Indian Government Endorsed Cambay Field's Gas Sales Agreement

Oilex Ltd. revealed Tuesday that it has received endorsement from the relevant Government of India authorities for the sale of gas from Cambay Field in the Cambay Production Sharing Contract in Gujarat, India specifically Cambay-73 well. This is a critical milestone for increasing production from the field and supplying gas to the local market. Returning Cambay-73 to production will also facilitate the collection of key data to further assess the reservoir deliverability of the same reservoir intersected by Cambay-77H.

As previously announced the Cambay-77H logs compare favorably to the Cambay-73 vertical well, which produced from the Y zone at ~1 million standard cubic feet per day, or MMscf/d, (plus condensate) and is located approximately 0.62 mile (1 kilometer) to the south of Cambay-77H. Cambay-73 commenced flowback unaided, strengthening the correlation between the wells for the purposes of an independent reserve assessment. Cambay-73 production data was not available at the time Netherland Sewell and Associates Inc. (NSAI) prepared the Independent Resource Assessment highlighted in the Oilex announcement dated Oct. 11, 2011 and Oilex anticipates an improvement in the Resource Assessment after incorporation of the Cambay-73 data.

NSAI independently confirmed Contingent Resources within the Cambay Contract Area of:

  • Zone X: Low (1C) - 6.4 million barrels of oil, 42.8 billion cubic feet (Bcf) of gas; Best (2C) - 21.6 million barrels of oil, 141.5 Bcf of gas; High Best (3C) - 49.2 million barrels of oil, 315.5 Bcf of gas
  • Zone Y: Low (1C) - 24.8 million barrels of oil, 136.7 Bcf of gas; Best (2C) - 61.6 million barrels of oil, 353.2 Bcf of gas; High Best (3C) - 130.0 million barrels of oil, 757.5 Bcf of gas
  • Total - Gross: Low (1C) - 31.2 million barrels of oil, 179.5 Bcf of gas; Best (2C) - 83.3 million barrels of oil, 494.7 Bcf of gas; High Best (3C) - 179.1 million barrels of oil, 1,072.9 Bcf of gas
  • Total - Net to Oilex: Low (1C) - 14.0 million barrels of oil, 80.7 Bcf of gas; Best (2C) - 37.4 million barrels of oil, 222.6 Bcf of gas; High Best (3C) - 80.5 million barrels of oil, 482.8 Bcf of gas

Now that endorsement of the gas sales agreement has been received, the Cambay Joint Venture will proceed to establish the appropriate production facilities for Cambay-73 and initially connect the production to a low pressure pipeline grid servicing the local area. The associated condensate will be stripped out and sold into the established markets that currently receive the Cambay crude oil. Having an endorsed contract removes part of the contingency in the assessment of recoverable quantities of gas as reserves.

Managing Director of Oilex, Ron Miller, said;

“We are very pleased to receive the endorsement from the Government of India to sell gas from Cambay-73. As soon as the gas composition from Cambay-77H is confirmed to be similar to Cambay-73, Oilex will be in a strong position to add to our production from Cambay Field. Importantly, Cambay-73 and Cambay-77H will also provide significant deliverability data for the Y zone which can be used in upgrading a portion of the independently certified Contingent Resources into Reserves. The contracted price remains Commercial-in-Confidence and was determined by a competitive bidding process. This reassessment will enable Oilex to consider delivery of pipeline quality gas to the high pressure grid located approximately 4.3 miles (7 kilometers) from this region the field.”


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