Oilex Says Two Well Drilling Program at Cambay Field in Gujarat Faces Delay
Australia's Oilex Ltd. reported Thursday that in light of the change in the company’s funding arrangements, as announced earlier today, it is likely that the commencement of the approved two well drilling program at the Cambay field in Gujarat, India will be delayed. The Company also advises that our joint venture partner (JVP), has formally indicated to Oilex that it wishes to vary the approved work program by flowing Cambay-77H for a period of six continuous months before embarking on the approved two well drilling campaign. This variation has not been agreed by Oilex and discussions are ongoing in relation to this matter. Any change to the approved work program for the joint venture agreed between the parties would require subsequent approval by the Government of India (GOI), under the terms of the Cambay Production Sharing Contract, and would be announced to the market at that time.
Therefore, should Oilex’s funding arrangements be resolved it is possible that the commencement of the approved two well drilling campaign may be further delayed as a result of the change to the work program, subject to the approval of the GOI.
Discussions continue regarding the joint venture cash calls owed by the JVP, which as at Oct. 31 amount to ~$7.7 million, an increase from June 30 of ~$1.6 million.
Consideration is being given to a range of proposals that have been put forward by both parties. These discussions are incomplete at this time. However, the Board is focussed on finding a solution that will enable the approved work program to move forward.
Separately on Thursday, Oilex provided an update on the deferred element of the previously announced capital raising (announcement dated Aug. 3), being the issue of shares and convertible notes to Zeta Resources Limited (Zeta). Zeta currently has a 10.3 percent holding in the share capital of Oilex.
Pursuant to arrangements agreed with Zeta, Zeta was to subscribe for:
- $3,028,586 (AUD 4,243,500) of 20 year, zero coupon unsecured convertible loan notes, convertible into Oilex shares at Zeta’s option at any time (subject to compliance with Australian law), at a conversion price of $0.0298 (AUD 0.0418) per share, by no later than Nov. 11 (the Convertible Notes); and
- 124,019,608 new ordinary shares at a price of $0.0290 (AUD 0.0418) per share, to enable the issue of those shares to be settled by no later than Nov. 12 (the Deferred Shares)
As at the date of this announcement, Zeta has failed to settle the subscription for the Convertible Notes. Oilex will be considering, together with its external legal counsel, the remedies available to it arising out of Zeta’s failure to settle the Convertible Notes.
Zeta has alleged that the Company has failed to disclose material information to it prior to its initial investment and has contravened statutory provisions relating to misleading or deceptive conduct and continuous disclosure and rights issue disclosure requirements. Whilst Zeta has at this stage only provided limited information to the Company regarding the basis of these allegations, Oilex considers them to be without merit and they will be vigorously defended.
The Board of Oilex is considering the full implications and options to progress the development of the Cambay Field, as a consequence of Zeta failing to settle the subscription of the Convertible Notes.
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