Oilex Updates on Operations at Upstream Assets in India, Australia

Australia-based Oilex Ltd. provided Tuesday an operational update on its upstream assets, comprising the Cambay field and Bhandut field in India as well as its Wallal Graben assets in Western Australia.

Cambay Field, India

Cambay-73 well continues to produce gas for the low pressure market in the immediate vicinity of the field at ~26 barrels of oil equivalent per day (boepd) with 100 percent availability. A temporary pipeline from Cambay-77H site to Cambay-73 production facility has been completed as part of a gas gathering system to assist in meeting market demand. Three legacy wells have been connected to this pipeline and provide additional gas to the low pressure market via the Cambay-73 production facility.

In addition, subsequent to the installation of a production tree and production tubing, Cambay-77H will be connected to the temporary pipeline to service the low pressure market via Cambay-73, without having to construct a dedicated low pressure production facility at the Cambay-77H site. It is estimated this will result in a saving of ~$150,000 after eventually replacing the temporary pipeline with a permanent pipeline during 2016.

Preparation of the 5 well workover campaign is nearing completion and field work is anticipated to commence during September. The workover campaign is targeting both oil and gas production which will make a contribution to generating operating cashflow to assist in the Indian operations becoming cashflow positive.

The contracting and procurement process for the 2015/16 drilling campaign is nearing completion. Technical and commercial evaluations for 13 of 14 major tenders are finished and final evaluation and approval processes are in progress. Interest from top-tier service providers is high and excellent responses have been received on all tenders, including the drilling rig.

Gas marketing activities have commenced for the volume of gas equivalent to the gross 1P Reserves of 90 billion cubic feet (Bcf). In conjunction with the marketing effort, a field development plan has been prepared for the initial gross 20 Bcf that is anticipated to be established and produced through a 5 million standard cubic feet per day (MMscf/d) gas treatment plant located near the Cambay-77H site.

Bhandut Field, India

Subsequent to completion of the design and procurement activities, field construction has commenced at Bhandut. The field work is estimated to require ~80 days for the contractor to complete, including commissioning activities.

The Bhandut-3 production test results have been further analysed and the internal deterministic estimate of 2C Contingent Resource has been upgraded from a previous internal estimate to ~425 million standard cubic feet (MMscf) (~170MMscf Oilex net) as at Aug. 21. Production data will be required over several months to enable an estimation of Reserves.

Wallal Graben Assets, Western Australia

An internal technical evaluation of the 3 exploration areas encompassing approximately 3 million acres (~11,900 square kilometers) has recently been completed, including a leads and prospects portfolio utilizing 2D seismic data that covers only 20 percent of the Wallal Graben play fairway. An extensive suite of 14 conventional prospects have been evaluated using probabilistic methods. Of these prospects, 5 have a Best Estimate Prospective Resource exceeding 200 million barrels oil. The full portfolio will be further assessed to identify the best prospects to mature to drillable status.

In accordance with ASX listing rule 5.28.2, the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

A detailed petroleum systems analysis, incorporating source rock maturity and thermal modelling, has also been completed. Results of these studies have concluded that the interpreted source rocks within the play fairway are currently mature for hydrocarbon generation and a significant portion of the interpreted source rocks are within the oil and wet gas maturity windows.

An evaluation of the unconventional prospectivity was undertaken which highlighted that significant unconventional plays are interpreted to exist consistent with those identified by drilling elsewhere in the Canning Basin.

A competitive tendering process is currently in progress to select a resource assessment company to undertake the independent evaluation of these assets. Oilex will update the market upon conclusion of this evaluation.

The first Heritage Agreement is expected be signed shortly with the Nyangumarta people in relation to the 2 northern blocks, which is a key milestone for this acreage. Consultations on the Heritage Agreements for the third block are ongoing.

Managing Director of Oilex, Ron Miller, said:

“Having successfully raised ~21.57 million (AUD 30million), the Company continues its focus on creating value through increasing production and cashflow in India while also striving to bring down costs and develop additional hydrocarbon production from legacy wells at Cambay.”