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AusTex Oil Limited - Quarterly Activities and Cash Flow Report, 31 December 2013

February 4, 2014

ENP Newswire - 04 February 2014 Release date- 31012014 - AusTex Oil Limited (ASX:AOK - OTCQX:ATXDY - TSXV:ATO) is pleased to provide its Exploration Activities and Cash flow Reports for the quarter ending 31 December, 2013 in relation to its oil and gas exploration and production activities in the states of Kansas and Oklahoma , in the mid-continent of the United States of America . Oklahoma AusTex operates leases in Oklahoma through its two wholly owned subsidiaries, International Energy Corporation ( Oklahoma ) and International Energy Corporation ( Northern Oklahoma ). Kansas In Kansas , AusTex is the major working interest partner through its wholly owned subsidiary, International Energy Corporation (Kanas) with Castle Resources Inc. , as operator. AusTex holds interests in 21,000 net acres with oil production in both Kansas and Oklahoma . The Company's primary focus is oil and gas exploration, development and production at its 100% owned Snake River Project in Kay County, Oklahoma targeting the liquid rich Mississippi Lime formation. Oklahoma Snake River Project , Kay County , Northern Oklahoma - 5,500 acres AusTex 100% Working Interest (WI) 81.25% Net Revenue Interest (NRI) The Snake River Project is located in Kay County , Northern Oklahoma and the primary target is the Mississippian interval which is approximately 4,300 feet below surface (or deeper according to structural relief). During the quarter, the Company drilled a total of 7 new vertical development wells and 2 new Salt Water Disposal (SWD) wells at the Snake River Project . This brings the total number of wells in production at Snake River to 26 with a further 7 wells under completion or awaiting infrastructure from the gas midstream company. Oil and gas production at the project is expected to increase as additional wells are tied into production facilities over the coming months. Due to the Company's recent success at Snake River and the fast pace of development, it is anticipated that production for the months of January and February will be on par or slightly down on recent production levels as infrastructure issues such as gas connection need to be connected to keep pace with development. Tulsa and Surrounds, Oklahoma - 860 acres AusTex 100% Working Interest (WI) 81.25% Net Revenue Interest (NRI) During the quarter there was no significant exploration, development or production work on the Company's other acreage in Oklahoma outside of the Snake River Project . These lease areas surrounding Tulsa continue to contribute 23-25 boe/day to production. Kansas Cooper Project , Sheridan County, Kansas - 11,600 acres AusTex 53% Working Interest (WI) 38% Net Revenue Interest (NRI) Ellsworth Project , Ellsworth County, Kansas - 2,400 acres AusTex 53% Working Interest (WI) 38% Net Revenue Interest (NRI) During the quarter there was no significant exploration, development or production work on the Company's Cooper or Ellsworth Projects in Kansas . There are presently 5 wells in production contributing 28 boe/day in net production to the Company. Beltz Project , Ellis County, Kansas - 160 acres AusTex 40% Working Interest (WI) 33.8% Net Revenue Interest (NRI). Currently not in production. Colby Project , Thomas County, Kansas - 15,500 acres AusTex 70% Working Interest (WI) 58.8% Net Revenue Interest (NRI) During the quarter there was no significant exploration, development or production work on the Company's other acreage in Kanas outside of the Cooper and Ellsworth Projects. Approximately 3,200 net acres of leases expired during the quarter and were not renewed by decision of management. Lease Operating Schedule Pursuant to Listing Rule 5.4.3, a schedule of the Company's leases and interests therein held at the end of the quarter is provided as follows (gross acreage shown) with approximately 3,200 net acres expiring and not renewed in the Cooper and Ellsworth Projects in Kansas with a 53% and 50% working interest respectively. Production and Revenue Gross Revenue from operations for the December quarter was a record AUD$5,125,300 ( US$4,755,770 ) with net to AusTex after royalties and taxes of AUD$3,815,000 ( US$3,540,025 ). Cash expended during the quarter for development was AUD$3,526,000 with an additional AUD$153,000 on exploration. In addition, US$17.5m of funding was received from the issue of both Redeemable Convertible Preference Shares (RCPA) and Redeemable Preference Shares (RPB) as announced to the market on 12 November. Cash and short term investments on hand at the end of quarter were AUD$19,501,000. Net oil and gas production for the quarter was 77,590 barrels of oil equivalent. Corporate Update The December quarter was a busy one from a corporate perspective with significant activity including: The completion of US$17.5m . in funding via the issue of both RCPA Shares and RPB Shares; The appointment of a new independent non-executive Director, Nicholas J Stone , on 19 November; A change in the Company's Reserve Based Lending Strategy (refer ASX announcement of 22 November) and The completion of the Independent Expert's Report by PricewaterhouseCoopers with regards to the shareholder vote in relation to a potential conversion of Preference Shares to Ordinary Shares in the Company. Completion of Capital Raising The completion of US$17.5m in funding resulted in the Company issuing a total of 58,942,656 RCPA Shares and 57,724,011 RPB Shares with a value of AUD $US0.15 per Share, the terms of which were announced to the ASX. The 58,942,656 RCPA Shares were issued pursuant to the Company's available capacity under Listing Rule 7.1 with the conversion right of the RPB Shares approved by shareholders subsequent to the quarter on 24 January. The funding will be used to accelerate the pace of development at the Company's Snake River Mississippi Project in Northern Oklahoma , meet general working capital requirements and repay the Convertible Note obligations in mid-2014. AusTex, along with the subscribers of the Preference Shares, have agreed to reserve 100% of the funds necessary to retire the existing Convertible Notes currently on issue upon their maturity in June 2014 . The ability to reserve such funds alleviates any potential concern about the Company being able to retire the Convertible Notes. Events Subsequent to the Quarter Activity subsequent to the end of the Quarter has also been busy with: The reappointment of Justin Clyne as Company Secretary following a sabbatical and the retirement of Tom Bloomfield ; The retirement of Dan Lanskey who the Company is pleased to advise will remain on as a Non-Executive Director; The transitioning of Richard Adrey to Managing Director and Interim Chairman and The exercise of in excess of 1,500,000 of the Company's AUD$0.15 options and US$375,000 of the Convertible Notes. The outstanding amount for repayment under the Convertible Notes has thereby been reduced from US$7.5m to US$7.125 . Contact: AusTex Oil Limited Level 7, 207 Kent Street Sydney NSW 2000 Tel: +61 2 9238 2363 Fax: +61 2 8088 7280

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Source: ENP Newswire

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