Australis Oil & Gas acquires Encana shale assets

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Australis Oil & Gas subsidiary Australis TMS, has entered a US$80 million ($104 million) agreement to acquire all of Encana Oil & Gas’ Tuscaloosa Marine Shale (TMS) assets.

The TMS is located along the border between Louisiana and Mississippi and is one of the few undeveloped shale basins in the United States.

The assets include interests in 31 operated and producing wells and 16 non operated producing wells; 64,000 net acres leased in the production defined TMS Core area within permitted Drilling Units; an additional 60,000 acres within the TMS Core area outside of the existing permitted drilling units; and technical data and knowledge transfer by the Encana.

The acquisition is in addition to Australis’ existing 50 per cent interest in 38,000 acres within the TMS Core.

It will add an estimated 80.2 million oil barrels of 2C oil resources and 215 future well locations.

The acquisition will also see Australis hold the largest net acreage in the oil rich TMS Core; operating across more than 100,000 net acres.

Australis chairman Jonathan Stewart said the TMS acquision was something the company had been looking for since it formed in 2014.

“We’ve looked at many opportunities, have remained patient and in our view nothing we have seen compares to the fundamental value and considerable upside potential that this transaction delivers,” he said.

“Australis will become the largest holder in one of the few remaining undeveloped oil producing shale basins in the United States and our large position is in the productive oil rich core of the TMS.”

Stewart highlighted the assets’ additional benefits including its existing production, positive cashflow and large underdeveloped resources.

Once the acquisition is complete, Australis will operate the assets and will offer positions to the current Encana field staff.