Oil Basins : Derby Block - Increase In Prospective Potential Recoverable Resources

ASX Release

15 January 2016

ASX Markets Announcements Australian Stock Exchange Limited 10th Floor, 20 Bond Street

Sydney NSW 2000 Dear Sirs

PERMIT EP487 (DERBY BLOCK) UPDATE INCREASE IN PROSPECTIVE POTENTIAL RECOVERABLE RESOURCES

HIGHLIGHTS

• OBL as operator of WA onshore Permit EP487 Derby Block has recently completed new mapping and depth conversion of the New Unconventional Wet Laurel Tight Basin Centred Gas (BCG) Play earlier presented to shareholders at the OBL AGM on 30 November 2015 - refer to ASX release 30 November 2015.

  
  

• Based upon this new OBL mapping, and all available public file data on nearby Tight BCG wells, a preliminary independent resources assessment has been conducted by 3D-GEO Pty Ltd on the unconventional and tight resources potential of the newly mapped play.

  
  

• Preliminary results confirms a significant 31.6% increase in gross potential prospective recoverable P50 resources to 24.6 Tcf within the eastern onshore portion of Permit EP487 (corresponding gross potential prospective recoverable P50 condensate volumes increase by 32.9% to 614 MMbbls).

  
  

• In addition, deeper Laurel Basal Shale gross prospective potential recoverable P50 resources down to 5000m have also been mapped and assessed at an additional 4.1Tcf and 103.7 MMbbls of associated condensate.

  
  

• Indicating that the overall gross prospective potential recoverable P50 resources down to 5000m within the onshore eastern portion of the Derby Block is now independently assessed at 28.7 Tcf and 717.7 MMbbls of associated condensate.

  
  

• All prospective potential recoverable resources have been independently determined in accordance with SPE PRMS (2011) guidelines.

  
  

• A full summary report will be released in a subsequent OBL ASX Release once finalised.

Permit EP487 (Derby Block) Update

The Directors of Oil Basins Limited (ASX code OBL, or the Company) are pleased to make the following update on the Company's 50% owned and operated onshore Permit EP487 (Derby Block) as a matter of record.

Location

Figure 1

Permit EP487

The Derby Block is very large and has an area of 5,063 sqkm (circa 1,251,095 acres).

Ownership

OBL - 50% Interest

Oil Basin Royalties Pty Limited - effectively 2% Over-riding Royalty Interest Rey Lennard Shelf Pty Ltd - 50% Interest

Backreef Oil Pty Limited - effectively 0.5% Over-riding Royalty Interest

Derby Block Key Attributes

• OBL holds 50% on title and operator Derby Block

  
  

• Region of Fitzroy Trough ideally situated as hydrocarbon source / kitchen with marine shale sediments of right geological age (Devonian) based upon North American USG

  / USO experience.

  
  

• Nearby Derby township and significant support infrastructure (base hospital, airports and local sea terminal etc).

• Main prospective region is completely bounded to the west, north and south by all- weather bitumen highways and only five significant pastoralist landholders.

  
  

• Route of proposed new Great Northern Pipeline traverses permit in the south and will have Common Carrier access.

  
  

• Unique NNTT Award with potential significant long-term benefits (access / clearances) - once the award is finalised the determination ensures certainty for site access and clearances.

  
  

• Derby Block offers significant potential for future gas supply to both domestic and export gas projects.

  
  

  New OBL technical assessment of Derby Block.

  
  

  Despite having obtained environmental approvals in early September 2015 to shoot some 533.7km of new 2D seismic survey (which can still be rolled over into late 2016), with the inability to shoot seismic during 2015, OBL has lodged a significant work program variation with DMP on 24 September 2015 to replace 2D seismic in 2015 with 2 wells in 2016 (subject to prospectivity assessment of likely prospects).

  
  

  OBL's new technical assessment was lodged with the DMP on 27 November 2015 and summarised in the ASX Release dated 30 November 2015.

  
  

  The additional new work by the EP487 joint venture included:

  
  

  • Reprocessing of circa 140km of vintage 2D and loading into comprehensive 3D- GEO mapping of Fitzroy Trough.

