Oilex Acquires 30% Stake in Cambay Field

Oilex NL reports that the Government of India has approved the assignment to Oilex by Gujarat State Petroleum Corporation (GSPC) and Niko Resources of a 30% participating interest in the Production Sharing Contract covering the Cambay Field located onshore Gujarat State, Western India.

Cambay field is located in one of the most prolific petroleum provinces onshore India close to existing pipeline and industrial infrastructure.

Oilex will become the operator under the existing PSC and Joint Operating Agreement and will earn its 30% participating interest by undertaking appraisal and development work program of a value equal to 30% of the costs incurred by GSPC and NIKO that have not been recovered under the cost recovery provisions of the PSC.

Cambay Field History

The field was discovered and developed initially by Oil & Natural Gas Corporation (ONGC) of India in 1957-58 with the drilling of Cambay-1. Hydrocarbons were found in Oligocene and Eocene sandstones below about 1550 meters. Subsequently 62 wells were drilled to develop and produce gas from one Oligocene reservoir; a small volume of oil from a deeper reservoir below 1730 meters and gas from a shallower Miocene reservoir at about 1420 meters. In 1991 the field was virtually shut-in because of sand and water influx and decline in reservoir pressure after producing about 48% of the Operator's estimated reserve.

The field was subsequently acquired by the GSPC and Niko Joint Venture in 1995 and continued to produce gas at low rates and, in recent years, small volumes of oil.

Oilex Strategy

Oilex has been conducting a detailed study of existing well data to prepare recommendations for a work program to re-develop the field. The results of the studies and recommendations will be presented to the Joint Venture in early April. In the event that the Joint Venture approves those recommendations, personnel and contractual arrangements for drilling materials and equipment are in place to facilitate the start of operations at the earliest opportunity.

Oilex is very pleased to have achieved this important milestone in establishing its presence as an Operator in oil and gas exploration and production in the Indian Subcontinent. The support of the Ministry of Petroleum & Natural Gas and the Directorate General of Hydrocarbons has been critical in achieving this goal and is much appreciated. Oilex looks forward to working with GSPC and Niko in this exciting new venture.