15th Jul 2014 11:20
LONDON (Alliance News) - Oilex Ltd Tuesday said it has received approvals from the Government of India to sell gas from the Cambay Field, specifically from its Cambay-73 well, and it has drawn down GBP1.2 million from its equity financing facility with Darwin Strategic Ltd.
The oil and gas exploration and development company said the approvals mark a critical milestone for increasing production from the entire field and supplying it to the local market.
The company is particularly positive on bringing the Cambay-73 well back into production, as it produced from the Cambay Y zone at roughly one million standard cubic feet per day and will help in its ongoing development of the Cambay-77H well.
The entire contract area would provide Oilex with 37.4 million barrels of oil and 222.6 billion cubic feet of gas according to the 2C findings of a 2011 resource assessment. Oilex said this data does not include the Cambay-73 information and it expects an improvement in its resources shortly.
The company said that now that the agreement has been made, partners on the site will develop the necessary production facilities for Cambay-73 and initially connect the production to a low pressure pipeline grid servicing the local area.
"The contracted price remains Commercial-in-Confidence and was determined by a competitive bidding process. This reassessment will enable Oilex to consider delivery of pipeline quality gas to the high pressure grid located approximately 7 km from this region the field," Managing Director Ron Miller said in a statement.
Oilex is currently developing the Cambay-77 well, which was recently fracked and gas flowed to the surface during milling operations. The company said that once the Cambay-77H well is stable, its production test will start and the commerciality of the reservoir will be quantified.
"Cambay-73 and Cambay-77H will also provide significant deliverability data for the Y zone which can be used in upgrading a portion of the independently certified Contingent Resources into Reserves," Miller added.
The company also said in a separate statement that it has raised GBP1.2 million after drawing down on its equity financing facility with Darwin Strategic Ltd by way of the issue of 18.6 million shares to Darwin.
It said the shares were issued at a price of 6.3 pence per share and the issue price represents a discount of 3.5% to the average of the last 15 daily volume-weighted average price on AIM.
The company said the funds will be used towards the development of its Cambay asset along with general working capital purposes.
"With flowback and clean-up in progress at Cambay-77H, operational flexibility creates additional opportunities to enhance production as well as pursue activities in our Canning Basin assets," Miller said.
Oilex shares were down 2.2% to 6.70 pence on Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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