Bass Oil Limited announced that, following the engagement of independent geological experts, Fluid Energy Consultants, it has identified a significant prospective resource that has the potential to materially grow the Company's Australian operations in the Cooper Basin in South Australia. The Deep Coal Gas Prospective Resource Report quantified the gas potential contained in PEL 182 (Bass 100%) in the Cooper Basin, South Australia at a "best estimate" of 21 TCF of gas in place along with accompanying 845 billion barrels of condensate/oil in place. Gas from deep coals, lying below 2,500 metres, represent a new significant gas play in the Cooper Basin and potential new material source of gas for the domestic market.

Gas is known to exist in the Permian aged coals of the Toolachee, Epsilon and Patchawarra formations and has flowed at potentially commercial rates after fracture stimulation and when comingled with conventional gas produced from sandstones. Santos and the Cooper Basin Joint Venture has been working on commercialising these coals. More recently, Santos has drilled and plans to frac the Beanbush 3 horizontal well adjacent to PEL 182, in the same geological setting and on trend in the Patchawarra Trough.

Bass and Fluid have defined a prospective area, named the Moolion East Deep Coal Prospect, within the permit where a pilot horizontal well or wells would be best placed to test the deep coal play. Santos previously drilled the Moolion East 1 well searching for conventional hydrocarbons but was unsuccessful. However, the well intersected a significant thickness of deep coal in the Permian section which is the target of this play and study.

The potential Prospective Resource volume of the Moolion East deep coal prospect is 568 BCF of gas and 22.7 million barrels of condensate (oil) (Table 2). The method for developing this significant resource is expected to be similar to the successful shale gas plays in North America by horizontal drilling and fracture stimulation. Bass will commence studies aimed a maturing the Moolion East prospect to drillable status.

Bass (100%) as operator of PEL 182 has the flexibility and optionality to conduct drilling for its own account, or to attract farm in partners to carry the company's expenditure. The average net coal within the Toolachee-Epsilon Unit in PEL 182 is approximately 18 metres. Net coal ranges from absent in the north of the permit to 35 metres towards the depocentre of the Patchawarra Trough.

The coals occur as mainly continuous seams, with those near the top Toolachee often being more than 10 metres thick. In addition, the average net coal within the Patchawarra Formation in PEL 182 is approximately 17 metres. Net coal ranges from being absent in the north of the permit to 40 metres in the southeast.

The coals occur as continuous seams within the upper Patchawarra, some of which can be 10 to 20 metres thick. The coal thicknesses and distribution are illustrated in the following cross sections. The first deep coal frac in the Cooper Basin was conducted in 2007 by Santos.

The result demonstrated that potentially, economic flow rates could be achieved. In the period from 2007 to 2013 a number of follow up fracs were undertaken with mixed success. In 2013, a change in fracking techniques saw a breakthrough in flow rates that achieved over 0.1 mmcfd per frac stage.

Over the next two years, a further 21 fracs were placed as single stages. The average flow rate was over 0.3 mmcfd with rates up to 0.8 mmcfd per stage. One well in the program is assessed to have produced over 0.5 BCF with a possible recovery of over 1.5 BCF.

The future plans of Cooper Basin operators are to perform multi-stage stimulations of vertical wells and trial horizontal drilling [and multi-stage fracs along the horizontal wellbore] in order to increase flow rates and recoveries. The first horizontal well, Beanbush 3, has recently been drilled and will be fracked. The results are as yet unpublished.

Bass and Fluid have defined a prospective area, named the Moolion East Deep Coal Prospect, within the permit where a pilot-well or wells could test the Deep Coal play. There were no conventional hydrocarbons found in sandstone reservoirs at Moolion East-1, a well drilled by Santos, so the new prospect is solely a Deep Coal gas target. The potentially recoverable Prospective Resource volume of hydrocarbons in the Moolion East Deep Coal prospect is 568 BCF of gas and 22.7 million barrels of condensate (oil).

The recovery potential of this resource is subject to significant uncertainty. Fluid has looked to the success of global shale gas plays in order to assist in determine the potential recovery factors possible. There are similarities between the Shale Gas and Deep Coal Gas plays.

Coals have a very high proportion of organic matter and so have a large, adsorbed gas fraction. Shales tend to have higher porosity. A very good Shale Gas play is brittle and "fracture-able" while coal is more ductile.

The US Energy Information Agency (EIA/ARI (2013)) applied an average 20% recovery efficiency factor of the gas in-place for shale gas basins and formations that have a medium clay content, moderate geologic complex- ity and average reservoir pressure and properties. Fluid has applied a factor of 15% to the calculation of Prospective Resources. The potentially recov- erable volume of hydrocarbons is 568 BCF of gas and 22.7 million barrels of condensate (oil).