Oil Basins Limited (ASX:OBL) Update on Proposed Backreef-1 Production Test

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Melbourne, Australia, Sep 16, 2011 - (ABN Newswire) - Oil Basins Limited (ASX:OBL.AX) are pleased to make the following ASX announcement relating to the testing of the previously cased and suspended Backreef-1 well, Backreef Area (OBL 100% beneficial interest), Canning Basin, onshore Western Australia (WA) so as to keep the market fully informed.

SELECTION OF PREFERRED TEST EQUIPMENT

OBL as operator Backreef Area wishes to advise that it has entered into a conditional Memorandum of Understanding (MOU) with Advent Energy Limited (Advent), operator and 100% owner of EP386 and RL1 in the onshore Bonaparte Basin, relating to its preferred use of the TDC Workover Rig No.5 and Vause Wireline Services Production Testing Equipment after Advent who have this equipment previously contracted for the period. Advent's major shareholders are MEC Resources (ASX:MMR.AX), BPH Energy (ASX:BPH.AX), Talbot Group and Grandbridge (ASX:GBA.AX).

Advent anticipates shortly mobilising the TDC Workover Rig 5 and Vause Equipment from Roma, Queensland to Kununurra, WA to conduct production tests of the Waggon Creek-1 and Vienta-1 gas discovery wells.

These two production tests are anticipated to be complete circa mid-October 2011.

POSSIBLE TIMING

Specifically, the conditional 'non-binding' MOU conditions specify that OBL finalises and obtains all necessary stakeholder consents by mid-October 2011, the good weather window in the Canning remains until late October, and the equipment is approved for use in WA by the Department of Mines and Petroleum.

Work programs, advanced plans and the necessary approvals are presently being finalised with the relevant stakeholders to conduct the cased-hole production test of the prognosed Backreef Oil Pool commencing on or around 21 October 2011, subject to equipment availability.

COSTS

The cost of using the preferred equipment with the Backreef-1 cased hole production test is presently being assessed. Under the terms of the MOU, should OBL elect to use the equipment, OBL will be obliged to pay 100% for the cost of demobilising the equipment back to Roma. This impact is likely to increase the previous budget by some 30% to 40%.

Nonetheless both companies stand to benefit from the defraying of mobilisation costs between Advent's WA operations nearby Kununarra and to the Backreef Area.

POSSIBLE FARMOUT

The Company is pleased to advise that it is presently advanced in seeking farmin interest for Backreef Area (in particular for both the production test and a second well), and from exhibiting at the recent Patersons Good Oil Conference, held last week at Fremantle, has obtained serious farmin interest from a number of third parties.

Earlier this week, the Company has executed confidentiality agreements and comprehensive G&G data relating to Backreef-1 and the recent interpretation of the New Oil Play within the Backreef Area has been exchanged with all these third parties.

With the conditional MOU in place, a work program lodged with the DMP and preferred equipment selected, OBL will seek formal offers from all interested third parties within the next fortnight.

OBL will make further announcements on the funding, planning progress and technical details of the Backreef-1 cased-hole production test in due course.

About Oil Basins Limited:

Oil Basins Limited (ASX:OBL.AX) is engaged in the investment in selected exploration production and development opportunities in the upstream oil and gas sector. Oil Basins Limited was listed on the ASX on 23 August 2006 and is involved in exploration for oil and gas initially in the offshore Gippsland Basin waters of south-eastern Australia and the onshore Canning Basin of Western Australia. Since listing the Company has increased its leverage across all of its assets and has increased its exposure to attractive and prospective areas with the Canning Basin.

Contact:

 
Neil Doyle
Director
Oil Basins Limited
Tel: +61-414-912-901
Email: n.doyle@oilbasins.com.au 

Source:

Oil Basins Limited

Copyright (C) 2011 ABN Newswire. All rights reserved.

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