AXP Energy Limited

First Park City gas sales: 420 mcf/day average since 1 July, with first Austin income expected in 60 to 90 days. Drilling stays paused to complete 17 wells, and the 2008 target is cut from 44 wells to 35. A second plant is under discussion.

production update

Austin and operator RET suspended Park City development drilling to focus on connecting 17 of the 19 wells drilled, and decided to connect naturally flowing wells before stimulating them. Only one well was connected and the plant was being repaired. Last week's acid stimulation at Wilkerson 2A failed, and the 44-well 2008 target was repeated.

production update

Austin plans a placement of up to 14.5m shares at $0.31 (up to $4.5m) to institutions and private investors, plus up to 5m more within three months. The SPP raised about $2.5m. Shareholder approval is sought at a meeting around 30 July 2008.

capital raising announcement

Austin offers eligible Australian and NZ shareholders a share purchase plan at $0.31 per share, a 10% discount to market, up to $5,000 each. Proceeds fund Park City development and general administration. No total target size is stated.

capital raising announcement

Seismic review identified a fault as the first drilling target at PEL 105 in the Cooper Basin. Consultants estimate possible (P10) recoverable volumes of up to 6.2 Bcf gas and 1.04 million barrels of oil/condensate. Pirie #1 well is expected in Q3 2008, with 100 km of 2D seismic.

drilling scheduled

The private investment is now finalised and funding has started, with better terms: the investor's payments and royalties (5% and 4.375%) start only on 1 January 2009. Austin keeps 65.625% net revenue interest through 2008, then 56.25%. Releases say US$5M; earlier ones said A$5m.

capital raising announcement

Austin reports seven Park City wells drilled, all with deliverable gas, and PC5 showing a 30 m oil column, the second oil-and-gas well. Wells are due for connection within 60 days. Flow rates for several are still to be tested; the oil column claim was clarified the next day.

drilling result

Austin says the first three Park City wells are commercial. The third, PC3, flowed 320 Mcf/day pre-stimulation, with 960 expected after acid treatment. Two more wells are near target depth and five more are permitted. Wells are renamed Aus-Tex PC1 onward. Post-acid figures are forecasts.

drilling result

First Park City flow test, Wilkerson 2A, gave an absolute open flow of 265 Mcf/day, with 150-200 Mcf/day expected after acid treatment. First gas sales are hoped for by June. Company calls it a success, consistent with its pre-acquisition expectations.

flow test result

The A$5m letter of intent is non-recourse funding secured on Park City cash flow, entitling the investor to up to A$10m over 3 years. It also brings 16.8m options at $0.25 for 3 years and overriding royalties of 5% and 4.375%, cutting Austin's net revenue interest to 56.25%. Not binding.

debt financing

Austin signed a non-binding letter of intent for a A$5m investment from a private Australian group to fund the first year of Park City development. Terms were not given in this release; details followed on 14 March.

capital raising announcement

The Doyle 2A well at Park City flowed gas, then heavy crude oil, naturally to surface from a 366 m target depth. The company calls it commercially viable, but a pump and tanks are needed and no production rate has been tested yet.

drilling result

Austin says it has concluded contract negotiations for Park City, Kentucky, with two wells drilled and testing. It will earn a 75% working interest and 65.625% net revenue interest per well, with up to 44 wells targeted by end 2008. This completes the 23 January option exercise.

asset acquisition disposition

Austin has formally exercised its option to acquire the Park City gas project in Kentucky after due diligence. Management says there is enough gas for at least 10 years of drilling and cites an average 300mmcf per well. No price or funding is given.

asset acquisition disposition

Austin acquired an option over the Park City gas field in Kentucky, offering a 63% net revenue interest in wells to be drilled, with four wells funded in phase one. It announced a shift from exploration to developing known resources. Option expires 31 December 2007 pending due diligence.

