Rey funded legal defences by one of the block's original applicants, Backreef Oil, which had fallen out with Oil Basins.

The junior now owns a half share of the 5000 square kilometre block, which was first granted in 2012.

EP 487 is north of Rey's existing interests in EP 457 and EP 458 where two wells could be drilled this year. Victory-1 will target a large 2D-defined Ungani Dolomite structure, while Senagi-1 could be drilled to offset a well-developed Ungani Dolomite reservoir equivalent where there are significant oil shows in the Camelgooda-1 mineral borehole.

"The acquisition of a 50% interest in the Derby Block extends the company's footprint into acreage we consider prospective for both conventional and unconventional hydrocarbons," Rey managing director Kevin Wilson said.

"The Derby Block also has some of the best existing access infrastructure in the region, enabling relatively straightforward mobilisation activities."

Rey earned its interest in the block by agreeing to meet all of Backreef's commitments, with $2 million to be paid on grant of a production licence or, at Rey's election, a 2% royalty on future production.

Rey also settled around $391,000 in outstanding claims on Backreef by Oil Basins in connection with past expenses incurred over the block and by granting Oil Basins a 0.5% net royalty over future production, or 1% over the whole JV area.

Rey expects to take over as operator of the block next year, although for the next few months Oil Basins will attempt to find a farminee that can carry the juniors for the first two years of work commitments in return for a 50% interest.

Oil Basins has the option of continuing on as operator if it introduces a farminee before December 31.

The junior is also progressing the acquisition of seismic to meet the permit work commitments for 500 kilometres of 2D at a cost of $4 million, expected to be conducted by year's end.

The farminee would ideally fund the seismic and two wells into the Laurel Formation shale formation on a two-for-one promote.

Oil Basins has estimated that the Laurel Formation play has the potential for a gross 18.7 trillion cubic feet (P50) in the Derby Block down to a depth of 4000m.

Testing of Rey's Dunnart-2 shallow oil well in the Perth Basin is also expected to begin this week.