Oil Basins’ Canning Basin oil play gets thumbs up from Green Rock Energy Tuesday, May 01, 2012 by Bevis Yeo Oil Basins’ (ASX: OBL) Backreef Area oil play in the onshore Canning Basin has received a vote of confidence after Green Rock Energy (ASX: GRK) took up the full 20% interest that it held options over.
Green Rock had in April signed a deal to acquire between 5% and 20% of the Backreef Area, where the Backreef-1 oil discovery is expected to be production tested this month, paying Oil Basins A$1.1 million as an upfront option payment.
It has now elected to pay an additional A$2.5 million to fund future operations in the area to earn the 20% interest.
Backreef-1 was drilled in October 2010 and intersected estimated net oil pay of between 12 metres and 39.2 metres.
Oil Basins had said previously that a modestly successful testing would value the Backreef Oil Pool at between A$1.8 million and A$5 million risked to itself.
It would also lead to a large reduction in risk for other mapped leads in the area that hold in-place oil of 48 million to 117 million barrels of oil.
The joint venture will also have options to follow up on the discovery by using the 2 drilling slot options included in the testing contract with Australian Drilling Services.
These additional wells will be drilled either by the ADS Rig 2 that will be mobilised from the Utopia oil field in central Queensland to carry out the Backreef testing or the ADS Rig 6.
Oil Basins will retain 80% of the Backreef Area and 100% of any benefits from a potential Buru Energy (ASX: BRU) back-in.
GRK Price at posting:
0.7¢ Sentiment: LT Buy Disclosure: Held
