Oilex Successfully Tests Cambay-74, Mulls Developmental Options

Oilex is very pleased to report that the Miocene (MBS) reservoir has been successfully tested in Cambay-74 at a constrained rate of more than 500 bopd, in the Cambay-74 appraisal well. The well will be completed as an oil producer on conclusion of the test program.

The oil is of high quality and has a gravity 380 API. It was tested through a 8mm choke with a flowing tubing pressure of 820 psi during the initial flow period at un-stabilized rates of over 500 bopd. On conclusion of the initial flow period the well will be shut-in for pressure buildup. The formation pressure measurements indicate that the reservoir is at virgin pressure and has not been depleted by production from older wells in the north of the block, now shut-in, that produced some gas from the MBS in the past. When the pressure build-up test is complete, the well will be returned to production and gradually opened up to establish the maximum sustainable production rate from the zone.

On the basis of this excellent result, the Joint Venture has made the to complete the well at this point so that it is kept as a producer, and also to re-design the balance of the Cambay drilling program. A Joint Venture meeting will be held in November to confirm the new program, the primary objectives of which will be to expedite the Miocene potential development in the Cambay Field. The hiatus in the drilling program will enable a variety of options to be evaluated for increasing production from the MBS, which has been a secondary objective in each of the wells drilled to date by Oilex, through workover and recompletion of old wells and drilling of new wells as well as formulating a plan for development of the deeper EP III-IV and Basal EP IV oil zones.

Cambay-74 Test Results

A cased hole drillstem test of well Cambay-74 over a perforated interval of 7 meters in the Miocene Basal Sand (MBS) has yielded a flow of more than 500 barrels per day of oil at a flowing tubing pressure of 820 psi on a 8 mm choke. During the initial flow period the flow rate was intentionally constrained to avoid possible sand production from the formation which has been observed in other Miocene reservoirs in the region of similar high quality sands. After the pressure build-up test is complete, the well will be returned to production and gradually opened up to establish the maximum sustainable production rate from the zone.

The oil produced from this test at Cambay-74 is being transported to a nearby refinery and sold along with the crude oil produced from Cambay-64.

Cambay-64 Production Rates

Cambay-64 has continued to produce oil with no water from a perforated interval of 2 meters at an average rate of 310 bopd on 5.6 mm choke at a flowing tubing pressure of 660 psi, a progressive improvement on the initial test rate of production that was reported on 20 October. The rate is currently constrained by available storage tank capacity at the well site and by tank trucks required to haul the crude to the nearest available offtake point. Shortly, once these logistics are resolved, the well will be flowed at higher rates.

The results from Cambay-64 and Cambay-74 have confirmed the commerciality of a new oil discovery in high quality basal Miocene reservoir sandstones that was historically bypassed. These sands are widely distributed in the Cambay block.

The MBS is an excellent quality reservoir and at a depth in this area of approximately 1400 meters, offers the potential for low cost development and early production from the Miocene which has now been proven by the results of both Cambay-64 and Cambay-74. The oil is very mobile having relatively high gravity and a moderate content of dissolved gas. The preliminary estimates of volume of oil-in-place indicate a range of 12 - 25 million barrels in this sector of the block. Recovery factors are likely to be in the range of 30% - 50% by analogy with other reservoirs of this quality in the Cambay Basin.

Further detailed work is required to refine the range of resource and reserve.

This estimate is in addition to the previous published estimate of 48 million barrels of oil in place for the deeper objectives in the western sector of the field.

Expansion of the production capacity of the Miocene in the western part of the Cambay Field is being evaluated through the potential to re-enter and complete existing wells for which wireline logs are available and through drilling of new wells.

Oilex serves as the operator of Cambay with 30% interest. Partners in the project include Oilex NL Holdings (India) with 15% and Gujarat State Petroleum Corp. with 55%.