Australian Oil Company Limited (ASX, AOK) has secured key assets in Queensland's Surat Basin and completed a strategic acquisition in California, positioning itself for near-term production growth and exploration upside.
- Binding agreements signed for Surat Basin asset acquisition pending regulatory approval
- Acquisition of Xstate USA increases Australian Oil’s California interests
- Production optimisation and stabilisation underway in the Dempsey area
- Completed A$800,000 capital raising to support operations and growth
- Active pursuit of new high-impact exploration opportunities internationally
Strategic Expansion into Queensland’s Surat Basin
Australian Oil Company Limited (ASX – AOK) has made a significant move into Australia’s east coast gas and liquids market by executing binding agreements to acquire a portfolio of assets in Queensland’s Surat Basin. The acquisition, subject to Queensland government regulatory approvals, includes key petroleum leases such as the Emu Apple Oil Field, Riverslea Oil Field, Major Gas Field, and pipeline access to the Silver Springs Gas Plant. These assets are strategically located near established infrastructure and within a corridor operated by major domestic producers, offering AOK a foothold in a producing basin with near-term production and development potential.
The Surat Basin acquisition diversifies Australian Oil’s geographic and regulatory exposure beyond its Californian operations, providing a platform for both immediate cash flow generation and longer-term exploration optionality. The company has completed due diligence and is progressing regulatory transfers, with initial focus on mapping exploration prospects, production restart studies, and pipeline capacity reviews.
Consolidation and Production Optimisation in California
On the US front, Australian Oil completed the acquisition of Xstate USA Corporation, increasing its economic and working interests across multiple assets in California’s Sacramento Basin. This consolidation simplifies joint venture structures and enhances operational control, enabling more efficient sequencing of development and exploration activities.
Operational efforts during the quarter centred on stabilising production and improving deliverability, particularly in the Dempsey area. While maintenance on the CRC-operated pipeline system caused a temporary shut-in of some wells, resulting in a 50% drop in gas volumes, higher gas prices have partially offset this decline. Technical evaluations are ongoing to reconnect and optimise wells and identify infill drilling opportunities close to existing infrastructure.
Financial Position and Growth Prospects
Australian Oil successfully completed a two-tranche capital raising of A$800,000 during the quarter, bolstering its balance sheet to fund production optimisation, asset integration, and new venture evaluations. Despite operating cash outflows, the company maintains a disciplined approach to capital management and retains capacity to raise further funds if necessary.
Looking ahead, the company is actively pursuing new ventures, focusing on assets in established producing basins or high-impact exploration plays with clear pathways to commercialisation. The appointment of Neil Taylor as New Business Manager for East Africa underscores Australian Oil’s commitment to frontier exploration, particularly targeting large gas opportunities in favourable jurisdictions.
Outlook for the March 2026 Quarter
For the upcoming quarter, Australian Oil aims to complete integration of the Surat Basin acquisition, mature exploration prospects, and advance production restart and optimisation plans. Securing a high-impact exploration project to complement recent acquisitions remains a priority, alongside maintaining funding runway visibility and capital discipline.
Bottom Line?
Australian Oil’s dual focus on consolidating US assets and entering the Surat Basin sets the stage for a pivotal year of growth and exploration.
Questions in the middle?
- When will Queensland government approvals for the Surat Basin acquisition be finalised?
- How quickly can production be restarted and optimised at the Riverslea and Major fields?
- What are the prospects and timelines for the high-impact international exploration opportunities under negotiation?