Green Rock Energy (ASX: GRK) is now fully funded to acquire up to a 20% interest in Oil Basin's (ASX: OBL) Backreef Area oil play in the onshore Canning Basin after securing A$3.22 million in funding.
The company had earlier this month signed a deal to acquire between 5% and 20% of the Backreef Area, where the Backreef-1 oil discovery is expected to be production tested in early May.
Backreef-1 was drilled in October 2010 and intersected estimated net oil pay of between 12 metres and 39.2 metres.
Oil Basins had said previously that a modestly successful testing would value the Backreef Oil Pool at between A$1.8 million and A$5 million risked to itself.
It would also lead to a large reduction in risk for other mapped leads in the area that hold in-place oil of 48 million to 117 million barrels of oil.
The joint venture will also have options to follow up on the discovery by using the 2 drilling slot options included in the testing contract with Australian Drilling Services.
These additional wells will be drilled either by the ADS Rig 2 that will be mobilised from the Utopia oil field in central Queensland to carry out the Backreef testing on or prior to May 1 or the ADS Rig 6.
Green Rock said Cygnet Capital had received firm commitments from sophisticated investors for at least A$3.22 million.
This will be carried out in 2 parts, a A$1.422 million placement of 158 million shares priced at A$0.009 each and the issue of converting loans for at least A$1.8 million that convert into shares at the lesser of either A$0.009 each or the volume-weighted average price for 7 days leading up to and including the planned shareholders’ meeting at which approval for conversion will also be sought.
Green Rock will pay A$1.1 million as upfront option payment to Oil Basins.
This gives the company the option to take a 5% interest in the Backreef Area by paying an additional A$625,000 or a 20% stake by paying A$2.5 million for future operations.
Oil Basins will retain 80% of the Backreef Area and 100% of any benefits from a potential Buru Energy (ASX: BRU) back-in.