29 Jul 2011 07:00
QUARTERLY REPORT TO SHAREHOLDERS 30 JUNE 2011
Highlights
Cambay PSC (45% Operator) onshore Gujarat, India
* Successfully drilled and completed 2,740 metre Cambay-76H well including
610 metre horizontal section, the longest horizontal well drilled in Cambay
Basin.
* Well log data while drilling indicated porous hydrocarbon-bearing intervals
with elevated gas readings throughout the Eocene tight reservoir horizontal
section.
* Fracture stimulation operations are anticipated to start soon. This will be
followed by well clean-up and an extended production testing phase.
* Further technical meetings were held with Netherland Sewell Associates Inc.
("NSAI") regarding the Independent Reserves Certification process for the
Cambay Eocene "tight" reservoirs. The certification report will be
completed after results from the Cambay-76H flow test.
Financial
* Cash at end of the Quarter of A$19.1 million.
* No corporate debt at the end of the Quarter.
Overview
During the June Quarter Oilex Ltd achieved the firstof its major objectives in assessing the potential of the "tight" reservoirs bysuccessfully drilling and completing the Cambay 76H "proof of concept"horizontal well. The Eocene low permeability ("tight") reservoirs extend acrossthe 161 km2 Cambay Production Sharing Contract ("PSC") area. The Company'sstrategy is to use horizontal drilling and modern fracture stimulationtechnology that has been developed and proven on similar plays in North Americato evaluate and exploit these "tight" reservoirs.The Cambay-76H horizontal multi-stage fracture stimulation well, the first ofits kind in India, will evaluate the potential of the Cambay Eocene Y zone"tight" reservoir. During the Quarter preparations and mobilisation of a rigand drilling equipment and services were completed. The well was then drilledand the completion was successfully run. Fracture stimulation operations areexpected to start shortly, and after well clean-up, it is anticipated that along term flow test will be performed to evaluate the production potential ofthe Y zone reservoir.The Company's main area of focus is now India, one of the major growingeconomies and energy markets in the world. The Company operates three onshorePSC's in Gujarat (including the Cambay PSC) on behalf of Joint Ventures withGujarat State Petroleum Corporation Ltd (GSPC). The Cambay PSC is located inthe heart of Gujarat's industrial corridor.
Gujarat has been described as the "growth engine of India" with GDP growth averaging over 10% in recent years and it is one of the country's most industrialised states. Gas demand in India is rising fast with demand outstripping the pace of domestic supply. Gujarat has an established and expanding gas pipeline network close to the Cambay Field contract area.
In its WA-388-P permit, offshore Western Australia, the Company participated inthe drilling of the La Rocca-1 exploration well. Although the well result was adisappointment, the Company had previously secured full funding for its shareof the well costs under the terms of a modified farm-out agreement with Apache.
The Company's cash position remains robust with cash at the end of the Quarter of A$19.1 million.
OPERATIONS REVIEWCAMBAY FIELD, Gujarat, India(Oilex Operator - 45%)
* The Cambay-76H well spudded on June 8th 2011 after an extended period of
mobilization and some major unplanned repairs to the rig by the drilling
contractor.
* After kicking off from the vertical hole at 1,167 metres, the well was
drilled to the horizontal landing point at 2,106 metres and the horizontal
section was drilled to 2,740 metres.
* The Cambay-76H well intersected the Y Zone reservoir on prognosis and well
log data while drilling indicated porous hydrocarbon-bearing intervals with
elevated gas readings throughout the horizontal section.
* The completion string for the planned eight stage fracture stimulation
programme was successfully run in the 610 metre horizontal well section.
The drilling rig was then demobilized from the well site to allow for the
mobilization of fracture stimulation equipment and related services.
