Australian-based oil & gas group Oilex has formally marked its transition to cash flow and production by delivering a strong December Quarter performance by starting up oil production from its Cambay Oil Field in October in India with 16,800 barrels of oil produced during the December 2008 quarter from two wells.
Oilex commenced production from Miocene Basal Sand (MBS) in the Cambay Field on October 17, 2008 from the Cambay-64 well, which produced 9,374 barrels to the end of December. A second well, Cambay-74, was brought into production on Dec. 5, and produced 7,453 barrels to the end of the quarter.
Oilex Managing Director, Dr. Bruce McCarthy, said the result was a pleasing start to Oilex's production activities at Cambay, with significant potential to rapidly increase production levels over the course of the coming year.
"The commencement of oil production has been a landmark event for the Company," Dr. McCarthy said. "Our focus in the months ahead will be to increase our production profile from Cambay by enhancing our off-take infrastructure, as well as by maintaining an active appraisal program to increase the Company's reserve base."
Production from the Cambay wells over the December Quarter was constrained by restrictions with oil off-take infrastructure, which led to limitations on daily production rates. The Company is currently sourcing an additional storage tank to alleviate this production constraint.
"Oilex is targeting sustained long-term production of 3,000 barrels of oil per day from the Cambay Field by the end of 2009," Dr. McCarthy said. "We are confident that these measures to enhance production from Cambay-64 and 74, together with the drilling of two additional wells, will enable us to reach this production level."
Two additional development wells are currently planned for the Cambay Field in the second quarter of calendar 2009, with potential to add an additional 800-1,000 barrels of oil per day (bopd). During the December Quarter, integration of seismic data with reworked data from old wells were used to identify a number of high grade locations for these wells, which are scheduled to be drilled most likely in second quarter this year.
In addition to its growing production profile at Cambay, Oilex has also announced continued positive results from the Company's portfolio of international exploration assets.
The Company's second priority development target is the West Kampar PSC (Oilex -- 45%), located onshore Sumatra, Indonesia. The Company is continuing to target early development from this region, submitting a development plan for phase 1 to the relevant authorities in November 2008. This development plan is a precursor to full field development, and involves a single well completion at Pendalian-3 oil discovery.
Oilex is targeting first oil production from the Pendalian field in early 2009 from 2 wells once government approval is received, working towards full field development later in the year. The Company is targeting production of up to 2,000bopd from the Pendalian field in 2009.
"Like Cambay, the Pendalian Field represents an excellent low-cost, low-risk production opportunity for Oilex, providing additional early cashflow to support the Company's intensive exploration program," Dr. McCarthy commented.
The second phase of drilling was completed earlier in January on Block 56, Oman (Oilex Operator -- 25%). A 4 well program gave encouraging results from 3 wells including the Al Jumd-1 well for which a testing program is being planned and the Umq-1 well in the central part of the block which had oil and gas shows over more than 500 meters of section.
The well results have confirmed the oil potential of the Eastern Flank Salt Basin in Block 56 and extended the prospective area into the extensive Central Terrace area where no previous drilling had been carried out. The program included the drilling of the Sarha-2 appraisal/exploration well and the Lathab-1, Al Jumd-1 and Umq-1 exploration wells.
"Underpinned by growing production and cash flow from our Cambay operations, Oilex has a very active year ahead in 2009 with a continued focus on generating cashflow to build value for our shareholders," Dr. McCarthy said.
Oilex's key focus in 2009 will be on fully assessing the Miocene potential at the Cambay Field, boosting production from the current wells and drilling additional wells. The Company will also be seeking to appraise the deeper Eocene oil and gas projects at Cambay, and assess the best oil and gas potential in the other assets in the portfolio, including the Joint Petroleum Development Area between Timor Leste and Australia.
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