new oil co-pawnee energy-us focus

AUSTRALIA TO GET NEW LISTED OIL PLAY WITH ONSHORE U.S. FOCUS BY YEAR’S END

Australia is to get a new ASX-listed oil and gas developer focused on key onshore production areas in the central United States under plans outlined today for an A$8 million capital raising and asset acquisition by mid December.

Adelaide-based Island Sky Australia Limited (to be re-named Pawnee Energy Limited “Pawnee”) plans to drill 17 horizontal and vertical development and exploration wells in oil producing provinces in Kansas and potentially Colorado within 18 months of listing on the ASX.

It has set its sights on first oil production in the June quarter next year.

The Company – which will be chaired by Beach Energy Chairman, Mr Glenn Davis - has entered into agreements with former Sundance Energy founder and Managing Director, Mr Jayme McCoy, and other private, well established oil producers in the two states, to acquire low cost acreage acquisitions in tight oil plays with near-term production potential into existing transport, processing and sale infrastructure.
The transactions include in Kansas, an acquisition, and a proposed acquisition to be settled early in December and thirdly, an exploration agreement over 21 counties in southeast Colorado.

Total outlay for the acquisitions and exploration agreement will be ~$2.15 million – leaving Pawnee (subject to full take up of its proposed $8 million raising and after all re-listing, fund-raising and administrative costs) - well cashed up with around $5 million in cash reserves to pursue what it describes as an aggressive drilling campaign to achieve first production by mid next year.

Pawnee is targeting start-up oil output of above 60 barrels of oil per day (“bopd”) rising to more than 500 bopd by March 2015 from the 4,000 feet deep petroleum-rich “Pawnee” formation from which the company takes its name and which already feeds historic oil and gas production in the region.

The vendor is the private McElvain Energy group, an established Denver headquartered oil house with a long production history in the central US.

“Our strategy is to secure early entry into onshore tight oil resource plays in US areas with excellent infrastructure and which provide the ability to quickly enter production, generate early positive cash flow and expand our focus areas,” Pawnee Chief Executive elect, Mr Neil Young, said today.

“In particular, Pawnee is not doing its work programs in isolation.