Australis Oil & Gas (ASX:ATS) is focused on oil and gas Assets in the Tuscaloosa Marine Shale (TMS), which extends across Louisiana and Mississippi in the United States. During 2025 and 2026, the company entered transactions covering its producing wells and undeveloped acreage, including a farm-in agreement that provides funding for an initial drilling program.

The company has also progressed permitting for its first carried well, with drilling targeted for the fourth quarter of 2026, subject to rig availability.

What Just Happened?

On 15 July 2026, Australis reported that the Mississippi State Oil & Gas Board had approved the permit for the Willson 1H well. The company has stated that drilling is expected to begin during the fourth quarter of 2026, subject to rig availability.

A second well, Mathieu 1H, is also included in the farm-in program, with the permit application initiated.

The farm-in agreement was executed in November 2025 with an unnamed US-listed independent operator. Under the agreement, the partner is responsible for funding the initial work program, which Australis has valued at approximately US$46.25 million. The arrangement covers interests in Australis' undeveloped TMS acreage.

Australis also completed a separate transaction involving its producing TMS wells. The company sold a 90% working interest to an affiliate of EQV Group for approximately A$25.9 million and retained a 10% interest. EQV also assumed operatorship, while approximately A$7.5 million of Debt was eliminated.

The Company and Its Key Assets

Australis was established in 2014 by Jon Stewart, Ian Lusted and Graham Dowland, who previously founded Aurora Oil & Gas. Aurora was acquired by Baytex Energy in 2014.

The company's current portfolio is centred on the Tuscaloosa Marine Shale in Louisiana and Mississippi. Australis has reported approximately 47,300 net acres in the TMS core, with about 84% held by production. Approximately 4,000 acres were identified as subject to expiry during 2026, with an extension option available.

The company has reported approximately 62 million barrels of combined 2P reserves and 2C resources on a net basis. These figures are company-reported estimates.

Australis' TMS portfolio includes both producing wells and undeveloped acreage. The farm-in agreement is intended to advance drilling on the undeveloped portion without Australis funding the initial work program itself.

Farm-in and Financing Transactions

The November 2025 farm-in provides for partner-funded drilling on Australis' TMS acreage. The initial program is valued at approximately US$46.25 million.

The separate transaction with EQV involved the sale of 90% of Australis' working interest in its existing producing wells. Australis retained a 10% interest and transferred operatorship to EQV.

The transaction also resulted in approximately A$7.5 million of debt being eliminated. Together, these transactions changed the company's exposure to its producing and undeveloped TMS assets while reducing its direct funding requirements for the initial drilling program.

Drilling Program

Willson 1H is the first carried well identified under the farm-in arrangement. Its permit was approved by the Mississippi State Oil & Gas Board in July 2026.

Australis has indicated that drilling is targeted for the fourth quarter of 2026, subject to rig availability. Mathieu 1H is the second well included in the program, with its permit application initiated.

The drilling program is intended to provide additional information on the performance of the TMS acreage and the potential development of the company's undeveloped interests.

Key Risks and Considerations

TMS development has historically involved technical and economic challenges, including drilling costs, well productivity and operating conditions. Results from individual wells can vary, and drilling outcomes cannot be established before the wells are completed and tested.

The farm-in arrangement reduces Australis' direct funding requirement for the initial carried wells but does not remove geological, operational or timing risks.

The company also retains only a 10% working interest in the producing wells transferred to EQV. Approximately 4,000 acres identified by Australis are subject to potential expiry during 2026, although the company has an extension option.

Future operating results will remain exposed to oil and gas prices, production volumes, operating costs and the terms of the company's various agreements.

What Comes Next?

The next major project milestone is the planned drilling of Willson 1H during the fourth quarter of 2026, subject to rig availability.

Other developments to monitor include the permitting process for Mathieu 1H, progress under the farm-in agreement and any drilling, completion or production results released by the company.

Quarterly activities and cash-flow reports will also provide updates on production, cash balances, operating expenditure and the company's remaining interests in the TMS.

Conclusion

Australis Oil & Gas is advancing its Tuscaloosa Marine Shale portfolio through a combination of farm-in, asset-sale and drilling arrangements.

The July 2026 permit approval for Willson 1H is a key project milestone, with drilling targeted for the fourth quarter. Mathieu 1H is also included in the carried drilling program, with permitting underway.

Australis has reported approximately 47,300 net acres in the TMS core and approximately 62 million barrels of combined 2P reserves and 2C resources. The company has also reduced debt through its transaction with EQV while retaining a 10% interest in the producing wells covered by that agreement.

The next stages will depend on drilling activity, well results, permitting and the continued implementation of the farm-in arrangements.