austex excited

Austex Excited

Barry Fitzgerald
The Australian
August 29, 2012 12:00AM

SHAREHOLDERS in AusTex Oil (AOK) are a happier bunch than they were in December when the stock was trading at all of 6.5c. AusTex is trading at 13.5c as excitement builds around its leveraged exposure to the unfolding Mississippian Lime oil play, said to have an all-up potential of six billion barrels of oil across a region stretching from northern Oklahoma to northwest Kansas.
AusTex has been a player in the M-lime for some years and ranks as a 300 barrel-a-day oil producer (on an oil equivalent basis), with plans to go higher from its Snake River project in Kay County, Oklahoma. In that neck of the woods, the market value for a producer of 100 barrels a day is roughly $10m.
At yesterday's close, AusTex was being valued at about $44m. So it is on its way to be being fairly valued, remembering that production is on its way up, with four new wells in the production testing phase and more planned.
In addition, there is plenty of upside to Snake River's potential once AusTex moves from the delineation phase (vertical wells) to horizontal wells with their greater reach along pay zones. A sense of that came with the drilling of the 13.76 per cent owned Balder 1-30 well by New York-listed Range Resources on a small section of Snake River.
The well flowed an average of 889 barrels of oil equivalent in June, of which 70 per cent was high-value oil-liquids. It was one of the best results achieved by Range in the M-lime and was enough in itself to see AusTex wriggle on to its higher share price levels.
More excitement could be on the way, with another big US independent, Apache, making a push in the M-lime play in northwest Kansas. Apache is about to drill its first horizontal well for proof-of-concept purposes. If it comes in, AusTex will be off to the races, thanks to its big acreage position to the south of the Apache action.

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