Strategy

Our strategy is to accumulate undervalued, high-quality unconventional upstream assets, manage those assets in a capital-disciplined fashion to demonstrate underlying value and then monetise based on the increased value of those assets on behalf of shareholders.

As the cornerstone of this strategy Australis set out to acquire, at an attractive entry cost, a foundational oil asset with Tier 1 economics and scale that provided a clear path of incremental production and reserve growth as oil & gas markets and commodity prices turned positive. Such a foundation asset required an existing production base that would remain profitable at lower oil prices to minimize downside risk. This foundation asset could be supplemented with earlier stage appraisal, development or exploration opportunities which combine significant upside exposure with low entry costs.

Strategy in action

Tuscaloosa Marine Shale 

Accumulate oil assets with Tier 1 productivity performance, clear path to growth and existing production….

Australis took advantage of market conditions that existed from 2015 to 2017 to acquire a large ownership position within the proven core of the Tuscaloosa Marine Shale (TMS), one of the last remaining emerging oil shale basins onshore in the USA. Proven oil productivity of wells in the TMS core is on par or better than other USA Tier 1 oil shale basins. Through acquisitions and additional leasing completed in 2016 and 2017 Australis accumulated ~95,000 net acres in the core of the TMS and, as at December 31, 2017, Australis’ independent reserve engineers allocated a mid-case resource recovery estimate of ~145 million barrels of oil to the acreage. As part of the early transactions, Australis acquired 32 operated wells in the TMS producing net ~1,300 barrels of oil per day at the end of 2017. In addition, through transactions and data sharing agreements, Australis acquired a significant body of TMS technical and operating data created through the collective expenditure of over US$1 billion in legacy operations in the play.

…at a low cost of entry

The average cost to Australis to acquire these initial TMS reserves and resources and existing production through the acquisitions and leasing was less than US$0.30 per barrel of recoverable resource. Additional leasing of undeveloped acreage in the TMS Core continues to add incremental recoverable oil resources allocated to our acreage at a cost of less than US$0.35 per barrel.

Manage assets to demonstrate underlying value

By the end of 2019 Australis had aggregated additional leased acreage in the TMS core, at low cost, and completed a six-well drilling program (IDP) aimed at replicating the top historical well performance in the TMS Core at today’s lower-cost environment, with a view to demonstrating the substantial underlying value of the Australis’s position. Through the IDP, Australis drilled and completed two of the most economic oil wells in the TMS, each having an IP 30 over 1,000 bbls of oil per day at an average cost to drill, complete and tie in of just over US$10.5 million. Following the IDP campaign our initial plans were to utilise the knowledge gained to find a larger partner to fund the next phase of the TMS development.  Those plans were put on hold as global events such as the COVID pandemic and the ensuing low oil price environment forced a change in focus.

Instead our strategy in the TMS focused on the management of our existing production to maximise field cashflows and the maintenance of our strategic leasehold position within the TMS core to ensure retention of an inventory of Tier 1 well locations and the associated level of oil resources for future development. Through 2020 to 2023 Australis reduced costs, paid down debt, improved the production performance and economics of the existing well portfolio whilst managing the TMS land portfolio within cashflow and cash reserve constraints.

We also explored interest from potential industry partners to assist in the funding of activity necessary to demonstrate and realise on the value of the TMS assets, which might include continued development drilling in the right price environment. Initially this was largely an educational process, with potential partners carrying out diligence and confirming the technical basis for future investment when the macro conditions were more favourable.

By the end of 2024 the acreage position had reduced to approximately 50,000 net acres, but Australis has carefully renewed those leases that maintain a strategic control on targeted high grade areas and has also instigated a permitting program, in anticipation of future drilling operations, that ensures Operator status on planned development units.

The Australis position in the TMS core has a number of advantages that continue to make it increasingly unique and valuable in the US shale industry. It is a large, strategic operated position in a basin with proven Tier 1 oil productivity that can be realised economically at modest oil prices. Management believe it is perhaps the only remaining Tier 1 oil play that has been delineated, appraised but remains effectively undeveloped. The position, with its associated sizable reserves and resources was acquired at a low entry cost. By pursuing the above strategy, Australis believes it will be in the best position to achieve significant value creation for its shareholders as our foundation asset becomes more attractive to industry participants in an environment where the diminishing inventory of Tier 1 oil wells in the USA needs to be replaced.

Monetise based on the increased value of those assets on behalf of shareholders

During 2025 Australis dealt with an increasing amount of inbound enquires about its TMS position, at times from companies we had previously engaged with, indicating that the industry drivers outlined above were making an investment more likely.

On 26 November 2025 Australis announced that it had executed two separate but synergistic transactions which achieved the next strategic goals we had long articulated to shareholders.

Transaction 1 – Australis entered into a Development Agreement with an established unconventional US public company with operations in multiple US basins.  The Development Partner has the right to earn an 80% interest in the Australis undeveloped acreage position by deploying US$46.25 million and carrying Australis for a 20% working interest in that program.  In addition, the Development Partner and Australis have established an Area of Mutual Interest (AMI) which covers a large portion of the TMS Core area and within that AMI any leases taken will be offered to the other party on an 80/20% basis.

Transaction 2 – Australis sold 90% of its working interest in the existing wellbores only (i.e. no undeveloped land was sold) to an affiliate of the EQV Group (“EQV”) for US$16.9 million before closing adjustments on 30 December 2025 and EQV assumed operatorship of wells previously operated by Australis.

(see announcement for further details on both transactions)

The combination of both transactions allowed Australis to:

• repay all existing the outstanding Macquarie Credit Facility and retain a cash balance at the end of Q4 2025 of US$14.2 million;
• validate the TMS opportunity through investment by an established unconventional operator in the US;
• be funded for approximately 4.5 gross wells as part of the carried program with the Development Partner; and

be able to participate in a leasing program which will allow Australis to expand its exposure to the TMS, in an aligned manner with the Development Partner.

Looking Forward

Following the close of both transactions Australis will:

• work with the Development Partner to prepare for and execute on development under the carried drilling program;
• work cooperatively with EQV on production operations to safeguard our 10% working interest and the HBP acreage associated with the producing well; and
• seek further opportunities to capitalise on the momentum we have created through these deals, leveraging the unique and valuable technical knowledge base Australis has on the TMS.