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AusTex Oil www.austexoil.com/

AusTex Oil (ASX: AOK) is focused on reworking and development of oil and gas leases in the U.S.

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AusTex Oil close to sourcing more exploration and development funds

Monday, March 19, 2012 by Bevis Yeo

AusTex Oil close to sourcing more exploration and development funds

AusTex Oil (ASX: AOK) could secure an additional US$10 million (A$9.4 million) to continue exploration and development of its oil and gas leases in Oklahoma and Kansas.

The company is planning to aggressively drill its Snake River project in northern Oklahoma that targets the Mississippi Lime and test drill a new prospect.

The Mississippi Lime has become the premier horizontal resource play in north central Oklahoma, attracting companies such as Chesapeake Energy (NYSE: CHK), SandRidge Energy (NYSE: SD) and Devon Energy (NYSE: DVN).

Australian players in the Mississippi include Red Fork Energy (ASX:RFE), World Oil Resources (ASX:WLR) and Sundance Energy Australia (ASX: SEA).   

AusTex had recently participated in two successful vertical production wells and is now involved in the first horizontal well. Additional vertical wells are scheduled to be drilled over the coming weeks.

The funds will be made available under a conditional agreement to issue convertible notes to North American institutional investors including Iroquois Capital Opportunity Fund.

Up to US$10 million in convertible notes will be issue to these investors, each note will be convertible into a new share at a price of A$0.15 each.

AusTex will also issue 1 free option for every 2 convertible notes issued. These options will have an exercise price of A$0.20 within 3 years of shareholder approval for the issue, which is expected on 3 May 2012.

The fund currently holds 8% of AusTex’s fully paid shares on issue.

Proceeds from the issue will also assist the company in finalising a listing on the Toronto Stock Exchange this year.

This will give the company access to a market that better understands the opportunities it is unlocking in North America, and in turn provide a share price that more closely reflects the assets it holds.

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