The Park City, Kentucky Oil and Gas Project
Austin has its initial oil and gas recovery focus on over 857.82 acres of mineral leases located in the small town of Park City, just south of Mammoth Cave National Park (Edmonson County, Kentucky) and approximately 18 miles northeast of Bowling Green.
Project Overview - Austin in Control
- Austin's wholly-owned subsidiary, Aus-Tex, is now the operator of record and controls a 100% working interest over the 857.82 acre lease at Park City.
- Austin has increased its Net Revenue Interest from 56.25% to 78.125% in this project.
- As the Operator of record for the project, Aus-Tex manages every aspect of the oil and gas field. This includes, but is not limited to: well selection, drilling, management, operations, regulatory reporting, service suppliers, land owner relationships, hydrocarbon storage and sales and income distribution to interest holders.
- The company has now mapped the geologic structures of the area, selected the best available completion technique and successfully completed its first oil well.
- Well operations became the responsibility of Aus-Tex on July 1, 2009.
- Ten mineral leases that encompass over 857.82 acres of land are currently controlled and managed by Aus-Tex. Additional mineral lease acreage will be acquired as qualified opportunities present themselves.
- These ten leases provide adequate drilling opportunities for an additional 60 wells. Well selection for any new drilling will be initiated based on the completion results of the current 17 wells.
- To increase the likelihood of a successful new drilling program the company will drill additional wells very near to already producing oil wells.
Net Revenue and Working Interest Distribution
Moving Forward - about the 17 wells and mineral leases
- Austin can now say with confidence that the combination of proper oil formation geologic structure mapping and the selection of the most appropriate well completion technique have proven successful. This combination will be used on future wells.
- Based on the original wells logs Austin believes that 15 of the 17 in place wells have corniferous zones of adequate thickness to deploy the radial drilling (SRS) procedure.
- This drilling procedure can also be used for gas pay zones such as the shale formation that is found in all 17 of Austin's wells. Other completion procedures have also been identified.
- Additional off-set wells can be drilled on these same leases in 4 acres increments thus giving Austin space to drill and complete new wells.
- A combination of immediate income from oil sales and new infusions of investment capital are now both achievable near term.
- 15 of these wells contain coniferous formations of adequate thickness to produce oil
- All 17 wells contain New Albany Shale of adequate thickness to produce natural gas
- All of the wells will be completed by the operator Aus-Tex Exploration, Inc..
- Oil will be the primary focus of each completion.
- Aus-Tex intends to maintain oil storage tank clusters on each lease that produces oil.
- The oil will be picked up at the storage site by an authorized transport company and transferred to the local refinery.
- Area infrastructure for oil sales has been in place for many years.
- The state of Kentucky currently has two refineries in operation and each is capable of taking a pickup order on just 24 hours of notice.
- Income from oil sales in one month are paid in the middle of the following month. (Example - A total of 210 barrels sold on August 10th and 17th will both be paid to Aus-Tex in mid September).
Sales - Moving Oil from the Wells to the Refinery (example only)
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How the process works
- Each lease will have its own storage tank(s) and the individual wells on that lease will feed oil to a central storage area.
- Each of the ten leases will hold a storage tank no smaller than 210 barrels.
- Aus-Tex currently maintains a transportation relationship with a local company.
- Within 24 hours of a request the transport truck will arrive at the designated property to retrieve the oil.
- One truck can handle a single 210 barrel storage tank.
- During the retrieval process a BS&W grinder will remove sediment and water from the oil.
- The clean oil will then be transported to the processing plant
Gross price is determined by the WTI Area 1 market monthly average. Please visit the following web site to view the current WTI Area 1 price.
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Please visit the following site to view current WTI 1 prices.
http://www.paalp.com/fw/main/Crude-Oil-Price-Bulletins-1363.html
Sales Price Example – a pickup in the month of August would pay out on the July monthly contract average. Current July average is $65.71. Current market is $71. September prices will be based on the August monthly average and so on
The Gas Gathering and Processing System
- Production records indicate that the gas processing plant has been down due to various reasons ranging from mechanical issues, to third party litigation with the previous operator.
- During plant up-time capacity constraints have not been an issue
- When the plant is operational it handles gas flows from the field favorably
- Atmos Gathering has indicated that the plant should be back on line and in operation no later than mid September 2009
