Oilex Provides Bhandut-3 Isochronal Production Test Report

Australia's Oilex Ltd announced completion of the final report related to an isochronal gas production test at Bhandut-3 undertaken earlier in the year as part of the approved work program and budget. As mentioned in the most recent quarterly report to shareholders, the Company is continuing to investigate commercial options to realize value from this asset with its Joint Venture partner, Gujerat State Petroleum Corporation Limited (GSPC), including the possible sale of off-spec gas from Bhandut-3, which is located in India's Cambay Basin.

Bhandut-3 flowed at a maximum rate of 6.5 million standard cubic feet per day (MMscf/d), or 0.184 million cubic meters per day (MMscm/d), through a 0.39 inch (10 millimeter) choke with a flowing tubing head pressure of 1,190 pounds per square inch absolute (psia). The isochronal test was conducted to obtain more precise reservoir performance data as part of attempting to realize value from Bhandut and the test confirmed the reservoir sand has a permeability of 124 millidarcy (mD), making it a conventional reservoir.

Subsequent to the Government of India’s recent announcement about increasing the base domestic gas price to stimulate additional investment in indigenous gas supplies, a number of interested parties have approached the Bhandut Joint Venture about purchasing gas from Bhandut-3. The isochronal test results have been useful in supporting ongoing discussions related to the sale of gas.

The Contract Area (~2.3 square miles or ~6 square kilometers) is covered by a 3D seismic survey acquired by Oilex in 2007 and the reservoir section at the well is 11.4 feet (3.5 meters) thick with modern well logs. This reservoir section thickness is below seismic resolution and is not present in other nearby Bhandut wells. As such, the lateral extent of the gas sand and in-place gas volumes cannot be accurately estimated from static data at present. Dynamic production test flow and pressure data suggests the (best estimate) Contingent Resource (100 percent basis) may be ~250 million standard cubic feet (MMscf) or ~7 million cubic meters (MMscm).

Oilex is the operator of the Bhandut JV and its attributable 40 percent interest in the estimated Contingent Resource is ~100 MMscf. This volume, together with appropriate low and high estimates, can only be confirmed through further production, which requires appropriate gas sales arrangements are entered into by the Bhandut JV.

Potential buyers remain interested and are considering the use of compressed natural gas (CNG) bullet trucks for transportation of natural gas from the well head in the field to end users. This provides flexibility to adjust the offtake rate between 0.5-1.0 MMscf/d to suit the deliverability of Bhandut-3 gas sand over time. Discussions continue towards reaching a similar off-spec Gas Sales Agreement (GSA) as has been signed for Cambay-73 production. Given the uncertainties, Oilex currently ascribes a commercialization risk factor of 75 percent to the Contingent Resource estimate.

Bhandut-3 is a lean gas composition with 98.9 percent hydrocarbons, of which 94 percent is methane, and 1.1 percent is inert gases (Nitrogen and Carbon Dioxide). As such minimal treatment is required to be suitable for sale. Minimal capex, if any, is expected to be required by Oilex under such a production scenario.


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