Oilex Confirms Key Condition of Timor Sea Farm-Out Satisfied

Oilex advised that an important approval has been received from the JPDA Designated Authority for an extension to the first term of the Production Sharing Contract (PSC) covering the highly prospective block JPDA 06-103 in the Timor Sea.

The approval of the extension follows the recently announced Farm-Out Agreement with Japan Energy E&P JPDA Pty Ltd, a subsidiary of Japan Energy Corporation and fulfils a key condition of that Agreement. Under the terms of that Farm-Out Agreement Oilex has agreed to farm down 15% of its 25% interest in the block, reducing its financial obligations while maintaining its exposure to the significant exploration potential. The consideration includes a refund of part of past costs and future funding for Oilex's remaining 10% share of the costs for two commitment wells up to an agreed cap.

The JPDA Designated Authority approved a 1-year extension to Contract Year 3 of the PSC for JPDA 06-103, which previously ended on January 15, 2010 and will now end on January 15, 2011. The extension of the term will allow adequate time to complete drilling programs to evaluate this highly prospective block. Oilex's wholly-owned subsidiary, Oilex (JPDA 06-103) Ltd is the Operator of the PSC.

Oilex is actively working to secure a rig for the initial two-well drilling program targeting a combined oil prospective resource of 285 million barrels (100% basis) with drilling expected to commence later this year.

The participating interests in the JPDA 06-103 PSC upon satisfaction of the remaining conditions of the Farm-Out Agreement (as reported on August 3) will be:

Joint Venture Party Participating Interest

  • Oilex (JPDA 06-103) Ltd (Operator) 10%
  • Global Energy Inc 25%
  • GSPC (JPDA) Ltd 25%
  • Bharat PetroResources JPDA Limited 25%
  • Japan Energy E&P JPDA Pty Ltd 15%