Austin to Accelerate Niobrara Gas Off-take Pipeline

Source: 8/5/2013, Location: North America

The Board of Austin Exploration Limited (“Austin” or the “Company”) advises that it has completed an institutional placement of $1.7 million through the issue of 141.6 million new shares at 1.2 cents per share. The placement was completed at a 14% discount to Austin’s last closing price on the on the ASX and closed oversubscribed. DJ Carmichael Pty Ltd acted as Lead Manager and Bookrunner to the Placement.

The Placement funds will provide Austin with additional working capital to allow an accelerated start and completion of the gas offtake pipeline at the Company’s Niobrara Pathfinder project, and the early commencement of gas sales. This development avoids the costs of temporarily shutting in the well while the foreshadowed Heads of Agreement is progressed, or an alternative found.

Chairman Richard Cottee said the investment in the pipeline is highly attractive to Austin because it allows the Company to bring forward the development and gas sales which will provide a strong revenue stream of around $150,000 per month in return for an investment of approximately $1.2m (representing a payback in approximately 9 months).

“The gas pipeline will allow us not only to tap gas, but also oil from the well. The technical risk and therefore economic risk is low as the well has already produced both oil and gas”, Mr Cottee said.
“With this kind of opportunity it was highly attractive to the board to raise this capital to fund the pipeline that will bring the Niobrara gas into commercial production and generate revenue so quickly”, Mr Cottee said.Revenue from the Niobrara project is expected to provide a strong and sustainable cash flow until substantial oil and gas production which is anticipated from the Company’s farm-out program. The financial and environmental impact of waiting for such consent made delay an imprudent option.

The placement is being conducted in one tranche under the Company’s 15% limit permitted under the listing rules without shareholder approval. Settlement of the Placement is scheduled to occur on 9 August 2013 and the new shares are expected to be quoted on that date.

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