* An 8 stage fracture stimulation program of the Eocene "tight" reservoir Y
Zone will be conducted. After well clean-up it is anticipated that a long
term production test will be performed to determine flow rates, quality of
hydrocarbons and commercial viability. The results of the long term production test will also provide important information for the ongoing Independent Reserves Certification commissioned by the Company. * Progress continues to be made on the Independent Reserves Certification
process with Netherland Sewell Associates Inc. ("NSAI"). NSAI has confirmed
six distinct hydrocarbon bearing zones within the Eocene section. The
Company is being advised by two North American companies, NuTech Energy
Alliance ("NuTech"), a leader in advanced petro-physical, geological and
fracture stimulation solutions for "tight" and "shale gas" reservoirs, and
Morning Star LLC ("Morning Star"), a worldwide petroleum consulting group
with expertise in "tight" reservoir projects.
* Some additional laboratory analyses were initiated to derive more accurate
reservoir parameters especially in the lower Z and deeper potential
reservoirs below the Z. The Company has been given access to additional
modern well data from areas close to the Cambay PSC which is being used to
enhance the Independent Reserve Certification process.
* NSAI has advised that in order to achieve the best possible classification
for the Y Zone, it will be necessary to demonstrate that tight gas
technology involving multi-stage fracture stimulation of horizontal wells
can be effectively applied in India to achieve commercial flow rates.
Accordingly, the reserves and resource certification report will be
completed after results from the Cambay-76H production test.
WA-388-P, Australia(Oilex - 8.4%)
* The first exploration well in the WA-388-P permit was spudded on 30 April
2011 targeting the "La Rocca" gas prospect.
* The La Rocca-1 well was drilled to a total depth of 4,864 metres after
drilling through the Intra Mungaroo formation channel sandstone objectives.
* There were no indications of gas in log data and the well was plugged and
abandoned after completion of wire line logs. * The well was operated by Apache Northwest Pty Ltd ("Apache") and was drilled using the "Ocean Patriot" drilling rig.
* Oilex secured funding for its share of the La Rocca-1 well costs under the
terms of a previously announced farm-out and subsequently modified
agreement with Apache.
* The WA-388-P permit contains a portfolio of play types which Apache will
evaluate now with the results of La Rocca-1. It is located north of the
Pluto, Wheatstone, Gorgon and North West Shelf Project fields, offshore
Western Australia. JPDA 06-103, TIMOR SEA(Oilex Operator - 10%)
* Petroleum Geo-Services ("PGS") completed the acquisition of the Tutuala 3D
seismic survey on behalf of the JPDA 06-103 Joint Venture in June 2011. * The Tutuala Survey comprises 220 km2 of 3D seismic data across the previously identified Tutuala lead at the Top Plover Formation
stratigraphic level. The Tutuala lead was only partially covered by 3D data
and the new survey provides infill coverage between the existing adjacent
3D surveys. * Additional reprocessing of existing 3D seismic data is also being undertaken to confirm the size and shape of an alternative structure,
Bazartete, which may also be considered as a drilling target for the next
well.
* The Joint Venture expects to drill the next exploration well in JPDA 06-103
after the completion of seismic processing and interpretation and
maturation of leads into drilling targets.
West Kampar PSC, Central Sumatra
(Oilex - 45% + further 22.5% secured*)
* Oilex continues to seek a commercial resolution to the dispute and discussions continue to that end. At the same time, Oilex intends to protect its participating interest in the West Kampar PSC and to pursue enforcement of its Arbitration Award as appropriate.
Background
* On 24 June 2010, the International Court of Arbitration of the ICC
(International Chamber of Commerce) found in favour of Oilex's wholly owned
subsidiary, Oilex (West Kampar) Limited, in its claim against PT Asiabumi
Petroleo (Asiabumi) for the recovery of US$4.6 million that is owed to
Oilex. Asiabumi is the parent company of the Operator (PT Sumatera Persada
Energi - SPE).
