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THE KESELING GAS UNIT II # 1 WELL - Dewitt County, Texas

Background and History

The Keseling Gas Unit II #1 well lies north of the townsite of Yorktown, Texas and taps into a geological formation known as The Edwards Reef—discovered by Shell, Texas Eastern, and other independents in the 1960’s and 1970’s. The well was completed in 1979 and produced until 1992 when it was plugged. However, recent discoveries in the Georgetown Lime and Basil Austin Chalk formations have revived interest in reentering these older wells, many of which have begun to produce once again* with the help of modern frac drilling technology**. The current owner (Pool Operating Corporation and Cavalier Oil & Gas, Inc.) recently acquired the lease to this well and began testing the formation. Petrox Energy Corporation (http://www.petroxenergy.com) is coordinating a joint-venture project to fund the development.

The Opportunity for Austin

The opportunity for Austin is to invest in the application of modern drilling technology to recomplete the existing Keseling Gas Unit II well with the aim of generating revenue from the safe and economical extraction of any discovered oil and gas reserves. On 9 May 2006 Austin acquired a 4% working interest in the project by joining the Petrox joint-venture. The 4% working interest has been structured to limit Austin’s liability and possible cost overrun. All drilling, testing and completion activities will be executed for a fixed turnkey price of US$89,500.00. The Keseling Well is the first in a 20-well project to develop the Edwards Reef and Wilcox formations in the Dewitt and Lavaca Counties, Texas. Austin has a first right of refusal to participate in subsequent well developments. Gas exploration is inherently uncertain. With this in mind Austin has aimed to maximize the opportunity for investors whilst containing the associated risk factors.

Current Status (August 2006)

Key Energy Services—the world’s largest rig-based well services company—is currently on site and is reentering the well to the Edwards Reef at a depth of 14,600 feet. By mid August drilling had reached a depth 13,921 feet where an obstruction was encountered. The team decided to back away from the obstruction and drill a directional hole to the south east of the bottom hole location. This procedure will be less costly than alternatives to remove the obstruction from the original bore. The directional leg will also allow access higher on the Edwards Reef where the formation is thought to be thicker and cleaner.

*According to reports by Carlton Gibson, Certified Petroleum Geologist, on behalf of the operating company Cavalier Oil & Gas, Inc.
** In basic hydraulic stimulation (or “frac” technology) engineers generate fractures in a low permeability geological reservoir by application of high-fluid pressure. These fractures increase the flow of oil or gas to the well bore and thereby assist higher rates of hydrocarbon production.

Statements Regarding Forward-Looking Information: Some statements contained in this web site are forward-looking statements. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. There can be no assurances that future developments affecting Austin will be those anticipated by management. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this information.