31st Jul 2015 09:29
LONDON (Alliance News) - Oilex Ltd Friday said production increased in the second quarter of 2015 and said it is expecting its operations in India to be cashflow positive before the end of the year if shareholders approve a proposed capital raising announced in July to allow it to expand production.
Oilex released an update for the second quarter ended June 30, after which it proposed a large capital raising to conduct its work programme over its Indian assets which will begin in the second half of 2015 and continue into 2016.
Earlier in July, the Indian-focused oil and gas company proposed a placing to raise AUD21.2 million and a rights issue for a further AUD7.0 million, which if approved will result in the company raising a total of AUD30 million when combined with the AUD1.8 million it has already raised through a smaller placing.
The proceeds will be used for the company's work programme at the Cambay oilfield in India during 2015 and 2016. The 2015/16 work programme in India includes two horizontal multistage fracture stimulated production wells and five workovers of legacy wells.
On Tuesday, Oilex released a statement to shareholders urging them to vote in favour of the fundraising at the general meeting to be held on August 12 to allow it to undertake the "transformational" work programme.
At the Cambay field, which is the company's main focus, Oilex secured maiden reserves during the second quarter which will provide "a strong foundation for the expedited development of the Cambay Field to achieve key corporate objectives of increasing reserves, production and cashflow," it said Friday.
Oilex is already producing from the Cambay field via the Cambay-73 well, and sales started in June. The second well, Cambay-77H is expected to come back online during August 2015.
Average daily production from Cambay-73 was 50.5 barrels of oil equivalent per day in the second quarter, including condensate, leading to total net production of 301 barrels and 487 million standard cubic feet of gas, which is 46% higher than in the first quarter.
"Demand for gas from local light industrial businesses is ongoing, with expressions of interest to purchase gas continuing to be received by Oilex including from buyers who previously bid for Cambay-73 gas," the company said in a statement.
Away from the fundraising and planned work programme, the company said it completed the scope of works at the Bhandut field and it also finalised the tendering process for the construction of the gas production facility at the field, with the view of the field entering production in September 2015.
Overall, Oilex is set for a large production increase once Cambay-77H and the Bhandut field come online in the second half, and the company is aiming for its Indian operations to be cashflow positive before the end of 2015.
Oilex shares were down 2.4% to 1.83 pence per share on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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