Australis Cuts Losses to US$1.9M, Revenue Falls 26% Amid Production Dip
Australis Oil & Gas reported a reduced half-year loss and positive cash flow despite lower production, while actively seeking a development partner for its Tuscaloosa Marine Shale assets.
- Net loss narrowed to US$1.9 million from US$4.0 million year-on-year
- Revenue declined 26% to US$7.7 million due to production dips and weather impacts
- Operational cash flow remained positive with a 30% cut in general and administrative costs
- Net debt reduced to US$1.9 million, maintaining compliance with debt covenants
- Company focused on securing a partner to advance development of TMS assets
Financial Performance Amid Production Challenges
Australis Oil & Gas Limited has released its financial results for the first half of 2025, showing a marked improvement in its bottom line despite a backdrop of declining production volumes. The company reported a net loss after tax of US$1.9 million, significantly narrower than the US$4.0 million loss recorded in the same period last year. This improvement was driven by positive operational cash flow, underpinned by an average realised oil price of US$70 per barrel and a disciplined approach to cost management.
Production volumes fell to approximately 110,000 barrels, down 16% from the prior year, reflecting natural well declines and weather-related outages. Nevertheless, Australis maintained steady production operating costs on a per barrel basis and achieved a 30% reduction in group general and administrative expenses, demonstrating effective cost control.
Market Pricing and Hedge Gains
The company’s oil sales pricing, benchmarked against Louisiana Light Sweet crude, averaged US$71 per barrel, representing a premium of US$3.28 to West Texas Intermediate prices. Australis also recorded a modest hedge gain of US$1,000 during the period, a turnaround from a hedge loss of US$262,000 in the previous year. These factors contributed to an adjusted EBITDA of US$0.7 million and earnings before non-cash items of US$0.5 million, albeit down from 2024 levels.
Balance Sheet and Debt Position
Australis reduced its net debt to US$1.9 million from US$2.2 million at the end of 2024, aided by positive operating cash flow servicing interest obligations. The company remains in full compliance with all covenants under its credit facility with Macquarie Bank. However, the report highlights a working capital deficit driven by upcoming debt amortisation payments and suspended royalty liabilities, which pose potential covenant risks without restructuring or partnering.
Strategic Focus on Partnering for TMS Development
The company reiterated its strategic priority to secure a development partner willing to invest capital into the Tuscaloosa Marine Shale (TMS) asset. With approximately 47,400 net acres in the TMS core area and an independently assessed 2P plus 2C reserves and resources estimate of 65 million barrels, Australis positions the TMS as a high-quality, undeveloped oil play. The company remains confident that improving market conditions and increasing inbound interest from potential partners will facilitate a transaction to unlock value.
While no guarantees are made regarding the timing or terms of such a partnership, Australis is adopting a patient but proactive approach, balancing ongoing operations with strategic engagement. The company’s management continues to work closely with financiers to explore facility restructuring options that align with production profiles and financial sustainability.
Outlook and Market Context
Australis operates in a challenging environment marked by natural production declines and weather disruptions, yet it has demonstrated resilience through cost discipline and financial management. The company’s ability to attract a development partner and restructure debt will be critical to advancing its growth ambitions in the TMS. Investors will be watching closely for updates on partnering progress and any amendments to the credit facility that could alleviate working capital pressures.
Bottom Line?
Australis’s next steps hinge on securing a development partner and navigating debt restructuring to sustain growth in the TMS.
Questions in the middle?
- When will Australis secure a development partner to fund TMS expansion?
- How will potential debt facility amendments impact the company’s financial flexibility?
- What operational strategies will Australis deploy to mitigate production declines and weather risks?