Rey Resources Ltd is continuing to seek a farm-in partner for Exploration Permit EP 487 (Derby Block), located in the Fitzroy Graben, onshore Canning Basin. The opportunity was revised after a deal with Doriemus Plc was cancelled in August 2019. Rey aims to bring in a partner to assess the potential of the Wet Laurel Basin Centered Gas play which is considered regionally extensive across the Canning Basin.  Ideally, Rey is seeking a partner to acquire a partner for up to 50% equity in return for contributing to the current work programme term and/or providing working capital to Rey. The terms of the farm-in are negotiable with operatorship options considered.  The Laurel siltstones of the basin centred gas (BCG) play have been proven by Buru at both Valhalla and Asgard (now held by Mitsubishi). The extension of the play in the basin has been estimated by Buru to contain around 13 Tcf gas and up to 24 Tcf, inclusive of the EP 487 area. Rey has reported that a conventional play in the mid-Laurel has been interpreted from seismic data. The play is estimated to contain up to 4 Tcf of wet gas (~ 120 MMb liquids) which could flow without stimulation. Total potential recoverable resources for the entire permit area was estimated by 3D-GEO in January 2016 as 24.6 Tcf gas, plus 612 MMb condensate (P50).  In the case that the first commitment well targets the conventional potential of the permit, a vertical well could be drilled plus a horizontal section (second well) to test the reservoir. In the case that the reservoir is too tight to flow conventionally at commercial rates, stimulation will be considered. If the wellâs flow is good, the second well would be an appraisal and replace the horizontal component.  Rey's deal with Doriemus was first entered into on 28 March 2019 for Doriemus to acquire 50% interest and operatorship in return for drilling a well within 12 months of the farm-in being completed. Doriemus was to engage an independent consultant to reassess the volumetrics of the Butler Prospect and look at drill options to test the play down to around 4,000 m, in Q3 2019. Doriemus had a 60-day due diligence period before entering into a joint operating agreement. After 12 months, and completion of agreed deal terms, Doriemus would be assigned 50% interest in EP 487. However, the deal was cancelled in August 2019 after Doriemus was unable to supply proof of funding for the ability to drill an exploration well by 31 July 2019 which was part of the deal conditions set.  On 13 November 2019 approvals were received to suspend, extend and change the work programme for EP 487. The suspension relates to term-two for a period of 12-months, from 14 December 2019 to 13 December 2020 and has a knock-on effect for all subsequent terms and the permit's end date, which is now 13 December 2024. Rey is also now exempt from drilling one AUD 3 million exploration well in term-three, which was scheduled in 2020/21. Term-two commenced in 2015 and has been under suspension since 2016. After completing AUD 1 million of 2D seismic reprocessing in term-one, a zero-dollar value has been assigned to the subsequent studies. However, one exploration well is due by December 2020 which is expected to cost around AUD 12.5 million.  Conducting work within the permit area has been, at times, difficult. During 2015, a planned 500 km of 2D seismic survey was delayed by nine months until after the rainy season and subsequently cancelled. The rainy season in the northern-most part of Western Australia is generally intermittent and is most prominent between November and May. The access to firm, dry pastoral lands is seen as critical during land surveys.   Background  The farm out was first initiated with joint venture partner Oil Basins Ltd (50%). However, the companies entered into an Asset Sale Agreement to transfer Oil Basinâs interest to Rey Resources. The deal completed on 16 June 2017. The transfer provides Rey Resources with 100% interest through its subsidiary companies Rey Derby Block Pty Ltd (50%) and Rey Lennard Shelf Pty Ltd (50%).   Under the terms of the Asset Sale Agreement, Oil Basins will no longer have funding obligations which was agreed to under the joint venture agreement with Rey Resources. This includes existing cash calls made by Rey Resources on Oil Basins for approximately AUD 577,000 and legal fees of around AUD 32,000 from historical disputes.   Rey Resources entered EP 487 in 2014 after Oil Basins announced that it had reached a formal agreement, with Backreef Oil Pty Ltd and Rey Resources. Under the Deed, Oil Basins resolved all previous disputes with former application partner Backreef and established terms for Rey to attain 50% interest in the block, which was subject to regulatory approvals. Once Rey formally entered EP 487, Oil Basins commenced a farm-out of combined 50% interest to fund a minimum of the first two years of the Work Programme.   With the failing of Oil Basins to complete a farm-out by 31 December 2015, Rey was scheduled to take over operatorship. However, Oil Basins claimed that Rey had not met the agreed preconditions and legal requirements to perform as operator of EP 487. On 26 May 2016 Oil Basins was ordered by the Supreme Court of Western Australia to immediately resign as operator of EP 487.   Parties interested in the opportunity were to contact:  Stanley Fu, Project Manager  Tel: +61 2951 9088  Email: stanleyfu@reyresources.com
Rey Resources Ltd is continuing to seek a farm-in partner for Exploration Permit EP 487 (Derby Block), located in the Fitzroy Graben, onshore Canning Basin.