American Patriot Oil and Gas (ASX: AOW) has achieved maiden production and locked-in first revenue from its recently acquired oil assets in South Texas and Louisiana in the United States.
As production ramps up across its asset portfolio, American Patriot is aiming to produce 500 barrels of oil equivalent per day by the end of the year.
“We are pleased to record our first oil and gas revenues from the recently completed South Texas transactions and we look forward to closing the most recent transaction we have announced,” American Patriot chief executive officer Alexis Clark said.
He added the company’s production and revenue base stands to “increase significantly” as new assets are acquired, and the production field is enhanced.
“We are continuing to find attractive conventional assets with significant upside potential in the current market and we are currently completing due diligence on assets which are more than five times the size of our recent acquisitions,” Mr Clark said.
In August, American Patriot reported it had entered an agreement to acquire 100% of the South Texas assets worth US$4.5 million from Safari Oil and Gas Production Inc and Anasazi New Ventures Corporation.
According to the company, the South Texas assets operational costs are around $20 per barrel, which makes them economic during low pricing environmental.
Meanwhile, at the beginning of November, American Patriot inked a new letter of intent with several private vendors to acquire more oil and gas assets in East Texas for US$2.5 million.
Existing infrastructure is in place, and operation costs for the East Texas assets are estimated at $23 per barrel, which also makes them economic during low oil prices.
Combined, the East Texas and South Texas assets provide American Patriot with more than 2 million barrels of oil equivalent in proven reserves.
According to base-case estimates, the company expects to generate more than US$50 million in revenue with oil prices at US$50 per barrel.
However, with the current oil prices of US$55 per barrel price prevail, American Patriot stands to achieve substantially more revenue.
Mr Clark said the company was looking to “deliver on the strategy of aggressively building a producing conventional oil business with well over 1,000 barrels of oil per day production in 2018”.
As part of this strategy, American Patriot is finalising its recently announced US$40 million debt facility that will allow it to pursue further acquisitions.