units; and considerable high-quality technical data and knowledge transferred by Encana.

On completion of the transaction, Australis will hold 81 000 acres in the TMS core, making it the largest holder in the region.

“We are very pleased with the level of support we received from our existing shareholders and from new investors,” said Australis chairperson Jonathan Stewart.

“The acquisition of this large acreage position within the TMS core, together with the associated production and cash flow, proven reserves and large undeveloped resource provides the platform for a significant value creation for those shareholders.”

Australis will become the operator of the 31 producing wells, with the company holding over 140 000 acres in the TMS core, of which over 20 000 acres are held-by-production status.

Stewart said that initially the company would focus on maintaining and extending leases within the 40 000 net acres located within existing permitted drilling units, with the activity to be funded from operating free cash flow.

The company also intends to include third parties involved in the TMS in the next phase of development activity, which is likely to be a small number of wells drilled in early 2018 within existing permitted drilling units.