Australis’ Debt-Free Future Hinges on Partner’s Drilling Execution Risks

Strategic Transactions Reshape Australis’ Financial Landscape

Australis Oil & Gas Limited has closed a transformative year marked by significant strategic transactions that have reshaped its financial position and future development prospects. The company reported a net loss of US$24.9 million for 2025, predominantly reflecting a non-cash impairment charge of US$20.7 million. This charge arose from the sale of 90% of its working interest in producing wells and the discounted value of a carry program associated with undeveloped acreage in the Tuscaloosa Marine Shale (TMS) play.

In November 2025, Australis secured a development partner with the financial capacity to deploy up to US$46.25 million in new well development capital within the TMS. This partner will carry Australis for its 20% working interest, earning an 80% stake in approximately 46,100 net undeveloped acres. The arrangement includes an Area of Mutual Interest, allowing Australis to participate in future leasing opportunities on an 80/20 basis, thereby maintaining exposure to growth while minimising reliance on shareholder equity or debt.

Asset Monetisation and Debt Repayment

Complementing the development deal, Australis completed a financing transaction in December 2025, selling 90% of its working interests in existing producing wells for US$16.9 million before adjustments. This sale to an affiliate of the EQV Group enabled Australis to repay its Macquarie Credit Facility in full by year-end, significantly strengthening its balance sheet. The company closed 2025 with a robust cash position of US$14.2 million, more than double the prior year.

Despite these positive financial moves, production volumes declined 18% to 208,000 barrels due to natural reservoir decline and operational downtime, including weather-related interruptions and deferred workovers pending transaction negotiations. Nevertheless, Australis achieved a 15% reduction in lease operating expenses, driven by lower workover costs and operational efficiencies, supporting a relatively stable operating cash flow of US$2.5 million.

Operational and Environmental Stewardship

Australis maintained a strong commitment to safety and environmental management throughout 2025. The company reported one OSHA recordable incident and six minor spills, all promptly contained and remediated. Emissions reporting aligned with Taskforce on Climate Related Financial Disclosures (TCFD) recommendations showed a reduction in Scope 1 greenhouse gas emissions consistent with lower production volumes. The company continues to pursue initiatives to minimise environmental impact and enhance operational sustainability.

Governance and Future Outlook

The company’s governance framework remains robust, with a board comprising experienced industry professionals focused on delivering shareholder value. Australis has scheduled its 2026 Annual General Meeting for 5 May 2026, with director nominations closing on 11 March 2026. Looking ahead, Australis is positioned to leverage its strengthened financial footing and strategic partnerships to advance development in the TMS, aiming to unlock significant value for shareholders while navigating the evolving energy landscape.