Australis Oil and Gas, which holds a dominant position in Southwest Mississippi’s Tuscaloosa Marine Shale geological formation, reports a favorable financial position after the year’s second quarter.

The company’s quarterly activities report reported production cuts instituted because of low oil prices for much of the quarter, and a sales volume of only 66,000 barrels. That’s down 61% from the first quarter.

However, operating expenses were cut to $7.87 per barrel during the quarter, a 45% decrease from the first quarter, and the company’s hedges on oil futures contracts brought in $2.69 million dollars.

The company claimed gross profits per barrel of oil at $63.81 when sales and hedging were considered, well above the market prices that have mostly floated between $30 and $50 a barrel for the first half of the year, though a scarcity of storage while Russia and Saudi Arabia boosted production to hurt each other’s economies drove oil briefly into negative valuation.

Corporate officials said they also improved the company’s standing by paying down $10 million on a line of credit extended by Australia’s Macquarie Bank, reducing that debt to $23 million. Additional borrowing capacity under the line of credit was canceled, and some terms of the credit offering were waived until year’s end.

Sales, combined with lower expenses and favorable hedging positions in the market, allowed the company to improve its cash assets from $3,9 million to $4.4 million.

The company also reported that it has paused its active leasing program, resulting in a loss of about 5% of its held acreage to 110,000 acres. The options on another 1,900 acres will expire in the second half of the year if the leasing program does not resume. However, 85% of Australis’ acreage will be retained because there are producing wells on the land or because the lease options do not expire until 2022.

Australis Oil and Gas was formed in 2014 and took over the TMS area by buying out Encana’s assets in the region.

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