Australis Reports 9% Volume Dip but Boosts Price Premium to $3.70/bbl

Quarterly Performance Overview

Australis Oil & Gas Limited (ASX, ATS) has released its Q3 2025 results, highlighting a quarter marked by operational challenges but underpinned by strategic financial discipline. Sales volumes fell by 9% to 48,800 barrels, primarily due to several wells undergoing workovers late in the quarter. Despite this, the company achieved a realised oil price premium of $3.70 per barrel above the West Texas Intermediate benchmark, helping to partially offset the volume decline.

Operating costs were reduced during the quarter, benefiting from the absence of workover activities, which contributed to a 28% increase in field netback to US$1.1 million compared to the previous quarter. Adjusted EBITDA remained positive at US$0.2 million, and importantly, cash flow from operations covered all operating and corporate expenses.

Financial Health and Debt Management

Australis continues to demonstrate prudent financial management with a reduction in credit facility principal debt by US$1.1 million, bringing total debt down to US$4.8 million. Net debt was reduced by 18% to US$1.5 million, reflecting the company’s focus on deleveraging. The cash balance at quarter end stood at US$3.3 million, down slightly from the previous quarter but sufficient to support ongoing operations.

The company’s credit facilities with Macquarie Bank include 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 hedged production proceeds. Australis’ hedging strategy remains conservative, with modest gains realised during the quarter and a significant portion of future production protected by zero-cost collars and swaps.

Asset Position and Development Strategy

Australis holds a substantial position of approximately 47,300 net acres within the core of the Tuscaloosa Marine Shale (TMS), a promising unconventional oil play in Mississippi and Louisiana. Independent assessments estimate 65 million barrels of combined proved and contingent reserves and resources, including 1.62 million barrels of producing reserves.

The company continues to operate wells on a periodic production schedule to optimise reservoir pressure and reduce artificial lift costs, which has improved well economics despite some modest production declines. Lease management remains disciplined, with only 100 acres expiring during the quarter and 84% of acreage held by production.

Partnering and Future Outlook

Central to Australis’ growth strategy is securing a development partner to fund initial drilling and development activities. The company has engaged with multiple potential partners, including public and private oil and gas entities, and remains optimistic yet patient in negotiations. Australis prefers this approach over raising additional equity or debt, aiming to preserve shareholder value while advancing its development plans.

While no definitive agreements have been announced, the ongoing diligence and commercial discussions suggest progress. The company plans to reassess its undeveloped reserves once a partner and funding are secured, which could unlock significant value in the TMS core.