report card

OBL advised market on 15 January that the NT of Derby Block will be awarded by end of month and non-binding FMG deal terminated on unacceptable terms.

· On 24 January OBL advised Octanex transaction had been executed whereby OXX subscribes for $525,000 Placement at 3.5 cps and attaching 1 for 1 OBLOB option OBL divests 25% Derby Block and $1.75m cash receives will fully fund OBL’s residual 25% interest for more than a year

· Late on Friday 1 February OBL were advised that our unfunded partner Backreef Oil P/L (Backreef) & OBL were Awarded the Derby Block by the NNT.

· Market advised pre-open Monday 4 February of award – there is a mandatory 30 day appeal period.

· On Wednesday 6 February advised market that it had offered Backreef as it is required (for 18 months after Award) under the binding terms of the executed MOUs to offer 50% of the Octanex deal (on identical $ per % point terms as set by Buru back in September 2012) – understand MOU’s also cover a backcost payment from Backreef to OBL will be repaid prior costs of the USG technical assessment.

· In addition, OBL is seeking immediate payment of 50% NT legal costs from Backreef

· If successful - OBL will move to 37.5% and will effectively have an option over the Backreef residual 37.5% stake (funding is unlikely to be a problemas OBL has garnered considerable interest in the permit’s USG/USO propsectivity)

· If unsuccessful - OBL holds 25% (funded to mid-2014) with an alliance partner Octanex and Buru/Mitsubishi each owning 25% - OBL will very likely be operator.

· Buru have been contacted (as expected), ball is in entirely their court possibly may now reconsider their interest in the Derby Block as they may not attain more than 37.5% with OBL intent upon exercising its binding paid for rights.



Derby Block attributes released to the market on 15 February with recoverable resources assessed using PRMS.



· P90: 4.8 TCF +117 MMbbl’s

· P50: 19 TCF + 461 MMbbl’s

· P10: 69 TCF + 1785 MMbbl’s



With Buru’s recent announcements on 8 February, this highlights that the Laurel Formation is a major gas and liquids bearing shale, with very large scale resource potential within Derby Block.



· Impressive gross recoverable P90/P50 numbers 4.8/19 TCF plus circa 461 MMbbls oil (down to 4000m depth)

· Massive additional upside - additional gross recoverable 50 TCF plus extra 1.324 billion barrels oil P10 (4000m to 5000m depth)

· Rigs of this depth capacity (16,400 feet) pretty common in the US (where upto 1 mile horizontals are then drilled) but no rigs of this capacity in Australia at present – so potential upside is significant and very large (even at 25%).

· As required under the MOUs these impressive figures were released to fully inform all stakeholders

· Formal Grant expected approx 1st week of March.

· Most likely the day OBL presents at the 2013 Excellence in Oil & Gas Conference in Sydney on 5 March (expect roadshows thereafter after this event).



OBL has delivered and has capped the downside but has well-positioned itself within its prior engineered commercial agreements to attain considerable upside.