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Austin shares surge on drill results
PUBLISHED: 21 Jan 2013 17:58:05 | UPDATED: 21 Jan 2013 17:58:05

Shares in exploration minnow Austin Exploration jumped some 46 per cent after the company reported strong oil and gas flows at its Pathfinder shale project in Colorado.

The first horizontal well drilled into the Niobrara shale formation is flowing both oil and gas, Austin said, describing the early flows as “a very encouraging sign.” It said the results demonstrate that the well has excellent reservoir characteristics and that fracking work carried out last month was successful.

Austin shares surged 1¢ to 3.2¢, with 198.2 million shares changing hands.

Hopes have been high for Austin since former Queensland Gas Co managing director Richard Cottee joined as executive chairman in February last year. Mr Cottee said then that Austin had “enormous upside”, with the potential for 40,000 barrels a day of oil production from its development drilling program.

He said in a statement on Monday that the company had expected oil flows from the well but that to see oil and gas “in these large volumes” was “quite exciting”.

“It appears we may have a very valuable project on our hands,” Mr Cottee said.

Still, Austin said it needs at least 30 days of monitoring of the oil and gas production before it can determine the long-term production capability of the well.