OIL BASINS and Rey Resources have signalled a new dispute on their EP487 (Derby block) acreage with a public disagreement on Rey’s entitlement to become operator from 1 January 2016.
Rey Resources and subsidiary Rey Lennard Shelf (RLS) did not meet preconditions and legal requirements to become operator of the permit, Oil Basins told the Australian Securities Exchange in mid-January, citing the permit grant, government guidelines and the companies’ joint operating agreement (JOA).
Oil Basins also said both Rey and RLS were in default under the JOA with respect to payment of outstanding cash calls for work completed between 1 June 2015 and 31 December 2015.
Rey refuted both the allegations of being unable to meet operator requirements or of being in default under the JOA, adding that it planned to take action in response.
Under the deed of settlement, Rey was due to become operator of the permit on 1 January 2016 as Oil Basins had failed to find a farm-in partner for the block.
In the meantime, Oil Basins said it had started planning and costing for new environmental and groundwater monitoring approvals, including drilling and production testing and the drilling of bores and environmental management systems.
Its application for a variation to its permit is still before the Western Australian Department of Mines and Petroleum, but if granted joint venture would move immediately onto drilling at least two wells in 2016, Oil Basins said.
An assessment completed by an independent expert and released in mid-January indicated a 31.6 per cent increase in gross potential prospective recoverable P50 resources on the permit.
It put gross P50 reserves at about 28.7 trillion cubic feet (Tcf) of gas and 717.7 million barrels (MMBBL) of condensate, Oil Basins said.