OEX.L Regulatory News (OEX)

9 August 2013

·; A privately financed UK based investment vehicle, Magna Energy, is to acquire a 10% participating interest in the Cambay Tight Hydrocarbon Project PSC for US$4 million with an option to acquire an additional 5% participating interest in the PSC for US$2m.

·; Proceeds to be used to fund up to 100% of Oilex's current 45% share of drilling the Cambay-77H development well if option exercised.

·; Oilex retains operatorship and a minimum 30% of the Cambay Project.

Oilex Ltd (ASX: OEX, AIM: OEX, Oilex) is pleased to announce that it has agreed to sell a 10% participating interest in the Cambay Production Sharing Contract ("PSC") incorporating its Tight Hydrocarbon Project ("Cambay Project") in Gujarat, India to Magna Energy ("Magna") for a total payment of US$4 million. Magna also has an option to acquire an additional 5% participating interest for a total payment of US$2 million. These payments will include the working interest share of the 2013/14 Cambay work program and budget and the value of the corresponding share of moveable property included in the joint venture books.

Under the terms of agreement, the funds received would be applied towards the proportion of the cost to drill the Cambay-77H horizontal well that relates to Oilex's current 45% participating interest in the PSC. Based on the gross estimated well cost of Cambay-77H of approximately US$13 million, it is anticipated that up to 100% of Oilex's share of the costs will be covered by the funds from Magna.

The Cambay-77H well will be the second multistage fracture stimulated horizontal well drilled in the Cambay Project and is designed to confirm the applicability of North American technology for development and production of tight hydrocarbon resources in India.

Unless otherwise mutually agreed, in the event that certain conditions, including the approval of the Government of India have not been satisfied or, where applicable, waived prior to 1 May 2014, the parties have agreed that the initial payment(s) will, to the extent practicable, be converted into shares in Oilex. The issue of shares will be limited to 19.9% of the enlarged issued capital of Oilex at that time, with any balance of the investment not satisfied in shares repayable in cash.

Shareholders will be asked to approve this transaction at an upcoming general meeting. A deposit of US$200,000 will be paid at signing with the balance of the US$4 million consideration for the sale of a 10% working interest being payable 10 business days after the later of shareholder approval or Oilex's non-operating joint venture participant, GSPC, not exercising its pre-emptive right within 30 days. Further details of the transaction will be outlined in the notice of meeting to be issued by the Company.

Oilex retains operatorship and a minimum of a 30% equity interest in the Cambay PSC, if the additional 5% equity interest option is exercised, corresponding to independently certified 2C Contingent Resources of 50 million boe, of which approximately 50% is gas (see below for further details on the Cambay PSC Contingent Resource Estimate). In addition to the Government of India approval, the transaction is subject to certain other conditions, including joint venture pre-emption rights.

The Cambay Field is located in one of the most prolific petroleum provinces onshore India. It is close to existing pipeline and industrial infrastructure and represents an important growth asset for Oilex with the potential to generate near term production and cash flows in a location where energy market fundamentals are attractive. Recently, the Government of India announced the likely increase in the domestic gas price to approximately the equivalent of US$8.00 per MMbtu during 2014 to encourage further investment in development of local gas resources.

Oilex had received a significant amount of interest from major companies looking to acquire an interest in the liquids rich Cambay Project and the transaction balances the obligation to provide substantial capital for development drilling whilst retaining a significant share of the Cambay resource.

Managing Director of Oilex, Ron Miller, said "This transaction will serve to reduce Oilex's funding requirements for the Cambay-77H work program while ensuring the Company retains a substantial interest in the prolific Cambay Basin and associated exposure to near term production, reserves and cash flow."

"Oilex looks forward to working with its new investment partner along with GSPC in unlocking the substantial confirmed gas, condensate and possibly oil resource located within the Cambay PSC."

For further information, please contact:

ABOUT MAGNA ENERGY

Magna Energy is a privately financed investment vehicle established in the UK. It is focused on oil and gas investment opportunities in emerging economies with growing energy demand and underexploited domestic hydrocarbon potential. Investors in Magna Energy have a successful track record in the Oil and Gas Industry.

Cambay PSC Contingent Resource Estimate

Full details on the Cambay PSC resources, including discovered and undiscovered in-place volume estimates and unrisked Prospective Resources estimates, are set out on page 7 of Oilex's 2012 Annual Report, available at www.oilex.com.au.

* Before completion of the transaction with Magna Energy Limited disclosed in this announcement.

Competent Person's Statement

Information in this report relating to hydrocarbon reserves or resources has been reviewed and checked by Mr Peter Bekkers B.Sc. (Hons), the Chief Geoscientist of Oilex Ltd who has over 15 years of experience in petroleum geology and is a member of the Society of Petroleum Engineers and AAPG. Mr Bekkers consents to the inclusion of the information in this report relating to hydrocarbon reserves and resources in the form and context in which it appears. Resource estimates contained in this report are in accordance with the standard definitions set out by the Society of Petroleum Engineers, Petroleum Resources Management System, 2007.

This document may include forward-looking statements. Forward-looking statements include, but are not necessarily limited to, statements concerning Oilex Ltd's planned exploration program and other statements that are not historic facts. When used in this document, the words such as "could", "plan", "estimate" "expect", "intend", "may", "potential", "should" and similar expressions are forward-looking statements. Although Oilex Ltd believes that it's expectations reflected in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements.

LIST OF ABBREVIATIONS AND DEFINITIONS