Oil Basins Limited (ASX:OBL) wishes to make the following ASX Announcement, so as to keep the market fully informed.
- Today the Company as Operator, Backreef Area, Canning Basin - OBL beneficial interest - 100%; formally contracted Australian Drilling Services (ADS) Petroleum Drilling Rig 2 for the cased hole production testing of Backreef-1.
- ADS Rig 2 will be mobilized from its present location at the Utopia Oil Field, Central Queensland to the Backreef-1 well site, on or prior to 1 May 2012, subject to formal approvals and favourable weather conditions prevailing.
- With the petroleum drilling rig contracted, the Company will now formally lodge all relevant approvals with the WA Department of Mines and Petroleum and stakeholders.
- The cost of the Backreef-1 well production test is expected to be now below 900,000 and will be further reduced (by circa 20%) relating to immediate removal of budgeted rig demobilization costs once a third party continuing operator (expected in the Northern Territory in mid-May 2012) is confirmed in due course by ADS.
Under the terms of this executed contract, OBL has successfully negotiated the following exclusive arrangements with ADS for the provision of two drilling slot Options for the use of ADS Drilling Rigs in the Canning Basin during the 2HY2012.
- Options will be either for ADS Rig 2 or ADS Rig 6.
- Options will be entirely at OBL's sole discretion and ADS will be formally notified as follows:
a) Option 1 may be exercised by OBL (in writing or email) within fourteen (14) days after the completion rig-release date of the Backreef-1 cased-hole production test.
b) Option 2, may be exercised by OBL (in writing or email) within thirty (30) days after the completion rig-release date of the Backreef-1 cased-hole production test.
c) Specifically, ADS agrees to offer a Drilling Rig to OBL to arrive onsite in the Backreef Area no later than 30 September 2012.
OBL is delighted with these firm rig contract arrangements and given the scarcity of drilling rigs in WA, is pleased to:
- Secure an appropriate sized rig from ADS to conduct the Backreef-1 Cased Hole Production Test in a cost effective manner in May 2012.
- Secure Options for appropriate petroleum rig equipment to conduct either:
a) An Extended Production Test at Backreef-1 (specifically after the one-off 90 day 30% Buru Energy Limited Back-in Option period has expired, should the cased hole production test be successful in delineating a Discovery at the Backreef Oil Pool in accordance with SPE PRMS guidelines); and/or
b) Complete a second well at East Blina-1 by 31 October 2012.
The Company will now contract the necessary production separator, well test, wireline services support equipment and contract personnel to conduct the well test program.
Further information and updates of the timing of Backreef-1 cased production hole test will be advised to the ASX at an appropriate time once all work program information has been lodged with stakeholders.