Oilex to Acquire Stake in West Kampar PSC

Oilex Ltd, through a wholly owned subsidiary, has entered into an agreement to acquire a 45% interest in the West Kampar Production Sharing Contract (PSC), onshore Sumatra, Indonesia from PT Sumatera Persada Energi (SPE). The block has an existing oil discovery that can be brought into production quickly if justified by appraisal drilling and a number of highly prospective structural trends, which will be the subject of an intensive exploration program.

The consideration for this interest includes Oilex refunding certain past costs and funding the drilling of the Pendalian-3 exploration/appraisal well, planned for July 2007, and the acquisition of 2D and 3D seismic work commitment programs.

Subject to approvals from the Government of Indonesia and certain other conditions precedent, the participating interests in the West Kampar PSC will be Oilex, 45% and Sumatera Persada Energi (Operator), 55%.

West Kampar PSC - The contract area is located in central Sumatra adjacent to the most prolific oil producing province in Indonesia. Awarded in October 2005, the PSC work program commitment provides for the acquisition of 250 kms of 2D seismic and 50 sq kms of 3D seismic along with drilling of the Pendalian-3 well and an additional 4 exploration wells by November 2008.

SPE - SPE is an Indonesian oil and gas company that is part of the PT Asiabumi Petroleo group, a diverse private company with interests in crude oil shipping amongst other activities. It acquired the PSC in its own right as operator in 2005 as a relative newcomer to the Indonesian exploration and production scene. SPE employs regarded industry professionals with substantial experience in the upstream oil and gas sector in Indonesia gained while working with international companies over a number of years.

Pendalian-3 - The Pendalian-3 well planned for July 2007 will appraise the oil field discovered in 1993 by the Pendalian-1 well, a cored slim hole that encountered a number of oil zones at depths ranging from 250 meters to 500 meters. Two of the zones flowed oil from drill stem tests in Pendalian-1 with maximum rates achieved of up to 530 barrels of oil per day. Independent technical work by Oilex indicates that the best estimate of the 'in place resource' for the field is 12 million barrels of oil.

If commercial productivity is confirmed by the extensive cased hole testing program planned for the conventionally drilled Pendalian-3 well, the West Kampar Joint Venture plans to acquire a 3D seismic survey over the Pendalian Field and a number of satellite structures and to accelerate development. Shallow, low cost wells and the proximity to infrastructure are attractive incentives for the rapid development of the field. Early cash flow generated by Pendalian production will be applied to the exploration of highly prospective trends that have been recognized on the block.

Exploration Potential - The proposed 2D seismic exploration program will delineate additional drillable prospects on proven exploration plays in the West Kampar PSC area, particularly on the Daludalu structural trend in the northern part of the block. Currently available data indicates that the Daludalu-1 well tested oil at a rate of 250 barrels per day and other wells on this trend had oil shows. Tonga-1, adjacent to the northern West Kampar block boundary tested oil at a rate of 1560 barrels per day and fields discovered on analogous structural trends in adjacent areas have produced up to 300 million barrels of oil.

"Oilex is excited by the prospects in this new area within our designated Indian Ocean Rim sphere of operations," said B.H. McCarthy, Oilex's managing director. "We are particularly pleased with the opportunity that West Kampar offers to move rapidly into production as we seek to expand our interests in Indonesia."