In case you didn't get the ann from the company site.....
Here it is.
OIL BASINS LIMITED(OBL)
March 2012 Quarterly - Moving forward, and de-risking! DIRECTORS
Kim W McGrath, Executive Chairman
Neil F Doyle, Director and CEO
Nigel Harvey, Non-Executive Director MARKET DATA
ASX Code: OBL, OBLO, OBLOA Current Price $0.069 52 week Share Price Range: $0.02 - $0.09 Market Capitalisation: $31.3 million CAPITAL STRUCTURE
Shares on Issue: 453.3 million KEY POINTS
Oil Basins Limited (OBL) released its March quarterly report, highlighting that is has executed a farm-out deal with Greek Rock Energy (GRK.ASX) whereby GRK will pay an initial non-refundable $1.1 million by 30 April, for a 5% stake in the Backreef Area, and then it may elect to acquire a further 15% direct stake in the Backreef Area by paying $2.5m to OBL. Over the past 3-months, the company has:
? Raised additional capital to fund the testing of the oil shows at the Backreef-1 well;
? Executed a farm-out of up to 20% of the Backreef Area, which puts a market value on this asset;
Listed Options; @1.5c; 30/6/12 56.9 million
? Secured a drilling rig (Australian Drilling
Services: ADS Rig #2) for the production test of Listed Options; @4c; 30/6/14 69.0 million MAJOR SHAREHOLDERS
Management 4.7% SENIOR ANALYST
Simon Oaten
(03) 9607 1371
April 2012
the Backreef-1 well by May, and possibly for a 2-well program commencing around September 2012;
? Commenced additional technical studies for its
100% owned Cyrano field.
Gordon Capital Pty Ltd Page 1 of 7 Investment Proposition
OBL is now demonstrating the value of its exploration plays, and now has minimal downside with its Backreef Area asset. The Backreef Area could be worth multiples of the current share price, in the event of success. OBL is clearly leveraged to news flow on flow-testing of the Backreef-1 well, which is expected to occur on or before 1 May 2012. Importantly, note that two separate zones may be tested. The CSM / USG potential of the Canning Basin is high, with known high quality source rocks. OBL has two permits that have significant USG / CSG potential. OBL's March quarterly report showed cash of $2.6m, excluding the minimum $1.7m payment from GRK, hence OBL is funded for its 2012 program. We estimate a "fair and reasonable" value for the company's assets of around 7cps "risked", with a high-side case of 12cps "risked". Backreef Area Update
OBL is now demonstrating the value of its exploration portfolio via:
? Sale or farm-out of prospective oil resource plays;
? Enhancing the prospective CSG / shale gas plays;
? Looking to add value to Cyrano via demonstration of additional recoverable resources. The farm-out deal with Green Rock Energy does two things for OBL:
1. Fully funds the production test ($700k estimate); 2. Puts a firm market price on the Backreef Area acreage (minimum $18m in total). The deal is as follows: GRK will make a non-refundable payment of $1.1 million to OBL (with an additional $625k for a 5% stake due by 30th April 2012). GRK can then elect to exercise an option to either a 5% or 20% interest in the Backreef Area by purchasing an OBL subsidiary by paying either $625k for 5%, or $2.5m for 20%, which must be finalised no later than the earlier date of 24 hours prior to the rig-up of ADS Rig #2 onsite at Backreef-1 or 30 April 2012. Note that GRK has raised additional funds to meet the 20% commitment (ASX release 12/4/2012). This implies an indicative market valuation range on 100% of the Backreef Area asset of between $34.5m and $18m. OBL's share of this is between $17.1m (retains 95%) to $27.6m (retains 80%). The wide ranges of values is consistent with the pre-test uncertainties of the Backreef Area. Should GRK move to a 20% stake, it will contribute $2.5 million on future operations (an Extended Production Testing of Backreef-1 and/or the drilling and completion of a second well) by 31 October 2012. Note that GRK does NOT participate in any future payments from Buru Energy, should it elect (within 90 days of declaration of discovery) to back-in to the permit.
Gordon Capital Pty Ltd Page 2 of 7
Source: OBL April 2012 Presentation
Importantly, OBL also announced that two separate zones at Backreef #1 may be tested:
? The first test (Primary Gumhole formation dolomites) - a 4m interval 957m to 961mRT,
? The potential second test (Upper Yellow Drum formation dolomites) - a 22m interval 918m to 940mRT.
Source: OBL April 2012 presentation.
We note that the lower zone is "stratigraphic" which was not included by RPS in its assessment of volumes in the permit. Any success would significantly improve the RPS estimated modest 3% to 6% "geological probability of success" of the seven other mapped leads within the permit (45mm bbl to 117mm bbl in place prospective resources). The East Blina lead would likely become "low risk" while the other leads could be risk assessed around 15-25% POS.
Gordon Capital Pty Ltd Page 3 of 7
In terms of valuation; there are two separate scenario's (successful flow test of Backreef #1, unsuccessful flow test). Given OBL is carried through the testing, we see little downside for OBL.
Gordon Capital estimates
Should the flow test of Backreef #1 prove successful, the "change in POS" of the mapped leads could be worth 2- 5 cps. News flow over the coming months should provide catalysts for value triggers:
? A flow-test at the Backreef-1 well (potential discovery or defined location) by May 2012, which could open up a significant new play type, with substantial volumes mapped leads.
? The small Cyrano Oil Field could be commercially viable, if development costs can be reduced to around
$65m or below, and/or gross recoverable volumes exceed circa 3 MM bbl's. OBL has engaged 3DGeo to look at the implications of oil at the Lindsay-1 well, and the potential for up-dip accumulations, and also the extension of the Nasutus field into the R3/R1 permit.
? The CSG and USG gas potential within the Canning Basin is likely to be very large, and it may eventually provide back-up/ ramp-up raw gas supply for nearby LNG exports (from James Price Point).
Further farm-out deals could add substantial value for shareholders. OBL is leveraged to the flow testing of the Backreef #1 well.
Gordon Capital Pty Ltd Page 4 of 7 Background
OBL is an E&P exploration and development company, which, since relisting on the ASX on 23 August 2006, has expanded its portfolio (with modest capital outlays), from an initial farm-in focussed on the Gippsland Basin, to having assets in three proven Basins:
? Offshore Gippsland Basin (Vic P/41: 12.5% rights - 5% direct, 7.5% indirect; Vic P/66 17% direct interest);
? Onshore Canning Basin (WA: Backreef Area 100% beneficial rights; 50% interest in 5/07-8EP);
OBL aims to maximise shareholder value via the identification of highly leveraged exploration farm-in opportunities, acquisition of appraisal (pre-development) opportunities, the acquisition of mature production opportunities, and if appropriate, strategic corporate investments. OBL has developed strategic relationships with "operator to operator" DU-EL Ltd and LNG Limited (an Independent LNG plant developer). OBL is already an approved Operator in W.A (both onshore and off-shore), and as such has the technical expertise to carry out all aspects of hydrocarbon exploration, appraisal and development (well design drilling, completions, and production operations). Its portfolio includes: a discovered oil resource, a potential onshore oil field, 14+ drill-ready prospects in both the Gippsland and Canning Basins, most of which are covered with 3D seismic, with supporting "AVO" signatures. Success in any of these projects, or farm-outs would add substantial value.
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