Oilex to Raise Funds for Exploration Project through Placement
Oilex NL (ASX; AIM: OEX) has proposed A$20 million institutional capital raising to underpin its next phase of growth as an international oil and gas company. The proceeds of the raising will be utilized for major development & exploration drilling programs in India, Australia and Oman and will also enable Oilex to increase its exposure to its flagship development and exploration assets in northwestern India.
The Perth-based Company - which has reshaped its growth strategy over the past 12 months as an international oil and gas group with a strong focus in India - said today (Tuesday) it had reached in-principle agreement with Australian broking firm Hartleys Limited, as Lead Manager, to raise up to A$20 million through the placement of 23.6 million shares at A$0.85 per share - predominantly to UK, North American, Asian and Australian institutional investors.
The landmark fund raising follows an active and successful 12 months for Oilex, which has seen the Company develop its portfolio of exploration assets with major Indian companies including integrated energy company Gujarat State Petroleum Corporation (GSPC), India's largest gas marketer and distributor GAIL (India) Ltd, leading oil refiner Hindustan Petroleum Corporation Ltd, and listed Indian conglomerate Videocon Industries Ltd.
To date in India, Oilex has acquired interests in three fields, including a 45% interest in the onshore Cambay Field in Gujarat State, and a 40% interest in each of the Sabarmati and Bhandut Fields, subject to the approval of the Government of India. With the benefit of its strong alliance relationships, the Company has also been awarded a highly prospective onshore block in Oman (in the South Oman Basin) with Indian partners and farmed in with Videocon and GSPC on an offshore block in the Otway Basin in South Australia.
Oilex's Managing Director, Bruce McCarthy, said the proceeds of the A$20 million placement would be utilized to progress the Company's growth strategy on a number of fronts, including the acquisition of an additional 15% interest in the Cambay Field and a 40% interest in the Bhandut and Sabarmati Fields, located in the same region of the Cambay Basin.
'In addition, it will underpin the drilling of up to five appraisal and development wells in the Cambay Field including completion costs, and fund the acquisition of 3D seismic on the Cambay, Bhandut and Sabarmati Fields, as well as the acquisition of 2D and 3D seismic on our newly awarded Block 56 in Oman and the acquisition of 2D seismic on EPP 27 in the Otway Basin,' Mr. McCarthy said.
'We are delighted with the strong response from institutional and retail investors, which demonstrates fundamental support for our growth objectives and future plans as an international oil and gas company,' he added.
The placement requires shareholder approval, which will be sought at a general meeting to be convened on or about July 28, 2006. Following completion of the placement, Oilex will have over A$20 million in cash reserves and some 74 million shares on issue, giving it a market capitalization of approximately A$75 million.
First Phase Drilling to Commence in India
Oilex has also contracted a rig to commence the first-phase drilling program on the Cambay Field. The first of the Cambay Field wells is expected to spud in the second half of July 2006, utilizing the second and third firm slots of a drilling program on the recently contracted Dalma Energy MR-1 drilling rig. Oilex has completed construction of three monsoon-grade locations in readiness to drill.
The Company recently took over as operator of the Cambay Field, which is located in a prolific onshore petroleum province in Gujarat at the northern end of the Bay of Cambay, close to existing pipelines and industrial infrastructure. The Bhandut Field is located to the south of Cambay, near the industrial center of Hazira, while the Sabarmati Field is located further to the north, near Ahmedabad.
Oilex has assembled a strong technical team, including Technical Director Ray Barnes, a former Technical Director of Voyager Energy, Chief Operating Officer and Country Manager India, Rich Paces, based in New Delhi, and General Manager - Operations, Tony Beckett, based in Vadodara, Gujarat, giving it the ability to undertake ambitious projects and maintain its objective of technical excellence and efficiency in all of its areas of operation.