• Summary of Oil & Gas Exploration Interests
• General Information on Australian Offshore Permits
• Background and Details of Permit Interests
• Carnarvon Basin
• Browse Basin
• Gippsland

Moby holds working interests in six Australian petroleum exploration permits situated in the offshore basins of Australia. Three are located in the Carnarvon Basin (WA-359-P, WA-360-P and WA-409-P), one in the Browse Basin (WA-342-P) and two in the Gippsland Basin (Vic/P41 and Vic/P47).

References in this section to Moby are references to Moby Oil & Gas Limited and its wholly-owned subsidiary, Rankin Trend Pty Ltd.

The information provided in relation to each of the permits where Moby holds a working interest covers:

• the Participants in each permit and relevant Joint Venture and their respective interests;
• the background to each permit (including its location and lead and prospect maps where relevant); and
• the remaining work programme obligations for the current term of each permit.

SUMMARY OF OIL AND GAS EXPLORATION INTERESTS

GENERAL INFORMATION ON AUSTRALIAN OFFSHORE PERMITS

Australian petroleum exploration permits are initially issued for six years.  Under the terms of each permit, the exploration work obligations nominated for the first three years must be met.  The permit holder may withdraw from the permit at the end of the third permit year, or at the end of any subsequent permit year, provided all the exploration work obligations up to the date of withdrawal have been met.

An individual permit year may be extended beyond 12 months if circumstances arise where the relevant work obligation for that year cannot be met in time.  In such circumstances, the final expiry date of the permit may also be extended, normally by the same period of time.

Provided all work obligations are carried out during the initial term of a permit, it may be renewed for a further 5-year term upon relinquishment of 50% of the original permit area.  This renewal is again available to the permit holder at the end of the first 5-year renewed permit term, with the same requirement to relinquish 50% of the already reduced area.  Any Retention Lease or Production License that is granted in relation to a discovery within a permit is excluded from the calculation of the relinquishment areas.  Therefore, subject to the prescribed requirements, a permit can have a potential 16-year life, or longer if one or more individual permit years has been extended.

BACKGROUND AND DETAILS OF PERMIT INTERESTS

CARNARVON BASIN INTERESTS

The Company’s Carnarvon Basin permit interests are displayed in the following map.

Carnarvon Basin-Permits Location Map

WA-359-P – CARNARVON BASIN – OFFSHORE WESTERN AUSTRALIA

Background:
Following a farmin, as detailed below, Moby holds a 28.5% interest in WA-359-P and the Operator of the permit and of the Joint Venture is Apache Northwest Pty Ltd (Apache), a subsidiary of Apache Corporation.

The WA-359-P Joint Venture members are:

The permit was granted by the Designated Authority on 1 February 2005 and comprises 15 graticular blocks (approximately 1,212 km² or 299,490 acres) in the Dampier Sub-basin portion of the Carnarvon Basin, offshore Western Australia Maps.

In Q2 2011, Moby entered into a farmin agreement with Exoil Pty Ltd (Exoil) in relation to Exoil’s interest in WA-359-P. The agreement has Moby earning a 95% interest in Exoil’s 30% residual interest in the permit by meeting 100% of Exoil’s costs through to the end of its current term and any renewed term of the permit.

The terms of the farmin to WA-359-P by Moby are subject to the farmin by Apache to the WA-359-P and WA-409-P permits that are detailed below.

During Q4 2010 and prior to Moby’s farming into the WA-359-P permit, Exoil entered into a farmout agreement with a subsidiary of Apache Corporation (“Apache”) under which Apache agreed to fund the acquisition, processing, mapping and interpretation of a 3D seismic survey across the whole of the area of WA-359-P and the adjoining permit, WA-409-P. Apache will earn a 40% equity interest and operatorship in each of WA-359-P and WA-409-P by meeting this commitment, with Moby and Exoil’s interests in WA-359-P reducing to 28.3% and 1.5% respectively.

Apache has a further right to elect to earn additional interests in WA-359-P and WA-409-P by funding up to 100% of the costs of the first well to be drilled in either of the permits. If Apache elects to drill a well in WA-359-P, the Company will be free carried through the costs of the well but will retain a 14.25% carried interest. Moby’s obligation to meet Exoil’s 1.5% share of the costs of the well will also be free carried by Apache and Exoil will retain a 0.75% carried interest.

