Oil Basins Limited (ASX:OBL) Independent Expert Report Delineates Significant Coal Seam Gas & Unconventional Shale Gas Potential Of Exploration Permit 5/07-8 EP And The Backreef Area In Canning Basin

Melbourne, July 8, 2010 AEST (ABN Newswire) - Oil Basins Limited (ASX:OBL) recently commissioned an independent assessment of the coal seam gas (CSG) and unconventional shale gas (USG) potential of both Exploration Permit 5/07-8 EP and the Backreef Area - Canning Basin, where the Company has interests as follows:

- Exploration Permit 5/07-8EP - (OBL rights on issuance to be 50%)

- Backreef Area - containing the Backreef Prospect (OBL net beneficial rights 90%)

Refer to the attached Independent Expert Report (see link at the bottom) by Consulting Geologist, Roger Meaney and the overall context in which this expert assessment has been made. In particular, investors are alerted to the following information:

- Prospective Resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscoverd accumulations. Investors should not infer that because "prospective resources" are referred to that oil and gas necessarily exist within the prospects. An equally valid outcome in relation to each of the Company's prospects is that no oil or gas will be discovered.

- Section 15.0 Risks contained within the attached report. As CSG Operator Designate for Exploration Permit 5/07-8EP, OBL believes this positive independent geological assessment of CSG prospectivity in the Company's permits is both significant and represents strategic value to OBL shareholders. OBL understands that the Report is a first such comprehensive study in the Canning Basin and is based upon the earlier Coal Measures Assessment report announced previously to the ASX on 1 June 2010.

The Independent Expert Report also for the first time delineates the previously unheralded USG prospective potential of both of these exploration areas, but especially the significant potential of the Noonkanbah Formation near Derby in Exploration Permit 5/07-8EP where a rich total organic content (TOC) >9% is evident from a prior vintage petroleum well (Booran-1) laboratory analysis.

Key findings of the attached Independent Expert Report are as follows:

1. New work by the Company, which has been confirmed by this Report, has identified substantial potential for the presence of, and the potential to, develop non-conventional hydrocarbons in the Company's Canning Basin tenements - Exploration Permit 5/07-8 EP and the Backreef Area.

2. Oil Basins' Canning Basin acreage is known to contain extensive Permian coal measures (Lightjacket coal measures within the Liveringa Formation) and carbonaceous shales, correlatives of which are known to have sourced the gas and oil accumulations in the Cooper Basin of central Australia and Bowen Basin of eastern Australia.

3. If the coals of the Liveringa Formation are like all the Permian aged coals of eastern and central Australia they should be good CSG targets as they are expected to be volatile and 'gassy'. Similar low cost east coast CSG development technologies may be applicable to Canning Basin coals.

4. The Permian aged coals of the Canning Basin are thought to have considerable potential for coal bed methane drainage. These source beds, of the Lightjack Formation of the Liveringa Group, are thought to contain Type 2 or oil prone macerals, as confirmed by geochemical analyses of samples from oil wells, and could also have sourced conventional hydrocarbon accumulations.

5. The estimated Lightjacket Formation 'in-situ coal volumes' are substantial:-

i. High Estimate 118.2 Billion tonnes

ii. Best Estimate 80.2 Billion tonnes

iii. Low Estimate 50.6 Billion tonnes

6. The estimated total gross estimated recoverable prospective CSG hydrocarbon resource in the 'maximum' (high), 'mean' (best) and 'minimum' (low) deterministic cases are:-

i. Maximum case 10.0 TCF

ii. Mean case 6.8 TCF

iii. Minimum case 4.3 TCF

6. The Permian aged shales of the basal Noonkanbah Formation appear to be candidates for fracturing and the production of shale gas, given their tight organic rich intervals. 'Wet', or condensate rich, headspace gas has been recorded from samples of this unit. The richness of this unit (within Exploration Permit 5/07-8 EP) has been confirmed by laboratory analyses of the vintage 1982 well Booran-1 (some 3.5 km south of Derby) - this evident wet trend of abnormally high TOCs >9% is evident with the assessment of West Kora-1 some 15km north east.

7. The estimated gross potential unrisked shale gas in place (GIP) resource determinations:-

i. Maximum case 527.5 TCF

ii. Mean case 263.8 TCF

iii. Minimum case 106.5 TCF

While no estimate of gross recoverable prospective resources is completely definitive at this very early stage of exploration assessment, the sheer size of this potential new USG play is significant (magnitude of the above USG GIP figures are more than comparable to those previously reported by other 'more remote to existing infrastructure' Canning Basin permit holders). The application of newly proven modern gas extraction techniques, with long-reach horizontal multi-lateral well drilling technologies and multiple-fraccing technologies (as used in the seven North American marine basins extracting USG), are worthy of further exploration assessment in both EP5/07-8 and the Backreef Area.

8. Should large enough volumes of gas, either of a CSG or USG shale genesis, be proven up then Oil Basins and its JV partner Backreef Oil would consider plans for the establishment of domestic gas supply for the local region or to the significant mineral operations in the Pilbara, and/or the establishment of either CSG or USG sourced liquified natural gas (LNG) plant feedstock supply to the proposed Kimberley LNG Hub at James Price Point and/or potentially the development of a large scale gas to liquids (GTL) synthesis plant situated near Derby.

In conclusion, the Company is very pleased with the independent assessment and conclusions of this Independent Expert Report which demonstates the potential of significant prospective potential in both CSG and USG and believes that it will greatly assist the attractiveness of its ongoing farmout efforts.

For the complete Oil Basins Limited independent expert report, please refer to the following link:

http://www.abnnewswire.net/media/en/docs/63256-ASX-OBL-338597.pdf

Contact

Neil F. Doyle SPE Director Tel: +61-3-9692-7222 Fax: +61-3-9529-8057