* Oilex commenced the ICC Arbitration against Asiabumi in Singapore in April
2009 following the failure of SPE in early 2009 to repay a debt owing to
Oilex under a previous agreement between Oilex and SPE. SPE's obligations
to repay the debt were secured by a parent company guarantee granted by Asiabumi to Oilex in 2008. * The Award granted in Oilex's favour took effect immediately. Oilex is pursuing the recovery of the monies owing under the Award.
* Oilex maintains that it is further entitled to have assigned an additional
22.5% to its 45% holding through the exercise of its rights under a Power
of Attorney granted by SPE following the failure of SPE to repay the funds
due referred to above. The assignment has been provided to BPMigas but has
not yet been approved or rejected. If the debt due to Oilex is satisfied,
it will not pursue this assignment.
Block 56, Oman(Oilex Operator - 25%)
* The Block 56 Joint Venture has given notice to the Oman Ministry of Oil and
Gas (MOG) of its intention to relinquish all of the Block 56 Contract Area
in accordance with the Exploration and Production Sharing Agreement (EPSA).
* On behalf of the Block 56 Joint Venture, Oilex Oman Limited (as Operator)
has completed the relinquishment work programme at well sites to the
satisfaction of the MOG and is completing the remaining administrative
requirements.
Financial
* Cash at the end of the Quarter of A$19.1million.
* No corporate debt at the end of the Quarter.
Health, Safety, Security and Environment
On 8 June 2011 a Lost Time Incident occurred at the Cambay-76H well site when asub-contractor personnel was injured. No Lost Time Incidents were recorded forOilex personnel at any location.
The Company's website www.oilex.com.au is regularly updated with current information.
For further information, please contact:
Oilex Ltd Bruce McCarthy - Managing Director +61 (0)8 9485 3200 Western Australiaoilex@oilex.com.au Ben Clube - Finance Director +61 (0)8 9485 3200 Western& Company Secretary: Australia oilex@oilex.com.au Read Corporate Nicholas Read: +61 (0)8 9388 1474 Western Australia nicholas@readcorporate.com.au Tavistock Communications +44 (0)20 79203150 UK Paul Youens: +44 (0)7843 260 623 UK pyouens@tavistock.co.uk Ed Portman: +44 (0)7733 363 501 UK eportman@tavistock.co.uk
Ambrian Partners Limited (Nominated Adviser and AIM Broker)
Anthony Rowland: +44 (0) 20 7634 4858 UK anthony.rowland@ambrian.com Matthew Einhorn: +44 (0) 20 7634 4860 UK matt.einhorn@ambrian.com Information in this report relating to hydrocarbon reserves or resources hasbeen compiled by Mr Ray Barnes B.Sc. (Hons), the Technical Director of OilexLtd who has over 38 years' experience in petroleum geology and is a member ofthe AAPG. Mr Barnes consents to the inclusion of the information in this reportrelating to hydrocarbon reserves and resources in the form and context in whichit appears. Resource estimates contained in this report are in accordance withthe standard definitions set out by the Society of Petroleum Engineers,Petroleum Resources Management System, 2007.This document may include forward-looking statements. Forward-lookingstatements include, but are not necessarily limited to, statements concerningOilex Ltd's planned exploration program and other statements that are nothistoric facts. When used in this document, the words such as "could", "plan","estimate" "expect", "intend", "may", "potential", "should" and similarexpressions are forward-looking statements. Although Oilex Ltd believes thatits expectations reflected in these are reasonable, such statements involverisks and uncertainties, and no assurance can be given that actual results willbe consistent with these forward-looking statements."CORPORATE DETAILS Board of Directors Share Registry Max D.J. Cozijn Non-Executive Chairman Security Transfer Registrars Pty Ltd Bruce McCarthy Managing Director 770 Canning Highway Applecross WA 6153, Australia Ray Barnes Technical Director Telephone: +61 8 9315 2333 Ben Clube Finance Director & Facsimile: +61 8 9315 2233 Company Secretary Email: registrar@securitytransfer.com.au Laxmi Bhandari Non-Executive Director Ron Miller Non-Executive Director
Capital Structure as at 29 July 2011 Stock Exchange Listing
Ordinary Shares 253,274,885 Australian Stock Exchange Code: OEX Unlisted Options 33,325,000 AIM Market of London Stock Exchange Code: OEX
