Fortescue Metals Group's decision to not become involved in gas exploration in the Canning Basin via listed company Oil Basins has enabled Melbourne-based explorer Octanex to get a foot in the door.
Fortescue announced last year it was in discussions with Oil Basins about becoming a major shareholder in the company; negotiations were taking place for Fortescue to pay $4.2 million for an 18 per cent shareholding in the company.
The agreement would also have given FMG the option to gain a 25 per cent interest in Oil Basins’ petroleum exploration permit 507/8-EP, otherwise known as the Derby Block.
However Fortescue pulled out of negotiations earlier this month.
Oil Basins has now announced a deal with fellow Melbourne-based explorer Octanex for it to take the 25 per cent interest in the permit for the same price of $1.75 million.
“Octanex considers that the Derby Block is potentially prospective for unconventional oil and gas from shales as well as from coal seams,” the company said in a statement.
“Octanex believes that there are only a number of onshore basins in Australia with considerable potential for unconventional shale oil and gas accumulations.
“It is Octanex’s view that the Canning Basin holds out the promise of being one of the best of such possibilities.”
Following the completion of negotiations Oil Basins and Octanex will both hold a 25 per cent stake in the permit, with Buru Energy taking the remaining 50 per cent ownership.
Oil Basins also announced today it would raise $625,000 through a strategic share placement to sophisticated and corporate investors priced at 3.5 cents a share.
Following the placement Octanex will hold a three per cent shareholding in Oil Basins.