If Apache drills a well in the adjoining WA-409-P permit, Apache will have completed its right to acquire a 70% interest in each of WA-359-P and WA-409-P, with the Company retaining a 14.5% interest and an obligation to fund its participating interest share (plus the obligation to fund Exoil’s 0.75% participating interest share) of any well the parties subsequently agree to drill within WA-359-P.

Moby and Exoil have collectively retained the right to elect to fund 5% (on a 95% and 5% basis respectively) of the costs of any well drilled by Apache in WA-359-P and, by so doing, to maintain their potential interest in the permit at 19% and 1% respectively.

In furtherance of its farmin obligations, Apache completed a new 3,783 km² 3D seismic survey called Zeebries. The aim of the Zeebries 3D survey is to define several new, potentially drillable, leads and prospects and, as noted above, Moby is free carried through the the acquisition, processing, mapping and interpretation phases of the survey. The Zeebries 3D survey was completed during Q2 2011 and incorporated the entire 1,212 km² area of the WA-359-P permit, plus the entire 566 km² area of the WA-409-P permit and two other adjoining permits Maps.

Work Programme:
The initial 6-year term of the permit expires on 31 January 2012, prior to which the Joint Venture will finalise the form of application to be made to renew the permit for its first 5-year term.

The year 6 work programme obligation, that is being met by Apache as part of its farmin obligations, is to complete the processing, mapping and interpretation of the Zeebries 3D survey acquired in the WA-359-P and adjoining permits.

Zeebries 3D Seismic Survey Location Map

WA-409-P – CARNARVON BASIN – OFFSHORE WESTERN AUSTRALIA

Background:
Moby holds a 30% interest in WA-409-P through its subsidiary, Rankin Trend Pty Ltd (Rankin Trend) and the Operator of the permit and of the Joint Venture is Apache.

The WA-409-P Joint Venture members are:

The permit was granted by the Designated Authority on 30 April 2008 and comprises 7 graticular blocks (approximately 566 km² or 139,860 acres) in the Dampier Sub-basin portion of the Carnarvon Basin, offshore Western Australia Maps.

As detailed at the Background section of the WA-359-P permit above, Moby, through Rankin Trend, entered into a farmout agreement with Apache under which Apache agreed to fund the acquisition, processing, mapping and interpretation of a 3D seismic survey across the whole of the area of WA-409-P (and the adjoining WA-359-P permit). This commitment will earn Apache a 40% equity interest and operatorship in each of WA-409-P and WA-359-P, with Rankin Trend’s interest in WA-409-P reducing to 30%.

Apache has a further right to elect to earn additional interests in WA-409-P and WA-359-P by funding up to 100% of the costs of the first well to be drilled in either of the permits. If Apache elects to drill a well in WA-409-P, Rankin Trend will be free carried through the costs of the well but will retain a 15% carried interest. If Apache drills a well in the adjoining permit, WA-359-P, Apache will have completed its right to acquire a 70% interest in each of WA-409-P and WA-359-P. In this situation, Rankin Trend will retain a 15% interest in the permit and an obligation to fund its participating interest share of any well the parties subsequently agree to drill within WA-409-P.

As with Moby’s rights in relation to WA-359-P, Rankin Trend has retained the right to elect to fund 5% of the costs of any well drilled by Apache in WA-409-P and, by so doing, to maintain its potential interest in the permit at 20%.

The Zeebries 3D seismic survey, that was acquired over the entire 566 km² area of the WA-409-P permit and other adjoining permits, was also detailed at the Background section of the WA-359-P permit above Maps.

Work Programme:
The permit is in year 4 of the initial 6-year term where the work programme obligations for both the current year and for year 5 are to complete the processing, mapping and interpretation of the Zeebries 3D survey and carry out geotechnical studies.

The year 6 work programme obligations are preparation for and the drilling of a well by the end of the initial term of the permit on 29 April 2012, integration of the well results and carrying out an evaluation of the data obtained in the permit prior to making a decision whether to seek a renewal.

WA-360-P – CARNARVON BASIN – OFFSHORE WESTERN AUSTRALIA

Background:
Moby holds a 10% interest in WA-360-P through Rankin Trend and the Operator of the permit and of the Joint Venture is MEO Australia Limited (MEO).

The WA-360-P Joint Venture members are:

The permit was granted by the Designated Authority on 1 February 2005 and comprises 15 graticular blocks (approximately 1,215 km² or 300,230 acres) on the Outer Rankin Platform portion of the Carnarvon Basin, offshore Western Australia Maps.

