Austin Exploration has announced the successful completion of its first oil well at the Company's Park City oil and gas field in Kentucky USA.The company expects first oil sales from the Park City field will be in August 2009. Austin -- through its wholly owned American subsidiary, Aus-Tex Exploration Inc (Aus-Tex) -- has employed the services of KOS Energy of Kentucky to complete the wells that were drilled some 12 months ago.
The initial drilling program consists of 4 oil well completions and will be completed by mid September 2009. KOS Energy Limited specializes in the completion and stimulation of shallow oil and gas wells in the Kentucky area. Austin has worked closely with KOS over recent months, reviewing the drilling logs from the Company's already drilled 17 wells.
When Austin began the drilling program for natural gas it became evident that many of the Company's wells contained a geologic structure known as the Corniferous formation. This Corniferous formation found in Kentucky has historically contained and produced crude oil for many years. This particular formation is generally found at a depth between 1000 to 1300 feet below the earth's surface.
Following a thorough review and due diligence by the Company's Management & Chief Geologist, it was decided that it was financially prudent for the company to shift its focus from natural gas to oil production, until such time as natural gas prices recover.
Austin is encouraged by recent success and looks forward to completing its existing wells. Upon completion of the first 4 wells, the company's Chief Geologist, in consultation with KOS, will review the drilling logs and determine the next wells for completion. The Company can also confirm that it is in discussion with several land owners regarding acquisition of additional leases that have been identified to contain the oil producing coniferous formation.
DETAILED OPERATIONAL UPDATE
Four Well Completion Program Under way -- Spillman #1 Flowing Oil
- The Spillman #1 well was tested on pump at a rate of 12 barrels per day.
- Subsequent to the initial flows a modest decline in daily production is anticipated.
- Oil wells producing from the coniferous formation generally have a life span of 20 years.
- Over 24 barrels of oil has now been collected and pumped to storage.
- Completion work at the second well, the James Spillman #2 is currently underway.
- Two other wells are also on schedule for completion by early September.
- Oil sold in the month of August will deliver income to Austin in the month of September.
Project Overview -- Austin in Control
- Austin's wholly-owned subsidiary, Aus-Tex, is now the operator of record and controls a 100% working interest over the 857.82 acre lease at Park City.
- Austin has increased its Net Revenue Interest from 56.25% to 78.125% in this project.
- As the Operator of record for the project, Aus-Tex manages every aspect of the oil and gas field. This includes, but is not limited to: well selection, drilling, management, operations, regulatory reporting, service suppliers, land owner relationships, hydrocarbon storage and sales and income distribution to interest holders.
- The company has now mapped the geologic structures of the area, selected the best available completion technique and successfully completed its first oil well.
- Well operations became the responsibility of Aus-Tex on July 1, 2009.
- Ten mineral leases that encompass over 857.82 acres of land are currently controlled and managed by Aus-Tex. Additional mineral lease acreage will be acquired as qualified opportunities present themselves.
- These ten leases provide adequate drilling opportunities for an additional 60 wells. Well selection for any new drilling will be initiated based on the completion results of the current 17 wells.
- To increase the likelihood of a successful new drilling program the company will drill additional wells very near to already producing oil wells.
- Austin can now say with confidence that the combination of proper oil formation geologic structure mapping and the selection of the most appropriate well completion technique have proven successful. This combination will be used on future wells.
- Based on the original wells logs Austin believes that 15 of the 17 in place wells have corniferous zones of adequate thickness to deploy the radial drilling (SRS) procedure.
- This drilling procedure can also be used for gas pay zones such as the shale formation that is found in all 17 of Austin's wells. Other completion procedures have also been identified.
- Additional off-set wells can be drilled on these same leases in 4 acres increments thus giving Austin space to drill and complete new wells.
- A combination of immediate income from oil sales and new infusions of investment capital are now both achievable near term.