A commercial oil play has not been discovered in the Otway Basin for 139 years – the most recent failed attempt being this week’s Cowrie-1, also held in part by Essential.

But Bass Strait Oil said it was confident about Pritchard-1’s chance of success.

“With these arrangements, [the company] will secure a significant interest in what we believe to be an emerging onshore oil play, as well as options to allow an increased exposure to the play in the event of success,” the junior said this morning.

In addition to the 25% interest in PEP 151, the farm-in agreement includes an option for the company to earn a 15% interest in neighbouring PEP 150, containing the Lindon-2 oil discovery. Bass Strait Oil may also earn an option to take up a further 25% interest in PEP 151.

CEO Andrew Adams said the company had interpreted a potential oil fairway in the Portland Trough area of the Otway Basin, at the relatively shallow Pebble Point/Timboon sandstone level.

“This level contains younger and shallower reservoirs than the targets in many existing Otway Basin wells, which have tended to be gas-prone,” Adams said.

“A number of prospects and leads have been identified in PEP 150 and PEP 151 at these shallower reservoir targets.”

Adams said the Pritchard-1 well in PEP 151 was a good test of the concept for two key reasons.

Firstly, it is a predominantly anticlinal closure - as opposed to the more common fault dependent closures in the basin – and secondly, it was ‘up-dip’ from fluorescence shows encountered in the adjacent Henke-1 well.

By acquiring a prescence in the onshore Otway Basin, Bass Strait Oil was diversifying from its existing offshore Gippsland Basin acreage, according to Adams.

“Bass Strait Oil believes that the Portland Trough oil play is an excellent complement to its Gippsland acreage and that it will bring new, relatively low-cost, opportunities and increased near-term activity, while at the same time maintaining the company’s regional focus,” he said.

The company will use its existing cash reserves to fund its contribution to the Pritchard-1 exploration well. Bass Strait Oil said a discovery would highlight a series of follow up targets within this oil fairway.

The Lindon wells in PEP 150 were drilled in 1983 and 1991 and encountered oil pay in the Pebble Point Formation, with Lindon-2 also recovering oil samples with an API gravity of 29 degrees.

Henke-1, drilled in 1987, recovered oil shows and samples, but failed to intersect a valid structural closure. The company said this was due to poor, sparse seismic data.