Australian Oil Secures Three Leases and Pipeline Licence in Surat Basin Deal

Strategic Acquisition in the Surat Basin

Australian Oil Company Limited (ASX – AOK) has taken a significant step in expanding its Australian footprint by signing binding agreements to acquire three petroleum leases and a pipeline licence in Queensland’s Surat Basin. These assets, acquired from ADZ Energy (Queensland) Pty Ltd and OGT Energy Pty Ltd, are located west of the Taroom Trough near the town of Surat, an area known for its established gas gathering and processing infrastructure.

The portfolio includes the producing Emu Apple Oil Field (PL 264), the Riverslea Oil Field (PL 30), the Major Gas Field (PL 512), and the pipeline licence PPL 22 connecting PL 512 to the Silver Springs Gas Plant. This cluster of assets places Australian Oil in close proximity to acreage held by major operators such as Santos, Shell, Elixir, and Omega, underscoring the strategic value of the acquisition.

Terms and Considerations

The consideration structure is notably pragmatic. ADZ Energy will receive a 2% wellhead royalty on their respective interests in the petroleum leases starting January 2029, while OGT Energy’s minority interests are acquired for a nominal sum of $1, incentivizing Australian Oil to develop gas resources with processing through OGT’s Silver Springs facility. The company will also indemnify both vendors against liabilities related to infrastructure and wells, with environmental bonds currently maintained by the vendors totaling over $550,000.

Completion of the transaction hinges on Australian Oil’s satisfaction with legal, financial, and technical due diligence, as well as the waiver of pre-emptive rights by ADZ and OGT. While no formal completion date has been set, the agreements will lapse if conditions are unmet by June 9, 2026. Australian Oil has already concluded its due diligence and anticipates a swift closing.

Growth Potential and Market Context

The acquired assets offer a blend of near-term production and exploration upside. The Emu Apple Oil Field currently produces around 15 barrels of oil per day, with potential to ramp up to 50 barrels daily. Additionally, the Riverslea and Major Gas Fields can be reactivated at relatively modest cost, supported by well-maintained facilities. Undrilled prospects within the leases present further exploration opportunities, particularly in gas, where undersupplied domestic markets could be targeted.

Geographically, the assets benefit from strategic positioning near existing infrastructure and the Inland Oil Refinery, which could reduce capital expenditure and development timelines compared to other Australian jurisdictions. This acquisition also dovetails with broader regional developments, including APA Group and CS Energy’s proposed Brigalow Peaking Power Plant, which may enhance demand for locally sourced gas.

Strategic Alignment and Forward Outlook

Managing Director Kane Marshall emphasized that this acquisition aligns with Australian Oil’s strategy to diversify its exploration portfolio and strengthen production capabilities. The company is focused on under-explored, high-quality assets that offer a clear commercial pathway for both oil and gas. With a robust jurisdiction and active nearby operators, Australian Oil aims to mature drilling targets and build momentum into 2026.

While Australian Oil currently operates primarily in California’s Sacramento Basin, this move into Queensland marks a significant expansion of its Australian presence. The company is also evaluating other opportunities to complement this acquisition as part of its growth strategy.