31 Jan 2012 07:00
OILEX LTD QUARTERLY REPORT TO SHAREHOLDERS
31 DECEMBER 2011
Highlights
Cambay PSC (45% Operator) onshore Gujarat, India
* Netherland, Sewell and Associates, Inc. ("NSAI") completed an initial
independent assessment of six the "tight" reservoirs within the Cambay
Contract Area and provided Best Estimates (100% basis) as set out below:
* two shallower zones (X and Y) with combined unrisked gross contingent resources of 494 BCF of gas and 83 million barrels of oil, * four deeper zones (Z, 180-200, 200-300, 300-400) with unrisked gross
prospective resources of 934 BCF of gas and 140 million barrels of oil.
* Interpretation of data from the Cambay-76H well indicates that the fracture
stimulation program was effective and has stimulated a rock volume comparable to that being achieved in North American tight reservoir operations.
* The Company's revised well production profile models for Cambay-76H that
incorporate post fracture data indicate Estimated Ultimate Recoverable
Volumes in excess of 3 BCFE. This is very encouraging for the performance
of future production wells which are expected to have a horizontal length
two to three times greater than the Cambay-76H proof of concept well.
* Fishing operations to retrieve the stuck milling tool in Cambay-76H well
were started and 246 metres of coil successfully recovered. Fishing
operations were interrupted due to higher than expected reservoir pressures
and an influx of hydrocarbons and fracture stimulation fluids into the
wellbore. As a consequence well control operations were initiated. As soon
as the well has been stabilised fishing operations will resume.
* In conjunction with the Cambay Joint Venture partner, Gujarat State
Petroleum Corporation, well locations and objectives have been agreed for
follow up drilling campaigns in 2012 and 2013 to confirm and develop the
NSAI assessed Resources.
JPDA 06-103 PSC (10% Operator) offshore Timor Sea
* Processing of 3D seismic data across the Tutuala lead and reprocessing of
3D seismic data across the Bazartete lead have been completed.
Interpretation of these data is nearing completion which could lead to a
drilling location being nominated shortly.
Financial
* Cash at end of the Quarter of A$10.5 million and no corporate debt.
Overview
NSAI's independent assessment of resources in the Cambay Contract Area, completed during the Quarter, confirms the substantial hydrocarbon potential of the Eocene X, Y and Z reservoirs previously recognised by the Company. NSAI also identified three additional deeper zones with significant hydrocarbon potential and assessed a greater potential for oil production than that previously assessed by the Company.
The Company's interpretation of data from the Cambay-76H well has beenencouraging and results are consistent with the Company's pre-fracturestimulation reservoir modelling. These results together with NSAI's assessmentprovide sufficient encouragement and justification to warrant further drillingof the Cambay tight reservoirs and form the basis for proposed work programsfor the evaluation and development of the Cambay tight reservoir resourcescurrently before the Joint Venture.
The Cambay-76H well clean-up operations and production testing have been significantly delayed due to the stuck coiled tubing and milling tool and subsequent well control operations. However, the Company believes that intermittent flows of hydrocarbons and fracture stimulation fluids to surface observed during this period may be positive indicators of potentially good future reservoir performance.
After the well has been stabilised, fishing and clean-up operations will resume. A production test will then follow to obtain data to demonstrate commerciality for a potential future Y zone development.
OPERATIONS REVIEW
CAMBAY FIELD, Gujarat, India
(Oilex Operator- 45%)
Cambay-76H Well
* Earlier in the year Oilex had successfully drilled and completed the 2,740
metre Cambay-76H well. The well included a 610 metre horizontal section and
an eight stage fracture stimulation program, the first well in onshore India to apply these technologies. However clean-up operations in preparation for production testing were suspended when a coiled tubing milling assembly became stuck in the wellbore. * In November pressure at the wellhead was recorded to have increased to approximately 1200psi and the well was subsequently "killed" for the installation of a Blow Out Preventer.
* Fishing or retrieval operations commenced on 6 December 2011 following the
mobilisation of a work over rig, personnel, materials, services and
imported manufactured specialist retrieval equipment.
* Operations to recover the stuck milling assembly proceeded satisfactorily
with 246 metres of coiled tubing recovered in four sections over five days.