Unlisted Performance Rights 65,000
LIST OF ABBREVIATIONS AND DEFINITIONS USED HEREIN
Associated Gas Natural gas found in contact with or dissolved in crude oil in the reservoir. It can be further categorized as Gas-Cap Gas or Solution Gas. Bbls Barrels of oil or condensate BCF Billion Cubic Feet at standard temperature and pressure conditions BOE Barrels of Oil Equivalent. Converting gas volumes to the oil equivalent is customarily done on the basis of the nominal heating content or calorific value of the fuel. Common industry gas conversion factors usually range between 1 barrel of oil equivalent (BOE) = 5,600 standard cubic feet (scf) of gas to 1 BOE = 6,000 scf. (Many operators use 1 BOE = 5,620 scf derived from the metric unit equivalent 1 m³ crude oil = 1,000 m³ natural gas). BOPD barrels of oil per day Deterministic The method of estimation of Reserves or Resources is called deterministic if a discrete estimate(s) is made based on knownEstimate geoscience, engineering, and economic data. GOR Gas to oil ratio in an oil field, calculated using measured natural gas and crude oil volumes at stated conditions. The gas/oil ratio may be the solution gas/oil, symbol Rs; produced gas/oil ratio, symbol Rp; or another suitably defined ratio of gas production to oil production. Volumes measured in scf/bbl. MMSCF/DAY million standard cubic feet (of gas) per day MMbbls million barrels of oil or condensate (recoverable) Contingent Those quantities of petroleum estimated, as of a given date, Resources to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by their economic status. Development Pending - A discovered accumulation where project activities are ongoing to justify commercial development in the foreseeable future. Development Unclarified or on Hold - A discovered accumulation where project activities are on hold and/or where justification as a commercial development may be subject to significant delay. Prospective Those quantities of petroleum which are estimated, as of a Resources given date, to be potentially recoverable from undiscovered accumulations Reserves Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. Possible Reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than Probable Reserves.3P P90 refers to the quantity for which it is estimated there is at least a 90% probability the actual quantity recovered will equal or exceed; P50 refers to the quantity for which it is estimated there is at least a 50% probability the actual quantity recovered will equal or exceed; and P10 refers to the quantity for which it is estimated there is at least a 10% probability the actual quantity recovered will equal or exceed. SCF/BBL standard cubic feet (of gas) per barrel (of oil) TCF Trillion Cubic Feet Tight Gas The reservoir cannot be produced at economic flow rates or Reservoir recover economic volumes of natural gas unless the well is stimulated by a large hydraulic fracture treatment, a horizontal wellbore, or by using multilateral wellbores Asset schedule
ASSET BASIN / STATE JOINT VENTURE PARTIES EQUITY % OPERATOR
/ COUNTRY Cambay Field Cambay/ Oilex Ltd 30.0 Oilex LtdPSC Gujarat / India Oilex NL Holdings (India) 15.0 Limited Gujarat State Petroleum 55.0 Corp. Ltd Bhandut Field Cambay/ Oilex NL Holdings (India) 40.0 Oilex NLPSC Gujarat / Limited Holdings India (India) Gujarat State Petroleum 60.0 Limited Corp. Ltd Sabarmati Cambay/ Oilex NL Holdings (India) 40.0 Oilex NLField PSC Gujarat / Limited Holdings India (India) Gujarat State Petroleum 60.0 Limited Corp. Ltd
Block 56 EPSA South Oman/ Oilex Oman Limited 25.0 Oilex
Oman Oman Limited GAIL (India) Limited 25.0 Videocon Oman 56 Limited 25.0 Bharat PetroResources 12.5 Limited Hindustan Petroleum Corp. 12.5 Ltd West Kampar Central Oilex (West Kampar) 67.5 (1) PT SumateraPSC Sumatra/ Limited Persada Energi Indonesia PT Sumatera Persada Energi 32.5 JPDA 06-103 Flamingo/ Oilex (JPDA 06-103) Ltd 10.0 OilexPSC Joint (JPDA 06-103) Petroleum Japan Energy E&P JPDA Pty 15.0 Ltd
Development Ltd Area / Timor-Leste & GSPC (JPDA) Limited 20.0 Australia Videocon JPDA 06-103 20.0 Limited Bharat PetroResources JPDA 20.0 Ltd Pan Pacific Petroleum 15.0 (JPDA 06-103) Pty Ltd WA-388-P (2) Carnarvon/ WA Oilex Ltd 8.4 Apache / Australia Northwest Pty Gujarat State Petroleum 8.4 Ltd Corp. Ltd Videocon Industries Ltd 8.4 Bharat PetroResources Ltd 8.4 Hindustan Petroleum Corp 8.4 Ltd Apache Northwest Pty Ltd 40.0 Sasol Petroleum Australia 18.0 Ltd
