AusTex Oil (ASX: AOK) is focused on reworking and development of oil and gas leases in the U.S.
AusTex Oil starts workover activity at East Tonkawa Unit, sets sail for 2011
US focused oil and gas producer AusTex Oil (ASX: AOK) has commenced recompletions on existing wells on the East Tonkawa Unit in Kay County, Oklahoma, after taking possession of the leases on 1 October 2010, and plans to increase the project area.
AusTex is the operator at the project, with a 81.25% Net revenue interest, through its US subsidiary has acquired a double drum workover rig, power swivel, rig-up truck, dozer, and other machinery to better maintain and service its existing and future wells.
The two wells are being recompleted for production, with the 2-2 well cement squeezed and prepared for production from the Red Fork and Layton formations as a test well.
The 17-6 well was cement squeezed off and laterals are to be run using the subsidiary company’s, Well Enhancement Services, LLC, Radial Jet Enhancement Technology to open more producing zone.
The 17-6 is drilled to the Mississippi Chat formation at 4365 feet and may later be a candidate for full horizontal extension through the Mississippi Limestone formation. Previous wells re-worked by Well Enhancement for another operator in the area in this same formation are still producing in excess of 60 barrels of oil per day after 6 months.
Recompletion of the wells is expected before December 31.
Since acquiring the initial lease group, AOK has entered into agreements to increase the project area to over 2000 acres. The additional acreage has been leased using existing capital.
AOK plans to undertake a horizontal drilling program in the area during calendar year 2011 to target the laterally extensive Pennsylvanian and Mississippian formations.
Since AOK first identified the opportunity in the region in early 2010, other oil and gas operators in Noble and Kay Counties have continued to advise of highly successful wells using horizontal drilling and completions in the Pennsylvanian Cleveland and Tonkawa formations and the Mississippi Limestone formation at depths of less than 6000 feet.
Wells are currently underway to the west, east and north of the Tonkawa lease operated by AOK with competitive leasing and drilling activity by major oil companies.
These include Range Resources (NYSE: RRC) who have reported initial production rates of 350 to 500 barrels of oil per day in the Mississippi Limestone wells.
Dan Lanskey, Managing Director of AusTex, said "driving through Noble and Kay Counties you see various sized drilling rigs targeting oil in either the shallow Pennsylvanian Sands at less than 4500 feet or running horizontal wells into the Mississippi Limestone."
The wells are costing $1.5 to $2 million and completed using multi stage fracs on horizontal legs of 2000 feet.
Return of the initial investment is reported 4 to 12 months. Other operators in the same area include Chesapeake Energy (NYSE: CHK) and Sandridge Energy (NYSE: SD).
Many of the mid-continent oil and gas companies have announced a move from gas exploration back to oil plays as a result of the strong oil price and depressed gas price.
AusTex is seeking a dual listing on the Toronto Stock Exchange (TSX) during the first half of 2011 to align its assets with a wider investor market.
