Austin Exploration Limited says that its U.S. subsidiary, Aus-Tex Exploration Inc., has completed a set of joint development and operating agreements with KOS Energy, LLC of Vancouver, British Columbia.

The development area represents the first drilling and re-completion efforts for Aus-Tex in the renowned Illinois Basin.

Five of the nine total wells held by current acreage are the initial focus for the two companies. These five wells reside on one contiguous lease that produced 472,500 barrels of oil from the Tar Springs formation during the period of 1956-1977. The first of these five wells, the Russell 2 has already undergone a partial re-completion of the Tar Springs formation and is now back on production at daily rates between 10 and 22 barrels of oil per day. A water remediation procedure is currently being scheduled that should stabilize this wells production nearer the higher daily rate. No less than one 220 barrel storage tank of oil is currently being sold each month from this single well.

The two companies are now focused on the recently drilled and cased 2,700 foot Russell 1A well. The 1A found two potential pay zones in the McClosky oil formation that, if successful would be the primary recovery formation with no depletion. This well has a completion rig scheduled to begin work in January 2010 and will represent the first test on this acreage of the more productive McClosky oil formation. The Tar Springs formation is also present in this well. The remaining three Tar Springs wells will be completed in the months of February and March 2010. The shallower Penn formation may also be tested at a later date.

Additional acreage and drilling opportunities will be added to the venture as they arise. The combination of current oil production from the Tar Springs formation, in place storage, pumping and electrical infrastructure provide the two companies with immediate income and development opportunities.

Tags: Austin Exploration Limited