Next Investors logo grey

Austin Exploration takes destiny into its own hands

Published 09-NOV-2015 12:29 P.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Austin Exploration (ASX:AKK) will no longer be constrained by drilling contractors, signing a 12 month leasing option for key equipment which it says leaves its destiny in its own hands.

The US-focused oil explorer told the market today that it had tied up a 12 month rental contract with a key US driller for a rig “at a rate that is significantly under market”.

The rig will be used at AKKs Pathfinder project in Colorado, and gives AKK flexibility in drilling.

Instead of wondering whether a drill rig will be available in a certain window, for the next 12 months the rig will be available to AKK for exclusive use.

“Lower oil prices call for cost-effective programs to be implemented for ongoing development to be economical,” AKK CEO Guy Goudy told investors.

“We now have a complete solution for the development of our Colorado property and for the first time the company is not constrained by external contractors.”

However, it’s not just a rig AKK is getting with the deal with Math Energy Drilling including a swathe of equipment which will allow AKK to construct its own drilling pads, build access roads, trench its own flow lines, and perform workovers of existing wells.

Normally this would need to be contracted out, and with AKKs non-executive chairman Mark Hunt holding a stake in Math Energy Drilling, the contract is at a discount to market prices. However, it said the deal was done on an arm’s length basis.

The first well to be spud under the new arrangement is the C18-2 well at its Pathfinder project, going after a target it has labelled a “high impact oil target”.

In October it identified oil targets within the Pierre Shale formation on 3D seismic, with the well due to be drilled in December to tap the shale.

If the well is a success, it could unlock a larger play for AKK as its holdings in the area could accommodate more than 350 wells.

Interestingly, fellow ASX-listed explorer Comet Ridge Energy (ASX:COI) drilled 25 wells between 2008 to 2012 in the directly adjoining landholding.

Of the 25 wells drilled, 22 were considered commercial with the average production in that time being 35,000 barrels of oil per well.

The best well had an initial production rate of 523 barrels of oil per day, has produced over 190,000 barrels of oil and is still producing.

About Austin Exploration (ASX:AKK)

Austin Exploration is a US-focused oil producer, with projects in five states.

It has recently switched up its strategy in a low-price oil environment to drill low-cost vertical wells targeting conventional targets in oil-producing regions.

However, it still has a major presence in the higher-stake unconventional basins in the US, holding 11,000 acres (4450 hectares) in the Niobrara Shale in Colorado and Eagle Ford and Austin Chalk in Texas.

Map showing location of AKK projects

Looking for more oil and gas stories?

Austin Exploration to get oil flowing in Mississippi

Icewine-1 “at the business end” for 88 Energy

Pilot Energy secures second Perth Basin project



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.