Australis Secures US$46 Million Farmout to Kickstart TMS Drilling in Q4 2026

Farmout Agreement Sets Stage for Renewed TMS Development

Australis Oil & Gas (ASX:ATS) is gearing up to revive activity in the long-dormant Tuscaloosa Marine Shale (TMS) with a farmout deal that hands a US-listed independent oil and gas company an 80% stake in nearly all of Australis’ undeveloped acreage. The partner will carry Australis’ 20% interest through a US$46.25 million drilling program, expected to kick off with the Willson 1H well in Q4 2026, subject to rig availability.

This arrangement not only de-risks Australis’ exposure but also signals growing confidence in the TMS as a high-quality shale play that has remained largely undeveloped since activity stalled amid the 2015 oil price crash. Australis retains operational control as the Willson 1H well operator, with the first well permitted for a 10,000-foot lateral and designed to include a data acquisition program aimed at optimising long-term reservoir modelling.

Strong Asset Base and Financial Position

Australis holds approximately 47,500 net acres within the delineated TMS Core, with 39,900 acres held by production. The company estimates a net recoverable resource of 62 million barrels of oil equivalent. Alongside the farmout, Australis has sold 90% of its producing wellbore interests for US$16.9 million to an affiliate of the EQV Group, enabling full repayment of its Macquarie Credit Facilities and bolstering its cash balance to US$11.2 million as of June 30, 2026.

This strong balance sheet and lack of debt provide Australis with the flexibility to pursue further leasing within the Area of Mutual Interest (AMI) established with its development partner, as well as explore additional business development opportunities across the TMS Core.

TMS Core Wells Exhibit Competitive Performance

Despite limited recent activity, the TMS Core wells have demonstrated productivity on par with major US shale basins such as Eagle Ford and Delaware, especially when considering the lack of recent technological enhancements applied to the TMS. Australis highlights that the TMS type curve wells, designed with 2014 optimised drilling techniques, compare favourably to 2021 performance metrics in established basins, underscoring the potential for further uplift as modern completion technologies are deployed.

The TMS remains one of the last Tier 1 shale plays in the US yet to see full-scale development, largely due to the oil price collapse in 2015 and a subsequent industry focus on low-risk, mature basins. Australis’ renewed activity could mark a turning point for the basin, especially as operators seek new, high-quality inventory to sustain production amid declining returns elsewhere.

Upcoming Wells and Development Outlook

Following the Willson 1H well, permits have been approved for a second carried well, Mathieu 1H, with permitting underway for a third, Baker 1H. Australis is actively leasing additional acreage within the AMI to expand its footprint and maintain strategic flexibility. The carried work program ensures Australis is funded through these initial development phases, reducing capital risk while maintaining upside exposure.

With drilling anticipated to commence before the end of 2026, Australis is positioning itself to benefit from renewed industry interest in the TMS. The company’s strategy balances operational control, financial prudence, and partnership leverage, aiming to unlock value as the basin transitions from appraisal to development.