(1) Oilex (West Kampar) Limited is entitled to have assigned an additional 22.5% to its holding through the exercise of its rights under a Power of Attorney granted by SPE following the failure of SPE to repay funds due. The assignment has been provided to BPMigas but has not yet been approved or rejected. If Oilex is paid the funds due then it will not pursue this assignment.
(2) The WA-388-P Joint Venture entered into a farm-in agreement with ApacheNorthwest Pty Ltd ("Apache"). Oilex, GSPC, Videocon, Bharat PetroResources, andHPCL participating interests in the WA-388-P permit are 14% and will be 8.4%after finalisation of the farm-in. Sasol's participating interest is 30% andwill be 18% after finalisation of the farm in. Oilex subsequently entered intoa sale and farm-in amendment agreement with Apache. Oilex participatinginterest is now 8.4% following finalisation of the sale and farm in amendmentagreement. Apache is now the operator.
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/01, 1/6/10,17/12/10.Name of entityOILEX LTDABN Quarter ended ("current quarter") 50 078 652 632 30 JUNE 2011 1 Consolidated statement of cash flows Current Year to date quarter (12 months) $A'000 $A'000
Cash flows related to operating activities
1.1 Receipts from product sales and 857 905 related debtors 1.2 Payments for (a) exploration and (3,489) (9,330) evaluation (b) development - - (c) production (212) (438) (d) administration (net) (187) (1,790) 1.3 Dividends received - - 1.4 Interest and other items of a 104 368 similar nature received 1.5 Interest and other costs of finance - - paid 1.6 Income taxes paid - - 1.7 Other (provide details if material) - - Net Operating Cash Flows (2,927) (10,285)
Cash flows related to investing activities
1.8 Payment for purchases of: - - (a) prospects - - (b) equity investments (33) (103) (c) other fixed assets 1.9 Proceeds from sale of: - 4,572 (a) prospects - - (b) equity investments 2 5 (c) other fixed assets 1.10 Loans to other entities - - 1.11 Loans repaid by other entities (1) 35 1.12 Other (provide details if - - material) Net investing cash flows (32) 4,509 1.13 Total operating and investing (2,959) (5,776) cash flows (carried forward) Current quarter Year to date $A'000 (9 months) $A'000 1.13 Total operating and investing cash (2,959) (5,776) flows (brought forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, - 9,885 options, etc 1.15 Proceeds from sale of forfeited - - shares 1.16 Proceeds from borrowings (net) - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (provide details if material) - - Net financing cash flows - 9,885 Net increase (decrease) in cash (2,959) 4,109 held 1.20 Cash at beginning of quarter/year 22,372 16,809 to date 1.21 Exchange rate adjustments to item (343) (1,848) 1.20 1.22 Cash at end of quarter 19,070 19,070
Payments to directors of the entity and associates of the Current
directors quarter
Payments to related entities of the entity and associates of the $A'000
related entities
1.23 Aggregate amount of payments to the parties included in 403
item 1.2
1.24 Aggregate amount of loans to the parties included in item
1.10
1.25 Explanation necessary for an understanding of the transactions
2 Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a
material effect on consolidated assets and liabilities but did not involve cash flows N/A
2.2 Details of outlays made by other entities to establish or increase their
share in projects in which the reporting entity has an interest N/A 3 Financing facilities available Amount available Amount used Add notes as necessary for an $A'000 $A'000 understanding of the position. 3.1 Loan facilities - - 3.2 Credit standby arrangements - - 4 Estimated cash outflows for next quarter $A'000 4.1 Exploration and evaluation 5,000 4.2 Development - 4.3 Production 100 4.4 Administration 400 Total 5,500 5 Reconciliation of cash
Reconciliation of cash at the end of the Current quarter Previous quarter quarter (as shown in the consolidated statement of cash flows) to the related $A'000 $A'000 items in the accounts is as follows.