An estimated 123 metres of coiled tubing and the milling assembly (12
metres) remain to be recovered once the well has been stabilised.
* Retrieval operations were interrupted after the fourth section of coiled
tubing was recovered when high bottom hole pressure conditions and an influx of gas and fracture stimulation fluids made it necessary to undertake well control operations to stabilise the well.
* Well control operations were initiated in mid-December which involved the
mobilization of additional equipment and chemicals to counter the abnormal
pressure in the well bore. Gas and condensate, nitrogen (that had been
injected in the early stages of attempting to free the milling assembly)
and fracture stimulation fluids were circulated to surface and the hydrocarbons flared. * While a reduction in pressure in the well bore was recorded during well
control operations, the well continued to flow thus preventing a resumption
of fishing operations. To counter the abnormal pressure a higher density
mud system is currently being mobilised.
* The Cambay-76H well will provide important long term production test data
to assess the potential of the Y Zone interval of the expansive Cambay
Eocene "tight" reservoirs and for the next stage of the independent
hydrocarbon assessment by Netherland Sewell and Associates Inc.
Resource Volumes
* During the Quarter an independent assessment of the hydrocarbon potential
was completed by Netherland Sewell and Associates Inc. (NSAI), a global consulting group specializing in the assessment and valuation of hydrocarbon resources.
* NSAI conducted a hydrocarbon in-place evaluation and recoverable resources
assessment of six potential Eocene reservoirs (X, Y, Z, 180-200, 200-300,
300-400 Zones) in the Cambay Production Sharing Contract ("PSC"). NSAI
determined:
* For the X and Y Zone, unrisked Contingent Resources on a Best Estimate
basis of 222.6 BCF and 37.4 MMBO net to Oilex. (Net High Estimate of 482.8
BCF and 80.5 MMBO).
* For the deeper Z, 180-200, 200-300 & 300-400 Zones, unrisked Prospective
Resources on a Best Estimate basis of 420.6 BCF and 63.1 MMBO net to Oilex.
* A further assessment will be undertaken by NSAI once sufficient production
data are obtained from the Cambay 76H well.
* NSAI has advised the Company that upgrading of the X and Y zone Contingent
Resources into Reserves may be possible on demonstration of: 1) X and Y Zone reservoir productivity; and 2) fracture stimulation technologies developed in North America being technically feasible and commercially viable for the Cambay project.
* With the successful drilling, completion and fracture stimulation of the
Cambay-76H well, the Company believes that it has already substantially
demonstrated one of these points; that fracture stimulation technologies
developed in North America can be transferred to India and are technically
feasible.
Cambay-76H Well Post-fracture Stimulation Analysis
* During the fracture stimulation program each of the fracture stages and
pre-fracture injectivity tests were monitored using surface and down-hole
pressure gauges and a microseismic surface array.
* Microseismic and pressure data acquired during the fracture treatments
provide complementary data which can be combined to develop a greater level
of confidence in the effectiveness of the fracture treatment and generate
more reliable calibrated models for the production performance of the
Cambay-76H well. The data will also be important for optimising the design
of future X & Y Zone production wells.
* The initial interpretation of these data has been completed and updated
well performance models have been generated. While final interpretation is
dependent on the data from the production test, the Company's preliminary
conclusions indicate that:
* Each of the eight fracture treatments successfully generated a complex
fracture network in the X and Y Zone in the vicinity of the Cambay-76H well
bore.
* The stimulated rock volume surrounding the well bore is comparable to that
obtained in North American stimulated wells according to public data
available for the Barnett and Haynesville reservoirs.
* Modelled initial production rates and well recoveries for the Cambay-76H
well incorporating these actual post-fracture stimulation data are
encouraging for the commercial production of hydrocarbons from the X and Y
Zones.
* Revised well production profile models for Cambay-76H that incorporate post
fracture data indicate Estimated Ultimate Recoverable Volumes in excess of
3 BCFE.
* The Cambay-76H well long term test will be conducted with the aim of
establishing a production decline curve and to confirm the expectations of
ultimate hydrocarbon recovery from wells in the Y Zone. These data will
also be used in assessing and potentially booking Reserves for the Cambay
Contract Area.
