LONDON (Alliance News) - Oilex Ltd on Friday reaffirmed its commitment to developing its onshore Cambay block in India and said it is in the advanced stages of completing a detailed work plan to take the asset forward.
Oilex said it is planning to drill a vertical well to target the Eocene siltstone to obtain a sample from the core of the reservoir. This will gather data that can be used for drill and fracking optimisation studies. If successful, that would support the company's plan to drill a horizontal extension to exploit the siltstones.
Dependent on the results from the core, Oilex will use the well to frack and test that reservoir, but could potentially use the well to test the shallower OS-II conventional reservoir, it said.
"The detailed planning for this well is still being finalised and is subject to joint venture/budget approvals. This approach allows the company to take advantage of the lower cost vertical well drilling rates in India at present," said Oilex.
Oilex said it is talking to its partner, Gujarat State Petroleum Corp, about resolving outstanding cash calls and to gain approval of the 2016/2017 work programme and budget.
"The resolution of these matters is essential for the company to extract maximum value from the Cambay Field. Various approaches to progress work at Cambay are being considered," said the company. "Whilst the working plans for the field are being finalised and approved, Oilex as operator, continues to bear the ongoing costs of the joint venture."
Cambay is already producing, pumping out 42 barrels of oil equivalent per day during May. Importantly, the "bulk" of that production came from the Cambay-77H EP-IV reservoir, and the Cambay-73 and Cambay-77H wells remain shut-in whilst Oilex waits for government approval to continue production testing those wells.
The Bhandut-3 well managed to produce an average of 120 barrels of oil equivalent during May, and Oilex said it is closely monitoring production whilst an extension of the permitted production plan is being approved.
"While tubing head pressure at the well has been maintained, some formation water has been identified with the gas," said Oilex.
Oilex also said its reserves and resources have been updated since the last review back in April 2015. The reserves and resources have been adjusted to take lower estimates concerning gas prices, a lack of approval concerning work programmes from the joint venture partner and the deferral of project timing into account.
On that basis, Oilex was advised that the reserve volumes should be re-classified as contingent resources.
Net gas volumes of contingent resources within the X and Y zones are now comprised of 215.00 billion cubic feet of gas in 1P resources, 417.00 billion cubic feet of 2P resources and 728.00 billion cubic of 3P resources.
That can be compared to the estimate in April 2015 of 215.00 billion cubic feet of 1P resources, 324.00 billion cubic feet of 2P resources, and 558.00 billion cubic feet of 3P resources.
Oilex shares were trading down 0.2% to 0.574 pence per share on Friday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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