RIGHTS PROSPECTUS DATED 17 AUGUST 2010

On 17th August 2010 OIL BASINS LIMITED (ACN 006 024 764) lodged a Prospectus for a fully underwritten non-renounceable rights issue.

Under the Rights Issue, the Company will offer its shareholders, whose registered addressed are within Australia and New Zealand (Eligible Shareholders) one (1) new fully-paid ordinary share for every one (1) fully paid ordinary share held as at 5:00pm on Thursday 26 August 2010 (Rights Issue Share) with one (1) free new option (each with an exercise price of $0.04 and an expiry date of 30 June 2014) (Rights Issue Option) for every four (4) Rights Issues Shares subscribed for. The issue price for the Rights Issue Shares will be $0.04. Fractional entitlements will be rounded down to the nearest whole number and the Rights Issue Shares will rank equally with the Company's fully paid ordinary shares on issue.

The Rights Issue is fully underwritten by Patersons Securities Limited and will result in the issue of 131,545,267 Rights Issue Shares and 32,886,316 Rights Issue Options, to raise $5,261,810 before costs.

The funds raised by the Rights Issue will be used for funding drilling and completion costs to earn a 90% interest in Backreef-1, exploration costs including CSG & Shale Gas assessment, advancing Native Title negotiations in Canning Basin permit 5/07-8 EP, and general working and administrative capital.

In accordance with the ASX Listing Rules, the Company has decided that the Rights Issue will not be extended to shareholders with registered addresses outside Australia or New Zealand as the Company has formed the view that it would be unreasonable to extend the offer in such a way having regard to:

1. the number of shareholders outside Australia and New Zealand as a proportion of the total shares of the Company;
2. the number and value of securities to be offered to shareholders outside of Australia and New Zealand; and
3. the costs of complying with the legal requirements and requirements of regulatory authorities overseas jurisdictions.

The expiry date of this Prospectus is 16 September 2010

The Prospectus linked to from this page is a copy and does not contain the Application form. Each Eligible Shareholder will be forwarded their own copy of the Prospectus. The number of New Shares and New Options to which you, if an Eligible Shareholder are entitled, will be shown on the personalised Entitlement and Acceptance Form which accompanies your copy of the Prospectus.

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