Forward Work Program 2012-13
* Data acquired during the fracture stimulation program has been assimilated
into the existing technical data base. The resulting interpretation forms
the basis for the design of an accelerated program for the evaluation and
development of the Cambay Field resources which will be focussed on:
* Drilling of additional vertical wells to obtain modern logs and specific
lithological and fluid data for the X & Y Zone at key locations in the
Contract Area. * Drilling of additional optimised horizontal production wells to build a Reserves base for the X & Y Zone.
* Assessment of the substantial oil and gas volumes identified in the deeper
Zones.
* Application of modern North American tight reservoir data acquisition and
interpretation technologies.
WA-388-P, Australia(Oilex- 8.4%)
* Work continued on the interpretation of the pre-stack depth migration
reprocessed data across the Placanica prospect by the Operator Apache
Northwest Pty Ltd. JPDA 06-103, TIMOR SEA(Oilex Operator - 10%)
* Processing of the Tutuala 3D Survey seismic data was completed. The Tutuala
Survey comprises 220 km2 of 3D seismic data across the Tutuala lead which
is mapped 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. The interpretation of
the Tutuala structure is ongoing. * Reprocessing of 3D seismic data across the Bazartete structure has been completed and the interpretation of these data is ongoing. * Upon completion of the above technical interpretation work, it is
anticipated that a drilling location may be nominated for the drilling of a
third well in JPDA 06-103.
* Autoridade Nacional Do Petroleo ("ANP"), the JPDA Designated Authority, has
agreed to vary the Production Sharing Contract to extend the initial
exploration period by 12 months until 15 January 2013.
West Kampar PSC, Central Sumatra
(Oilex - 45% + further 22.5% secured*)
* Oilex continues to pursue a commercial resolution to the Joint Venture
dispute and negotiations have continued to that end. At the same time, the
Company intends to protect its participating interest in the West Kampar
PSC and to pursue enforcement of its Arbitration Award as appropriate.
Financial
* Cash at the end of the Quarter of A$10.5 million with no commercial loans
at the end of the Quarter.
Health, Safety, Security and Environment
No Lost Time Incidents were recorded for Oilex personnel or contractors 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 +61 (0)8 9485 3200 Western AustraliaManaging Director: oilex@oilex.com.au Ben Clube +61 (0)8 9485 3200 Western Australia
Finance Director & Company Secretary:
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 Cozijn Non-Executive Chairman Security Transfer Registrars Pty LtdBruce McCarthy Managing Director 770 Canning HighwayRay Barnes Technical Director Applecross WA 6153, AustraliaBen Clube Finance Director & Company Secretary Telephone: +61 8 9315 2333 Sundeep Bhandari Non-Executive Vice Facsimile: +61 8 9315 2233 Chairman Email: Ron Miller Non-Executive Director
registrar@securitytransfer.com.au
Capital Structure as at 30 January 2012 Stock Exchange Listing Ordinary Shares 253,324,885 Australian Stock Exchange Code: OEX Unlisted Options 34,075,000 AIM Market of London Stock Exchange Code: OEX
Unlisted Performance Rights 22,000
LIST OF ABBREVIATIONS AND DEFINITIONS USED HEREIN
MMBO Million standard barrels of oil or condensate BBO Billion standard barrels of oil or condensate BCF Billion Cubic Feet at standard temperature and pressure conditions BCFE Billion Cubic Feet Equivalent calculated by applying a condensate gas conversion of 5.62 Discovered in Is that quantity of petroleum that is estimated, as of a place volume given date, to be contained in known accumulations prior to production Undiscovered in Is that quantity of petroleum estimated, as of a given date,place volume to be contained within accumulations yet to be discovered Prospective Those quantities of petroleum which are estimated, as of a Resources given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. MMSCF/DAY Million standard cubic feet (of gas) per day Contingent Those quantities of petroleum estimated, as of a given date,Resources to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development 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. 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. Reserves must satisfy four criteria: they must be discovered, recoverable, commercial, and remaining (as of the evaluation date) based on the development project(s) applied. Asset Schedule ASSET BASIN / JOINT VENTURE PARTIES EQUITY % OPERATOR STATE / COUNTRY
