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AusTex Oil Limited (ASX:AOK) Advises The Mayo-Moore #8 Enhanced Recovery Well (ERW) Is Under Completion, Drilling To Commence On Baggett #33-4 Well.

Sydney, Australia, July 13, 2010 - (ABN Newswire) - AusTex Oil Limited (ASX:AOK), advises that drilling of the Mayo Moore #8 ERW (Enhanced Recovery Well)has been completed on the Lancaster Lease Group, Tulsa County, Oklahoma. This is the first well permitted and drilled specifically for water injection into the producing Red Fork and Tanaha formations as part of the reservoir management plan. A number of injection wells will be drilled over the coming months in addition to new production wells. This will ensure maximum recovery and life span of oil and gas production from the lease.

The well is located between the Mayo Moore #1 and Mayo Moore #2 wells, which are producing oil and gas from the Red Fork formation on the east side of the lease. This is the 12th well being drilled on the eastern side of the lease-group since development drilling began in September 2009.

Drilling to commence on Baggett #33-4 well

Drilling of the Baggett #33-4 is scheduled to commence this week, weather permitting. The well is targeting the Red Fork and Tanaha formations and is the 4th well on the Baggett Lease on the eastern edge of the lease group.

Drilling operations are expected to take between 3 and 5 days with a planned total depth of 2,500 feet.

Reservoir Management Plan Update

As previously reported, drilling on the eastern side of the lease group has encountered reservoirs with virgin pressures in the Red Fork and Tanaha formations. The Red Fork formation is a gas driven reservoir and a pressure maintenance plan continues to be developed for the lease.

A further review of data from all wells drilled on the lease group has now been completed by the Company's in-house technical team. Reservoir modelling has been updated and a decision has been made to proceed with water injection only into the reservoir. Gas produced from the lease is currently being sold with liquids via pipeline to Scissortail Energy Inc., who are stripping the liquids off site and paying a premium price per MCF. Currently AOK is receiving $4.25 AUD per mcf of gas.

Helen Lancaster #1Well - recompletion

As part of the review and reservoir modelling the Helen Lancaster #1 well is being recompleted and has been opened in the Red Fork formation with 56 feet of net pay perforated. The well will be fitted with a pump jack for production testing.

Hollie #2 and Mayo Moore #6 completions

Both wells are completed and waiting on pump jacks to be fitted to commence production testing along with some infrastructure work on lines. Some delay has been experienced moving equipment on the lease due to recent storms. Both wells are expected to be on pump within 2 weeks.

Additional Acreage Acquired

The Company has increased the acreage of the lease group to 890 acres with the addition of a 160 acre lease to the north and 120 acre lease to the west. Further contiguous acreage is under negotiation to ensure better control over enhanced recovery activities.

AOK holds a 100% Working Interest and 81.25% Net Revenue Interest in this project.

About AusTex Oil Limited:

AusTex Oil Limited (ASX:AOK) is an Australia-based company. The Company is engaged in the development of oil and gas leases in the United States. It produces oil and gas from leases in Oklahoma and Kansas. It is also engaged in the exploration, development and production of hydrocarbons in the United States. Its wholly owned subsidiaries include International Energy Corporation (Oklahoma), International Energy Corporation (Kansas) and Well Enhancement Services LLC. During the year fiscal year ended March 31, 2009 (fiscal 2009), the Company was engaged in the drilling of three wells on the Lancaster Lease group, Tulsa County; two wells on the Sweet Unit, Pawnee County, and one well on the BlueHawk Project in Osage County.

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Publication:ABN Newswire
Date:Jul 13, 2010
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