In June 2010, the Company announced that Rankin Trend had agreed to sell a 5% interest in WA-360-P to MEO’s subsidiary, North West Shelf Exploration Pty Ltd, for US$7million. The necessary regulatory approvals for the sale of the interest were obtained and settlement of the sale took place in Q4 2010. Rankin Trend retained a 10% interest in the WA-360-P permit and this interest was fully carried through the drilling of the Artemis-1 well.

Beginning on 25 November 2011, the Artemis-1 exploration well was drilled into the Artemis prospect by the Songa Venus semi-submersible rig from a location within the WA-360-P permit. The location of the Artemis-1 well is displayed above Maps. The well failed to encounter hydrocarbons, was plugged and abandoned and the rig released on 26 December. Since then, the Joint Venture has continued to analyse the drilling results from Artemis-1.

Work Programme:
The permit is in year 6 of the initial 6-year term where the work programme obligations are to complete geotechnical studies that integrate the Artemis-1 well results and carry out an evaluation of the data obtained in the permit prior to making a decision on whether to seek a renewal.

BROWSE BASIN INTERESTS

The Company’s Browse Basin permit interest is displayed in the following map.

Browse Basin Permit Location Map

WA-342-P – BROWSE BASIN – OFFSHORE WESTERN AUSTRALIA

Background:
Moby holds a 22.375% interest in WA-342-P and the Operator of the permit and of the Joint Venture is Hawkestone Oil Pty Ltd, a subsidiary of Exoil.

The first 5-year renewal of the permit was granted by the Designated Authority on 4 January 2011 and the renewed permit comprises 21 graticular blocks (approximately 1,755 km² or 433,670 acres) in the Caswell Sub-basin portion of the Browse Basin, offshore Western Australia Maps.

The Cornea oil and gas accumulation was discovered by Shell within the early exploration wells Cornea-1, 1B and 2. The wells are considered to have established the presence of a 25m gas column and a 22.2m oil column in the Albian sandstones of the Jamieson Formation. The field is a large drape feature. It accumulated 22 to 24 degree API oil derived from Early Cretaceous, Echuca Shoals Formation and possibly Late Jurassic source rocks in the Heywood Graben, located over 60 km to the west. The field is split into three main structural components – Cornea South and Cornea Central, both with gas and oil, and Cornea North with gas and no underlying oil presence.

In December 2009, Cornea-3 was drilled into the known oil and gas accumulation by the Songa Venus semi-submersible rig. The objectives of the well were to define the location of the hydrocarbon contacts and obtain data on the potential reservoir qualities of the Middle Albian and Lower Jamieson Formation.

The Cornea-3 well penetrated the targeted Middle Albian and Lower Jamieson Formation B and C sand reservoir interval (2.2 metres deeper than predicted) but, as planned, just below the predicted gas oil contact. The well was then deepened to penetrate exploration targets in the Early Albian and Aptian of the Lower Heywood Formation, before terminating at a total depth of 910.6m MDRT (measured depth below rotary table).

Work Programme:
The permit is in year 1 of its first 5-year renewed term where the work programme obligations are to carry out geotechnical studies in years 1 and 2 and drill a well in year 3. This is followed by reprocessing of existing 3D seismic data and further studies in the last two years of the term.

GIPPSLAND BASIN INTERESTS

The Company’s Gippsland Basin permit interests are displayed in the following map.

Gippsland Basin Permits Location Map

VicP41 – GIPPSLAND BASIN – OFFSHORE SOUTH VICTORIA

Background:
Moby holds a 30% interest in Vic/P41, subject to a farmin by Oil Basins Ltd (OBL) and the Operator of the permit and of the Joint Venture is Bass Strait Oil Company Limited.

The first 5-year renewal of the permit was granted by the Designated Authority on 20 September 2006 and the renewed permit comprises 16 graticular blocks (approximately 1,079 km² or 266,625 acres) in the Gippsland Basin, approximately 40 km south of the eastern Victorian coast Maps.

A 2D survey carried out in 2008 recorded a total of 295 km of new seismic data in the east of the permit and fulfilled the year-3 work programme commitment, which called for a 250 km 2D seismic survey to be acquired by September 2009. The Joint Venture accelerated the completion of the 2D seismic commitment in order to better define the eastern area of the permit, where several leads were defined only on sparse existing data.

