The junior stepped up to the plate after the previous buyers, Ilyas Chaudhary's ACL International and Brett Mattes' Lamara Energy, terminated a sales process in August after regulatory delays.

BassOil managing director Tino Guglielmo told Energy News the transaction was not a last minute deal to "help out a mate", but was about giving the company its first ever production and giving it a chance to tap its brownfield development skills.

"This is a deal we had been interested in for over a year in its various machinations. In fact, it was mooted before I joined the board in early 2016," he said.

Cooper initially went with other buyers because they were offering cash, but when that deal collapsed, Bass Oil circled back around.

"They really like the asset, but it doesn't belong in the portfolio, so Cooper is leveraging off the fact that they have a significant shareholding in us, and we can take the distraction away from them, manage this and grow it to the potential we all know it has, and they can reap the reward indirectly," Guglielmo said.

He said the company could use its new position in Indonesia to look at executing additional low-cost acquisitions within the region, with a number of bolt-on opportunities in Indonesia and multiple low-cost and low-risk development opportunities within the Tangai and Bunian oil fields.

"Acquiring the KSO represents a significant milestone for the company and is the result of an extensive search for a cornerstone project which will form a solid platform for future regional growth," Guglielmo said.

In terms of expanding BassOil, Guglielmo said he wants to focus on brownfields and brownfield remediation, and build up the company while the market is still depressed.

Exploration opportunities aren't of immediate interest, because the company needs to build up to making drilling commitments.

Terms

In return for issuing 180 million shares at 0.15 cents, worth $270,000, and paying up-front cash of $500,000 BassOil will gain production of around 250 barrels of oil per day for its 55% stake

Cooper, which will increase its interest in Bass Oil from 13.5% to 24.09%, will also be in line to receive a further $2.27 million in cash 12 months from completion, plus additional payments made up of existing receivables as they fall due, valued at $2.7 million.

Completion of the $5.7 million deal is expected within three months, only slightly less in aggregate than the $5.9 million in cash it stood to gain from the earlier deal.

Guglielmo does not expect any regulatory issues, and said the assets should pay for themselves from free cash flow, meaning the company shouldn't need to raise any new capital.

"The first few months of production will be about optimisation, and getting into a bit of a groove," he said.

"We will be banking the money, and there aren't any large capital commitments, so we will optimise the cash flow, and then we will start building a capital program."

Development

The KSO has the potential to produce a gross 2000bopd with upgrading of processing and transportation facilities.

"There is a team in place now that is focused on making sure that all of the cost recovery items and all of the stuff that is important in a KSO is done, and they are doing a bunch of production optimisation, including some artificial lift trials," Guglielmo said.

He compared the KSO's fields to the Worrior field that underpinned his former company, Stuart Petroleum, in terms of robust reserves and upside.

At June 2015 the KSO had 2P reserves of 3.1MMbbl, with cash costs of $35/bbl.

It had been producing at a gross 800bopd earlier in the year, and it has been declining since.

When Cooper entered the Tangai and Bunian oil fields in 2010 production was just 60bopd from a single Bunian well.

The field is now running about 450bopd (gross).

Gippsland Basin

Guglielmo confirmed the company was considering "a very small tweak" to the company's name to recognise its change of directions, although he remains committed to doing "something" with the remaining Gippsland Basin permit.

Cooper is now heavily focused on its namesake basin and its opportunities in Bass Strait, such as the development in the Sole and Manta fields, and while Bass Oil retains some optionality in leases nearby, it has found it difficult to attract farminees for drilling.

Having recently handed back the riskier VIC/P41, BassOil's sole remaining asset is VIC/P68, which sits between the Sole and Manta fields and contains the small Leatherjacket oil discovery.

"We think it has some really good potential, and I really like the Leatherback oil discovery, but the question is if it is better off in our hands or in someone else's," he said.

"I think the work that our geoscientists have done on the intra-Emperor plays is really interesting, and when the market turns people will look at this permit, and that's why I am loathe to part with it."

A well would be due in VIC/P68 in 2017 or 2018.