asset acquisition disposition

Testing at both Jeter Branch and Lil' Bit gave results too small to develop, and both wells will be plugged and abandoned as dry holes. Together with SW Edwards, the three recent US wells have all failed. The AGM is set for 29 November.

drilling result

Austin acquired Hughes and Hughes Australia's interest in PEL 105 and farmed out 50% to Adelaide Energy, which becomes operator and funds the first well. A work program of 150 sq km of 3D seismic and one well within a year follows, with three more wells by end 2009.

farm in farm out agreement

SW Edwards testing recovered no oil or gas from the 30 feet of potential pay, and the well will be plugged and abandoned as a dry hole. This ends the thread from the July spud. Focus shifts to Jeter Branch, where Austin now holds 50%.

drilling result

Austin farmed into the Lil' Bit prospect, a 640 acre lease in Kenedy County, Texas, taking a 25% working interest (18.75% net revenue). Company-stated potential is 1.12-1.687 Bcf net to Austin. Drilling is planned within 30 days under a fixed-cost turn-key contract.

farm in farm out agreement

Logs and side wall cores at Jeter Branch show 7 feet of potential pay near 5,500 feet. Austin has become operator and says it is finalising a rise in its working interest from 30% to 50%. Testing to follow.

drilling result

Austin farmed out St Gabriel #1, abandoned in March after high pressure, to Drillmar, which takes 100% of the obligations and will re-enter and deepen it. Austin and its private investors keep a combined 20% after payout.

farm in farm out agreement

Drilling is underway at Jeter Branch in Caddo, Louisiana, targeting Cretaceous reservoirs to 5,450 feet. Austin holds 30%, and the well is under 2 miles from existing production. Two wells are now drilling at once.

drilling spud

Re-entry drilling has begun at SW Edwards in Mississippi, targeting 13,250 feet in two Rodessa sands. Austin's company-stated potential reserve is 2.86 Bcf gas and 1.096m barrels of oil. This is the start of the drilling expected since April.

drilling spud

Halliburton's final analysis identifies 55 feet of pay in zones above the original target at Gueymard #1, resolving the earlier ambiguity. Austin is running 5 inch casing to test them; reserves and phase two timing are still to come.

drilling result

Gueymard #1 could not reach the targeted P sand and below, because of an obstruction and about 300 feet of fractured casing, so a sidetrack is not achievable. Logs suggest possible hydrocarbons in upper zones, but the data is ambiguous pending further analysis.

drilling result

Half-year loss was $181,018. St Gabriel 1 (65% interest) was abandoned as uneconomic after abnormally high pressure. PEL 73 (one-sixth interest) found only an uneconomic show at 691-699 m and was plugged. Both ended the early drilling run in disappointment.

half year report

Austin arranged A$11.5 million of non-dilutive US-dollar funding by selling down interests in prospects, giving carried drilling at St Gabriel II, Jeter Branch and SW Edwards. It sold 20% of St Gabriel I, buys 5% more, and gains a 30% Jeter Branch interest.

farm in farm out agreement

Ezell 4-H tested at over 1.5 million cubic feet of gas and 20 barrels of oil a day, with expected net revenue of about US$8,500 a day. Austin holds 35%. St Gabriel I drilling is expected around year end and PEL 73 in early 2007.

well test result

Drilling has started on the Ezell #4-H sidetrack at Polecat Creek, Texas, the company's first well since listing. It re-enters an abandoned well, targeting about 4,000 ft vertical and 3,000 ft horizontal in the Georgetown Limestone; four wells are planned for 2006-07.

drilling spud

Austin acquired an 80% interest in a second Louisiana prospect, St. Gabriel II, an existing Shell well with 8 billion cubic feet of gas and 250,000 barrels of oil potential. It pays 100% of costs until recouped, then 80/20 with its partner.

asset acquisition disposition

Austin Exploration, an early-stage oil and gas explorer, offers 50 million new shares at $0.20 to raise $10 million, with up to $2 million more in oversubscriptions and a $9 million minimum. This is its initial public offer.

capital raising announcement