9 Nov 2011 07:56
9 November 2011
CHAIRMAN'S ANNUAL GENERAL MEETING SPEECH
Oilex advises that the Oilex Chairman Max Cozijn gave the following review of the Company's affairs at the Annual General Meeting of Shareholders on 9 November 2011.
Dear Shareholder,
I am pleased to report to you on what has been a year of significant progress and achievement for Oilex in confirming the potential of the extensive, Eocene low permeability (or "tight") reservoirs in the onshore Cambay Field, Gujarat in India.
The Cambay Field represents a potentially company-making growth asset for Oilex with significant resources and the potential to generate near-term production and cash flows in a location where the energy market fundamentals are extremely attractive. Gujarat is one of the major industrial centres in India.
The Company's strategy in commercialising the Cambay Field "tight" Eocene reservoirs is to apply leading-edge tight reservoir evaluation, drilling and production technologies and techniques which have been developed in recent years in the rapidly expanding "tight" and shale gas industry in North America.
During the year, the Company achieved a major objective of this strategy by successfully drilling and completing the Cambay 76H "proof of concept" horizontal well and performing a multi-stage fracture stimulation of the well.
The Cambay-76H well is the first of its kind in India and represents an important milestone in demonstrating that "tight" reservoir drilling, completion and stimulation techniques and technologies can be successfully transferred to and implemented in India.
The Company's operating presence and extensive experience in India was instrumental in achieving this successful outcome.
Operations commenced recently to open the Cambay 76H well for flow back; however, these have been temporarily suspended to retrieve tools currently stuck in the well. Immediately following this "fishing" operation, the opening of the horizontal section will be resumed to allow the well to clean up and begin production testing.
Initial conclusions should be possible a few months after clean-up of the well and a stable flow test of data has been obtained from the well.
During the year the Company also completed detailed technical studies of the Eocene "tight" X, Y and Z reservoirs using its existing comprehensive well and technical data base. After detailed analysis of the data, the Company announced an upgrade to the unaudited reserves and resources for the Cambay Field in September 2010. The Company was advised on this by two North American companies who are industry leaders in the field of "tight" and "shale gas" reservoir evaluation.
Subsequently, the Company commissioned Netherland Sewell Associates Inc ("NSAI") to undertake an independent certification of the Cambay "tight" reservoirs. On the 11th of October NSAI completed an initial independent assessment of six potential Eocene reservoirs in the Cambay Production Sharing Contract - the X, Y, Z, 180-200, 200-300, 300-400 Zones.
NSAI's assessment confirms the substantial hydrocarbon potential of the Cambay PSC and validates the volumetric potential recognised by the Company in its assessment of the X, Y and Z zones in late 2010. NSAI also identified several significant deeper zones with more speculative tight hydrocarbon potential not previously assessed by Oilex.
In addition, NSAI recognised the potential for oil production which is demonstrated by well tests from previously drilled conventional vertical wells on the Cambay field.
NSAI have advised that before classification of commercial reserves can be made, it needs to be demonstrated that North American tight reservoir technologies can be applied successfully in India and are both technically and commercially viable in these Cambay tight reservoirs. The next stage of NSAI's assessment will be undertaken once sufficient production data is available from the Cambay 76H well flow test and appropriate revised classifications will then be made.
With the progress made on the Cambay Field during the year, the Company's primary focus is now in India. Our Executive Directors, Dr Bruce McCarthy and Ben Clube, are dedicating increasing amounts of their time in India to manage the existing Cambay asset and to pursue expansion opportunities that may arise.
The Company is also continuing to build its Indian-based organisation so that it is well positioned to progress with the next phase of activity in appraising, delineating and developing the Cambay asset.
At the end of the year, the Company had retained cash of AU$19.1 million with no commercial loans outstanding. In December 2010, the Company completed a AU$10 million placement with UK AIM institutional investors which was oversubscribed. The placement has helped raise the Company's profile with international investors, being one of the few investment vehicles providing exposure to the growing Indian energy and petroleum sectors. Presently over 40 per cent of the Company's shares are held on the LSE AIM register in the UK.
In conclusion, in behalf of the Board, I would like to thank our staff, joint venture partners, contractors, local communities and shareholders for their support and contribution during this transformational year for the Company.
Thank you for your attention.
For further information, please contact:
Oilex Ltd +61 (0)8 9485 (Western Australia) 3200 Bruce McCarthy Managing Director oilex@oilex.com.au Ben Clube Finance Director oilex@oilex.com.au Ambrian Partners Limited (Nominated Adviser and AIM Broker) Matthew Einhorn +44 (0) 20 7634 (UK) 4860 matt.einhorn@ambrian.com Anthony Rowland +44 (0) 20 7634 (UK) 4858 anthony.rowland@ambrian.com Read Corporate Nicholas Read +61 (0)8 9388 (Western Australia) 1474 nicholas@readcorporate.com.au Tavistock Communications +44 (0)207 920 (UK) 3150 Ed Portman +44 (0)7733 363 (UK) 501 eportman@tavistock.co.uk Paul Youens +44 (0)7843 260 (UK) 623 pyouens@tavistock.co.uk
XLON