Cambay Field Cambay/ Oilex Ltd 30.0 Oilex
Ltd Gujarat / PSC 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) Limited Gujarat State Petroleum 60.0 Corp. Ltd Sabarmati Cambay/ Oilex NL Holdings (India) 40.0 Oilex NLField PSC Gujarat / Limited Holdings (India) India Limited Gujarat State Petroleum 60.0 Corp. 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 PSC Flamingo / Oilex (JPDA 06-103) Ltd 10.0 Oilex (JPDA 06-103) Ltd Joint Petroleum Development Japan Energy E&P JPDA 15.0 Area / Pty Ltd Timor-Leste & Australia GSPC (JPDA) Limited 20.0 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 Carnarvon/ Oilex Ltd 8.4 Apache
Northwest Pty Ltd
WA/ Australia Gujarat State Petroleum 8.4 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. Rule 5.3Appendix 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 31 DECEMBER 2011 1 Consolidated statement of cash flows Current Year to date quarter (6 months) $A'000 $A'000
Cash flows related to operating activities
1.1 Receipts from product sales and - - related debtors 1.2 Payments for (a) exploration and (4,044) (7,889) evaluation (b) development - - (c) production (145) (221) (d) administration (net) (579) (948) 1.3 Dividends received - - 1.4 Interest and other items of a 69 145 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 (4,699) (8,913)
Cash flows related to investing activities
1.8 Payment for purchases of: - - (a) prospects - - (b) equity investments (7) (29) (c) other fixed assets 1.9 Proceeds from sale of: - - (a) prospects - - (b) equity investments - - (c) other fixed assets 1.10 Loans to other entities - - 1.11 Loans repaid by other entities 4 - 1.12 Other (provide details if - - material) Net investing cash flows (3) (29) 1.13 Total operating and investing (4,702) (8,942) cash flows (carried forward) Current Year to date quarter (6 months) $A'000 $A'000 1.13 Total operating and investing cash (4,702) (8,942) flows (brought forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, - 13 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 - 13 Net increase (decrease) in cash (4,702) (8,929) held 1.20 Cash at beginning of quarter/year 15,437 19,070 to date 1.21 Exchange rate adjustments to item (276) 318 1.20 1.22 Cash at end of quarter 10,459 10,459
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 529
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 3,300 4.2 Development - 4.3 Production 300 4.4 Administration 400 Total 4,000 5 Reconciliation of cash
Reconciliation of cash at the end of Current quarter Previous quarter the quarter (as shown in the
consolidated statement of cash flows) $A'000 $A'000 to the related items in the accounts is as follows. 5.1 Cash on hand and at bank 3,817 6,155 5.2 Deposits at call 6,642 9,282 5.3 Bank overdraft - - 5.4 Other (provide details) - - Total: cash at end of quarter 10,459 15,437 (item 1.22) 6 Changes in interests in mining tenements Tenement Nature of interest Interest Interest reference at at end of (note (2)) beginning quarter of quarter 6.1 Interests in Refer to Permit/Asset mining tenements Schedule in Quarterly relinquished, Report reduced or lapsed 6.2 Interests in Refer to Permit/Asset mining tenements Schedule in Quarterly acquired or Report increased
7.9Exercised during quarter7.10Options
7 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 Amount paid number quoted price per up per security 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 securities 253,324,885 253,324,885 Various - 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 Number Issue Amount paid quoted price per up per security security 7.7 Options Exercise Expiry date price (description and conversion factor) 300,000 - $2.75 31/03/2012 900,000 - $2.75 30/06/2012 2,000,000 - $0.30 15/09/2012 16,687,500 - $0.30 10/11/2012 150,000 - $0.50 01/08/2013 4,150,000 - $0.30 01/07/2014 8,737,500 - $0.37 10/11/2014 500,000 - $0.36 21/11/2014 150,000 - $0.63 01/08/2015 500,000 - $0.46 21/11/2017 Total 34,075,000 2008 Performance Rights 22,000 Tranche 3 expire 1/07/2013 Total 22,000 7.8 Issued during 500,000 - $0.36 21/11/2014 quarter 500,000 - $0.46 21/11/2017 - - - - Expired during quarter - - - - 2008 Performance Rights 21,000 - Tranche 1 expire 1/07/2013 22,000 - Tranche 2 expire 1/07/2013 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: 31 January 2012
(Director and Company Secretary)
Print name: Ben Clube
XLON