Australian Oil Company (ASX:AOK) strengthens Australian portfolio with strategic Surat Basin acquisition

Australian Oil Company Limited (ASX:AOK) has advanced its Australian expansion strategy through the acquisition of three petroleum leases and a petroleum pipeline licence in the Surat Basin, securing a portfolio that combines current production, redevelopment potential and undrilled exploration opportunities.

Situated west of the Taroom Trough and near the town of Surat, the assets benefit from proximity to major gas gathering and processing infrastructure as well as nearby activity from operators including Santos, Shell, Elixir and Omega, positioning the Company to further develop its onshore capability in a well supported region.

Kane Marshall, Managing Director, has addressed a series of investor questions designed to clarify the factual elements of the transaction and outline how the acquired assets complement the Company’s broader operational direction.

What is the strategic rationale behind acquiring PL 264, PL 30, PL 512 and PPL 22 in the Surat Basin?

The rationale is founded on assembling a balanced group of assets that provide immediate production, cost effective redevelopment pathways and undrilled prospects positioned close to existing midstream infrastructure. Importantly there is material exploration potential that has not been properly assessed.

The assets, which include the Emu Apple, Riverslea and Major fields, are located in a region with established operators and accessible processing routes, thereby supporting efficient development planning across both oil and gas.

These opportunities align directly with our strategy to broaden our exploration portfolio and increase our exposure to quality assets in quality jurisdictions.

PL 264 includes the producing Emu Apple Oil Field, while PL 30 and PL 512 hold the Riverslea and Major fields that have previously produced and retain facilities in good condition.

PPL 22 links PL 512 to the Silver Springs Gas Plant, providing an established commercial pathway.

Taken together, the assets broaden the Company’s operational presence and align with its strategy to efficiently progress exploration, development and optimisation activities.

What near term production and development opportunities exist within these assets?

Near term opportunities focus on production optimisation, reactivation potential and the advancement of undrilled high impact prospects.

The Emu Apple Oil Field currently produces approximately 15 bopd and has potential to increase output up to 50 bopd or more, which presents an immediate and measurable enhancement opportunity.

The Riverslea and Major fields, both of which have previously produced, can be brought back online at modest cost due to the condition of the existing facilities. The Riverslea Field can be brought back onto production on free flow at 20 bopd with potentially 2 other wells and this production significantly increased by bringing in pumping units.

The licences sit in a robust jurisdiction with active nearby operators, and they offer a mix of exploration potential, near term development and production optimisation for both oil and gas.

Across all three petroleum leases, undrilled prospects and leads are situated near existing infrastructure that support efficient drilling and development planning, with scope for near term capital allocation toward activities that enhance production while maturing new targets and potentially using organic cash flow to fund material exploration drilling.

How is the acquisition being funded and what financial obligations arise from the agreements?

The acquisition does not carry work commitments, and the Company intends to fund early activity through existing capital reserves complemented by production revenue from the Emu Apple Oil Field and subsequent reaction of other fields or production improvement opportunities.

Under the agreements, ADZ will receive a 2% wellhead royalty on its interests in PL 264, PL 30 and PL 512 commencing 1 January 2029, while OGT will receive $1 for its minority interests in PL 30, PL 512 and PPL 22 as part of an arrangement that supports gas processing through the Silver Springs Gas Plant.

The Company’s subsidiary will indemnify ADZ and OGT for their proportional liabilities associated with infrastructure and any suspended or producing wells.

ADZ will maintain all existing Financial Assurance and Financial Resilience Certificates for the assets, totalling $552,640.45, and any recalculated amounts will be credited against future AOK bonding requirements.

We now have a clear line of sight to commercial pathways for both commodities, supported by a range of opportunities that will appeal to different investor groups.

What conditions must be met for the acquisition to complete, and what timeframe is the Company working toward?

Completion requires Australian Oil Co to be satisfied with its legal, financial and technical due diligence, while ADZ and OGT must waive any pre-emptive rights under the existing joint venture arrangements.

The Company has concluded its due diligence and is satisfied with the outcome, which positions it to move toward completion once remaining procedural steps are finalised.

Although no formal completion date has been set, the agreements will terminate if conditions precedent are not met or waived on or before 9 June 2026.

The Company intends to provide further detail at its upcoming General Meeting followed by a shareholder webinar to ensure continued transparency as the transaction progresses.

What broader industry and regional dynamics make this an appealing time to secure these assets?

Industry activity within the wider Surat Basin is increasing, with operators advancing gas exploration programs to take advantage of installed infrastructure and the ability to meet domestic gas demand. This includes activities by Omega Oil and Gas, Elixir, Santos and Shell.

The region’s role in supply development has been further highlighted by APA Group’s intention to jointly develop the proposed Brigalow Peaking Power Plant with CS Energy, which reflects a supportive market environment for flexible gas solutions.

We look forward to advancing these assets, maturing exploration drilling targets, strengthening our production profile, and building positive momentum into 2026.

The location of PL 512 provides optionality for further gas exploration or potential gas storage opportunities, while the proximity of existing infrastructure and the Inland Oil Refinery supports shorter development timelines and reduced capital intensity compared with other regions.

These factors collectively strengthen the commercial relevance of the assets and support the Company’s objective to build operational momentum into 2026

Positioning the company for sustainable operational progress

The acquisition of the Surat Basin assets represents a deliberate and strategically aligned expansion of Australian Oil’s operational footprint, providing a coherent platform from which to enhance production capability, mature drilling opportunities and strengthen exposure to both oil and gas markets.

The combination of producing fields, reactivation potential, undrilled prospects and established midstream infrastructure offers an integrated suite of opportunities that can be advanced methodically and with capital efficiency.

Within this context, the Company’s ongoing technical assessment and operational planning will underpin a structured progression of activity across the portfolio as it moves into 2026, supported by the favourable regional dynamics highlighted in the ASX release.

Further detail will be provided at the upcoming General Meeting and through a follow up webinar, ensuring shareholders remain fully informed as the Company advances this next phase of its growth strategy.

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