    
    

  • Assessment and integration of the recent WA Geological Survey (2014) which was shot along main Broome to Derby Highway and Derby-Gibb River Road and was instrumental in tying all previous vintage 2D seismic to the earlier Buru Energy Bunda 3D Seismic (shot in 2009)

    
    

    The new OBL mapping has delineated three new, significant and extensively developed Laurel Unconventional reservoir plays are newly defined in EP487 (Derby Block), namely:

    
    

  • Upper Laurel (Top Laurel) Clastic Marine (Meda-1, Yulleroo-1 to-4, East Yeeda-1, Valhalla/Paradise)

    
    

  • Middle Laurel Carbonate and Delta (Blina, Backreef-1)

    
    

  • Lower Laurel Clastic/Carbonate Delta (Wattle-1, Valhalla/Paradise)

    Of the three reservoir plays, the Middle and Lower Laurel Delta reservoir plays are most significant "new plays" in addition to the established "well defined Top Laurel BCG play".

    In addition underlying across the northern sector there is a newly mapped deeper (and higher risk) Basal Laurel Unconventional Shale unit at drillable depths which is assumed for mapping and assessment purposed down to 5000m. New interpretation by OBL of vintage seismic and recent new seismic suggests:

• Extensive development of deltaic cycles in the Middle and Lower Laurel, Late Devonian to Early Carboniferous sequences.

  
  

• These cycles (regressional, prograding parasequence sets) comprise classic delta topset and foreset clinoform geometries, prograding westward across the Fitzroy Graben from a re-entrant on the Lennard Shelf.

  Three prospects have been delineated within EP487 (Derby Block) based on identification of the major reservoir play, thickness and depth of burial. All are Laurel plays defined as unconventional, Basin Centred Gas (BCG) stratigraphic plays and all have significant potential for condensate production, (ignoring the deeper Basal Laurel tight shale gas unit), namely:

  
  

• West Kimberley Wet Laurel BCG and Oil Prospect - This prospect is defined by the newly recognized Lower Laurel delta reservoir play, principally possible reservoir sands developed in delta topset and foreset sequences. The Upper and Middle Laurel also has potential.

  
  

• Yeeda Wet Laurel BCG Prospect - Principally an Upper Laurel reservoir play drilled by East Yeeda-1. Deeper potential in the Middle and Lower Laurel (> 3,500 m). Similar to the Yulleroo gas discovery and prognosed as an extension of the Valhalla / Paradise Wet Laurel BCG System (Buru Energy / Mitsubishi) to the east.

  
  

• Great Northern Wet Laurel BCG Prospect - similar to and possibly an extension of the Yeeda Laurel BCG Prospect with similarities to the Yulleroo Gas Field to the south west.

Prospective Potential Recoverable Resources - Wet Laurel Basin Centred Gas

The company's operated permit is a potential new energy source and with new mapping complete, early in January 2016 OBL contracted 3D-GEO Pty Ltd (3D-GEO) to conduct an Independent Expert assessment of the Basin Centred Wet Gas Potential of the new plays delineated by OBL 3D-GEO had earlier in 2012 completed the remapping for the WA DMP for the entire Canning Basin in Petrel TM and based on that mapping had delineated gross potential recoverable P50 resources of 18.7 Tcf and 461.9 MMbbls associated condensate in accordance with SPE PRMS (2011) refer to OBL ASX Release 14 February 2013.

The onshore eastern portion of EP487 (completely outside the 2013 declared West Kimberley Wilderness Reservation) was the focus of the independent study by 3D-GEO with gross recoverable resources assessed in accordance with SPE PRMS (2011) and based upon parameters based upon on US Bakken well correlations and specific public available calibration information (petrophysical analysis and assessment of well logs and completion reports and seismic) of the derby Block vintage East Yeeda-1 well and modern nearby BCG correlation wells at Yulleroo-3 and -4 , Paradise-1, Valhalla-2, Valhalla North-1 and Asgard-1 as at 13 February 2013 (ie no access to nearby fracking (fraccing) production test results at Valhalla North-1 and Asgard-1 which presently remain confidential).