Australis Q3: 9% Volume Drop, $3.3M Revenue, $1.1M Debt Reduction

Quarterly Performance Amid Operational Challenges

Australis Oil & Gas Limited has released its Q3 2025 activities report and revised Appendix 5B, correcting the currency presentation to US dollars. The quarter saw a 9% drop in sales volumes to 48,800 barrels, primarily due to several wells undergoing workovers that began shortly after the quarter ended. Despite this volume decline, Australis benefited from a favourable oil price environment, achieving an average realised price premium of $3.70 per barrel over the West Texas Intermediate benchmark. This helped limit the sales revenue decline to 8%, settling at US$3.3 million.

Operationally, the company adopted a strategy of periodic well production to allow reservoir pressure to rebuild, reducing reliance on artificial lift and lowering electricity costs. This approach has yielded improved well economics, even as some wells experienced modest production declines. The reduction in workover activity during the quarter also contributed to lower production operating costs, resulting in a 28% increase in field netback to US$1.1 million and a modest adjusted EBITDA of US$0.2 million.

Financial Position and Debt Management

Australis continued to strengthen its balance sheet by reducing total debt under its Macquarie Credit Facility by US$1.1 million to US$4.8 million. The company’s net debt decreased to US$1.5 million, down 18% from the previous quarter and US$0.7 million lower than at the start of the year. Cash reserves stood at US$3.3 million at quarter-end, providing a solid liquidity buffer as the company navigates its development plans.

The credit facility comprises a US$3.5 million secured Facility A and a US$1.3 million Facility C, with the latter scheduled for full repayment over the next six months through monthly payments aligned with oil price hedge settlements. Australis’ hedging program, which covered 56% of net sales volumes during the quarter, delivered a modest gain of US$0.01 million, reflecting prudent risk management amid volatile oil prices.

Strategic Focus on Tuscaloosa Marine Shale and Partnering

Australis holds approximately 47,300 net acres within the core of the Tuscaloosa Marine Shale (TMS), an unconventional oil play spanning Mississippi and Louisiana. The company’s acreage includes around 160 net Tier 1 future drilling locations, with an independent assessment estimating 65 million barrels of combined proved and probable reserves plus contingent resources. However, Australis has deferred reassessment of undeveloped reserves pending the securing of a development partner and funding.

During the quarter, Australis engaged with multiple potential partners, including public and private oil and gas companies, to explore commercial structures and funding arrangements. The company remains patient but optimistic about securing a partner to fund initial development activities, preferring this route over raising capital through shareholders or additional debt. Leasehold expiries were minimal, with only 100 acres lapsing, and the company is confident in its ability to renew targeted acreage once funding is secured.

Outlook and Operational Considerations

Australis’ operational strategy emphasizes cost efficiency and well economics improvement, leveraging lessons learned from earlier drilling campaigns and industry advancements. The company is uniquely positioned as one of the few operators actively drilling in the TMS since 2015, with potential upside from applying newer technologies to this relatively underdeveloped basin.

While the current quarter’s production was impacted by well workovers, these maintenance activities are expected to support more stable and potentially increased output in subsequent quarters. The company’s financial discipline and ongoing partner discussions will be critical in advancing development plans and unlocking the full value of its TMS assets.