REY RESOURCES subsidiary Rey Lennard Shelf (RLS) has commenced legal proceedings against Oil Basins in the Supreme Court of Western Australia, Rey announced on 12 February.

Rey is seeking orders that Oil Basins resigns as the operator of EP 487, to be replaced in the role by RLS.

This is in accordance with the terms of the joint operating agreement between Rey, RLS and Oil Basins, Rey said.

Following Rey’s statement, Oil Basins confirmed it had been served with a summons and would “solidly defend” its position.

Oil Basins said it believes RLS is not qualified to be operator.

Therefore, Oil Basins said it is required to be operator due to the terms of the grant of petroleum exploration permit EP 487 and in compliance by the joint venture.

This is in line with various regulatory prescriptions and the WA Department of Mines and Petroleum (DMP) guidelines, according to the company.

“It is intended that the legal proceedings, which could take some time to be heard, will be solidly defended,” Oil Basins said.

On 11 February, Oil Basins received a payment of about $154,000 from joint venture partner RLS in order to complete cash calls for the year one work program, which has since been completed.

Oil Basins confirmed it has not resigned as operator of EP 487 and is continuing to prepare for implementing the recently awarded year two work program variation, which is to drill two deep wells in EP 487.

Oil Basins said the wells will focus on the Laurel formation unconventional basin centred gas and condensate prospects characterised by low permeability reservoirs.

In compliance with the terms of grant, the proposed year two plan will be presented to the DMP within two months of the end of year one.

The year two plan and budget are awaiting approval by the joint venture.

Oil Basins said it takes its obligations under the grant seriously and has recently taken steps to seek early appointments of an experienced Perth based operations manager and a health, safety and environment manager.

These managers, who have both previously worked with the company, will join Oil Basins’ existing Perth based environmental manager and Melbourne based exploration manager to assist in the preparation of all environmental management, safety management and drilling management systems.

This is as per the requirements of the DMP 2015 guidelines and grant.

In support of the variation application, in the fourth quarter or 2015, Oil Basins reprocessed more than 140 line kilometres of vintage 2D and integrated more modern 2D and 3D regional seismic and a suite of public available information on nearby basin centred gas discoveries.

Oil Basins said it has completed mapping and reported that the independent assessment of overall gross prospective potential recoverable P50 resources down to 5,000 metres within the onshore eastern portion of the Derby block is now 28.7 trillion cubic feet with 717.7 million barrels of associated condensate, in accordance with SPE PRMS (2011).

This preliminary assessment was conducted prior to the recent public announced production testing results at nearby Valhalla North 1 and Asgard 1, the company said.

When the full results are announced, Oil Basins said it will prepare a further independent assessment, revised for the impact of these fracking results, on the overall gross prospective potential recoverable P50 resources down to 5,000 metres.