Interpretation and mapping of the 2008 2D seismic data and re-processed older data has confirmed the potential of the eastern area of the permit. The Lead A, Junger and Wilde features, previously defined only on sparse older data, all demonstrate structural closure based on the updated mapping. Lead A also exhibits anomalous amplitude responses that may be indicative of hydrocarbons and warrant further investigation Maps.

The Joint Venture has mapped extensions of two productive trends across the Vic/P41 permit. The first is the eastward extension Rosedale Fault system that sets up prospects analogous to the Kipper oil and gas field to the west of the permit, where development drilling in the Kipper field has been carried out ahead of first production scheduled for 2012. A second trend extension is analogous to the Basker/Manta/Gummy oil and gas fields (located to the west of the permit and south of Kipper) which have been in production since December 2006.

As well as the features defined in the eastern area of the permit, Vic/P41 contains a number of large prospects defined on modern 3D seismic, notably, Kipling, Benchley and Oscar Maps.

The ExxonMobil/BHP Billiton discovery at SE Remora-1 provided new impetus to exploration of these trends and the nearby investment in the Kipper development is directly relevant to the Kipling and Benchley prospects in Vic/P41.

To further define and ‘de-risk’ these opportunities, two new technical studies were completed by the Joint Venture during 2010. A seismic inversion project analysed both 2D and 3D seismic over the Rosedale trend prospects and leads (i.e. Kipper analogues) for indications of hydrocarbon anomalies and other factors.

Also, a basin modelling study was undertaken with the aim of defining the nature of hydrocarbon charge into the east Gippsland area (i.e. the existence of oil versus gas), as well as the timing and migration pathways of this charge. It shows the area immediately south of the permits is mature. It is modelled as having generated and expelled hydrocarbons at a time where they could migrate towards the basin margin and be trapped in the structures identified in Vic/P41.

While the 3D-defined prospects in Vic/P41 are ready to be tested, the timing of any potential drilling is dependent on suitable rig availability in the Gippsland Basin and on the progress of ongoing farmout negotiations.

Work Programme:
The permit is in year 5 of its first 5-year renewed term where the work programme obligations are to carry out geotechnical studies and an evaluation of the data obtained in the permit.

An application to renew the permit for a second 5-year term has been lodged with the Designated Authority.

VIC/P41 Prospects and Leads

VicP47 – GIPPSLAND BASIN – OFFSHORE SOUTH VICTORIA

Background:
Moby holds a 35% interest in Vic/P47 and the Operator of the permit and of the Joint Venture is Bass Strait Oil Company Limited.

The first 5-year renewal of the permit was granted by the Designated Authority on 16 November 2009 and the renewed permit comprises 3 graticular blocks (approximately 203 km² or 50,160 acres) in the Gippsland Basin, approximately 5 km offshore, south of the Victorian town of Orbost Maps.

Approximately 160 km² of existing 3D seismic data has been acquired within the area of the renewed permit and the year 2 work commitment is to reprocess this data. Vic/P47 contains the Judith and Moby gas discoveries and the area of those discoveries are covered by the existing 3D seismic data Maps.

The Judith gas resource was certified by international consultants Gaffney Cline & Associates (“GCA”) (see details following) and both the Judith and Moby gas resources are in close proximity to existing and planned infrastructure in adjacent licences. The Longtom Field to the west commenced gas production in late 2009 and the Kipper Field to the south is being developed for first gas production in 2012.

During June 2008, GCA completed an independent resource certification of the Judith gas discovery and associated prospects in Vic/P47. GCA reported that a gross gas column of 290m can be interpreted from Judith-1 electric log data and GCA’s petrophysical analysis indicated 135.5m of net gas pay in the Judith-1 well. GCA’s certification provides independent confirmation that, subject to successful appraisal, the Judith gas discovery has the resource volume potential to underpin a commercial development.

The Judith gas discovery is located 22 km east of the Longtom Gas Field where Nexus Energy holds a 100% interest and, as noted above, commenced production late in 2009. Longtom is the first commercial production from the Emperor Subgroup, a geological unit which also forms the potential reservoir at Judith. The Longtom Field has been developed on the basis of a contract to sell 350 PJ (approximate conversion = 325 BScf) of sales gas.

Work Programme:
The permit is in year 2 of its first 5-year renewed term where the work programme obligations are to reprocess existing 3D seismic data and then complete gas marketing studies in year 3.

The year 4 and 5 work programme obligations are preparation for and the drilling of a well by the end of the renewed term of the permit on 15 November 2014.

VIC/P47 Prospects and Leads