Oil Basins to Acquire Shelf Oil, Ups Stake in Vic/P47 in Gippsland Basin

Oil Basins Limited (OBL), an Australian oil and gas company, provided an update Monday that the firm has executed an agreement whereby the Company increases its stake in offshore Gippsland to an overall combined 35.435 percent by acquiring the Strategic Energy Resources Limited (SER) wholly owned subsidiary Shelf Oil Pty Ltd. (Shelf) which holds a 17.5 percent interest in exploration permit Vic/P41. OBL has also been granted a conditional exclusive option over SER’s 25 percent interest in Vic/P47, which may at OBL’s nomination be split 50/50 between OBL and Shelf on exercise, and which exercise is subject to the offshore regulator NOPTA approving a new variation and extension to the 2014 Vic/P47 Work Program as submitted by the proposed new operator.

Under the terms of the executed Share Sale and Purchase Agreement for Shelf, OBL will issue SER 7.0 million new OBL ordinary shares at $0.0187 (AUD 0.02) per share for 100 percent of the equity of Shelf which only holds a 17.5 percent interest in Vic/P41. There are no pre-emptions with this transaction. Under the terms of the exclusive option with SER for the 25 percent interest in Vic/P47, on exercise OBL will issue SER a further 6.0 million new OBL ordinary shares at $0.0187 (AUD 0.02) per share.

Attributes of this Transaction:

  • OBL is very pleased with this strategic transaction as it increases the Company's exposure to the new gas supply/price dynamics that presently exist on the eastern gas market where gas shortages have been recently forecast to occur from 2017
  • Current Vic/P41 Work Program 2014 obligations are modest and OBL's effective combined interest increases to 35.435 percent
  • Should the 25 percent Vic/P47 option be successfully exercised, the combined OBL/Shelf net share of the variation Work Program 2014 is expected to be circa $46,860 (AUD 50,000)
  • Both permits are adjacent to well-developed regional infra-structure (Patricia-Baleen Regional Subsea Hub & Onslow Gas Plant)
  • Both permits have modern 3D seismic data and defined prospects - Vic/P47 has two undeveloped gas discoveries - Judith Gas Field (1989) and Moby Gas Field (2005) which latter was recently deemed a Location. Combined recoverable 2C and P50 gas resources are estimated at circa 150 billion cubic feet (Bcf)
  • Permit Vic/P41 is an under explored permit - two 1980's wells drilled on 2D, both with invalid tests, but hosts circa an estimated 2.2 trillion cubic feet (Tcf) of P50 wet gas (previously reported by operator)
  • Given the nearby oil/gas fields and the regional geological framework, the presence of reservoir/seal pairs and access to hydrocarbon charge are believed not significant risks. The current Vic/P41 2014 approved work program is designed to select a location for the Kipling-1 well (due in 2015) and to assess the fault seal risks with AVO anomaly data
  • Well defined (3D and AVO) field analogues - Golden Beach Formation: Kipper, recent new discovery South East Remora-1 (Kipling 'look alike' in Vic/P41) & older aged Emperor Formation: Longtom (Judith is a Longtom 'look alike' in Vic/P47)
  • Subject to regulator approval, the new proposal is to review all prospective potential of the 3 graticular blocks which now comprise the Vic/P47 Permit and with particular focus on gas nearby the Moby Gas Field and the Patricia-Baleen Regional Subsea Hub and Pipeline to Shore and Orbost Gas Plant (infrastructure is presently owned by Santos but is under-utilized by the Nexus Energy Longtom Gas Field Subsea Development)

With this increased strategic footprint within known highly prospective "gassy blocks" in offshore Gippsland, OBL expects to capitalize on the renewed interest under the expected high gas price regime in conventional oil and gas exploration, with well-established and underutilized gas hub and pipeline infrastructure nearby for accessing all east coast gas markets.

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