Oil Basins Limited (ASX:OBL) Updates On Canning Basin Backreef-1 Drilling Operations No.1

Melbourne, Oct 11, 2010 AEST (ABN Newswire) - Oil Basins Limited (ASX:OBL) are pleased to make the following ASX announcement relating to the imminent commencement of drilling operations at Backreef-1, Backreef Area Canning Basin, onshore Western Australia (WA):

1. On 8 October 2010, the Company as Designated Operator, obtained formal approval from the WA Department of Mines and Petroleum (DMP) to commence drilling operations at Backreef-1 using the Hunt Energy and Mineral Co. Rig 3 (Hunt Energy Rig 3).

2. As at 12:00am WST 11 October 2010, the Hunt Energy Rig 3 was at an advanced stage of rig-up onsite and the Backreef-1 well is expected to spud sometime during 12 October 2010.

3. The Backreef-1 proposed drilling and evaluation operations as approved by the DMP and the prognosed Backreef-1 time versus depth curve using the Hunt Energy Rig 3 are presented in Figures 2 and 3 (see link at the bottom of the release).

4. In brief, the well will be drilled with a 311mm (12-1/4 inch) diameter hole to 650m RRT at which point 244 mm (9-5/8 inch) diameter casing will be run and cemented to surface. After connecting and testing the Blow-out Preventors and testing the formation, the well will be drilled with a 216 mm (8-1/2 inch) diameter hole to a prognosed total depth (TD) of 1,600m. At which point the well will be evaluated for hydrocarbons and either deepened, logged and abandoned or completed as a discovery with a 178mm (7 inch) diameter production liner.

5. The primary target in Backreef-1 is Devonian-aged sands in the Clanmeyer Formation deposited in a debris flow off the reef edge southwest of Harold-1. Based on acoustic impedance characteristics, these sands are interpreted to have preserved porosity. The section is likely to be self-sourcing and sealed by shales of the Clanmeyer Formation. The interpreted prospective section is centred on 1,500m. Although no coring is now planned during the drilling operations in either the shallow coal measures or the prognosed deeper shales, the production hole formations will be extensively logged (Quad Log i.e. - Dual Laterolog - MSFL - Density-Neutron-Sonic-Caliper - Gamma Ray) and, if warranted, comprehensive wireline formation pressure testing and sampling will be undertaken (Formation Pressure Tester - Pump Out-Fluid Analyser - PVT Sample Chambers). Refer to the comprehensive OBL ASX Announcement dated 6 September, 2010 for more information.

6. OBL is earning 90% of the Backreef Area by funding 100% of the drilling costs of Backreef-1. The OBL Farm-in is subject to a number of conditions by the titleholder - notably the well must attain a minimum depth of 1,500m by 31 October 2010 and the titleholder has 90 days to elect to exercise its once-off backin right to 30% by reimbursing OBL 90% of the well costs. Due mostly to higher mobilisation/demobilisation costs associated with using the Hunt Energy

Rig 3 and higher service company costs, the Backreef-1 well cost is now estimated at circa A$2.9 million (dry hole basis) and circa A$3.3 million (successful basis) based upon 15 days overall to drill and complete.

In accordance with ASX Listing Rules, during the conduct of Backreef-1 drilling operations, OBL will advise the market weekly (on Thursday's), or after concluding an important well drilling operation and/or obtaining an important assessment or result.

Designated Operator: Oil Basins Limited - earning 90% (by funding 100%)

Following the completion of the Backreef-1 well, the ownership interests in Backreef Area will be as follows:

Oil Basins Limited (ASX code OBL) (or Nominee) (Notes 1, 2 , 4): 60% (Designated Operator)

OBL Backreef No.5 Pty Ltd (Notes 1 & 2): 5%

OBL Backreef No.10 Pty Ltd (Notes 1 & 2): 10%

Canning Basin Oil Limited (Notes 1 & 2): 15%

Backreef Oil Pty Limited ("Backreef") (Notes 1, 2, 4): 10% (Contract Well Operator Titleholder Note 3 Nil% (holds back-in rights 30%)

Note 1: Columbus Energy Ltd (CVE:CEL) (PINK:CELYF) owns a 2% ORRI payable by Backreef Area Joint Venture Partners (JVPs)

Note 2: European Gas Limited (ASX:EPG) (PINK:EUPGF) owns a 3% ORRI payable by Backreef Area JVP's and Budside Pty Ltd owns a 1% ORRI over EP129, but excluding L6 & L8 - these royalties are payable by Backreef Area JVP's.

Note 3: EP129 and L6 Titleholder is Buru Energy Limited ( ASX:BRU) ( PINK:BRNGF) and holds one-off back-in rights for 30% by paying OBL 90% of well costs within 90 days of drilling Backreef-1.

Note 4: OBL is carrying Backreef Oil Pty Limiited as to 10% thereby increasing its Group holding to 90%

The Backreef Area comprises EP 129 Remainder (R)2 (part thereof), R3 & Licence (L)6, (part there-of).

Summary of Assessed Prospectivity

Permit: Backreef Area (EP 129 R2&R3 and L6)

Earning Interest: 90% OBL Group - Beneficial Rights

Gross Target Size: 270 MMbbl (median case for oil)

Gross Target Size: 500 BCF (median case for gas)

Total Depth: 1,500 metres (Proposed)

Seismic Grid: Sparse - 2 lines reprocessed with PSTM and PSDM and seismic inversion

Nearest Oilfield: Blina - approximately 4.5 km due west

Prospect Style: Stratigraphic Trap - submarine clastic (sandstone) fan play

For the complete Oil Basins Limited announcement including figures and tables, please refer to the following link:

http://www.abnnewswire.net/media/en/docs/63915-ASX-OBL-343405.pdf

Contact

Neil Doyle Director Oil Basins Limited Tel: +61-414-912-901 Email: n.doyle@oilbasins.com.au