5.1 Cash on hand and at bank 8,259 11,470 5.2 Deposits at call 10,811 10,902 5.3 Bank overdraft - - 5.4 Other (provide details) - - Total: cash at end of quarter 19,070 22,372 (item 1.22) 6 Changes in interests in mining tenements Tenement Nature of interest Interest Interest at reference at end of (note (2)) beginning quarter of quarter 6.1 Interests in Refer to Permit/ mining Asset Schedule in tenements Quarterly Report relinquished, reduced or lapsed 6.2 Interests in Refer to Permit/ mining Asset Schedule in tenements Quarterly Report acquired or increased 7.107 Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. Total Number Issue price Amount paid number quoted per security up per security 7.1 Preference - - - - +securities (description) 7.2 Changes during - - - - quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions 7.3 +Ordinary 253,274,885 253,274,885 Various - securities 7.4 Changes during - - - - quarter (a) Increases through issues (options exercised) - - - - (b) Decreases through returns of capital, buy-backs 7.5 +Convertible - - - - debt securities (description) 7.6 Changes during - - - - quarter (a) Increases through issues (b) Decreases through securities matured, converted 7 Issued and quoted securities at end of current quarter (cont'd) Description includes rate of interest and any redemption or conversion rights together with prices and dates. Total Number Issue Amount paid up number quoted price per per security security 7.7 Options Exercise Expiry date price (description and conversion factor) 3,900,000 - $2.00 1/07/2011 3,900,000 - $2.50 1/07/2011 500,000 - $1.57 30/09/2011 300,000 - $2.75 31/03/2012 900,000 - $2.75 30/06/2012 2,000,000 - $0.30 15/09/2012 16,737,500 - $0.30 10/11/2012 4,150,000 - $0.30 1/07/2014 8,737,500 - $0.37 10/11/2014 Total 41,125,000 2006 Performance Rights 15,000 Tranche 1 expire 1/07/2011 2008 Performance Rights 21,000 Tranche 1 expire 1/07/2013 22,000 Tranche 2 expire 1/07/2013 22,000 Tranche 3 expire 1/07/2013 Total 80,000 7.8 Issued during - - - - quarter 7.9 Exercised during - - - - quarter 7.10 Expired during quarter Options 350,000 - $2.70 30/04/2011 900,000 - $1.75 30/06/2011 900,000 - $2.25 30/06/2011 50,000 - $0.30 10/11/2012 50,000 - $0.37 10/11/2014 Performance Rights - - - 7.11 Debentures Nil Nil (totals only) 7.12 Unsecured notes Nil Nil (totals only) Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX.
2 This statement does give a true and fair view of the matters disclosed.
Sign here: Date: 29July 2011
(Director and Company Secretary)
Print name: Ben Clube
XLON