Bhandut-3 - Gas Sales Agreement Endorsed

 5 December 2014

Bhandut-3 - Gas Sales Agreement EndorsedOilex Ltd (ASX: OEX, AIM: OEX) is pleased to announce it has received endorsement from the Government of India for the sale of gas from the Bhandut-3 well, which is located within the Bhandut Field. This is a critical milestone for returning the field to production, supplying gas to the local market and generating positive cash flow for the Company from a previously idle asset.

Now that endorsement of the gas sales agreement has been received, the Bhandut Joint Venture will proceed to establish the appropriate production facilities for Bhandut-3. This will include a compressed natural gas (CNG) loading facility that will enable CNG "bullet" trucks to be loaded at site for transportation of the gas to end users. Bhandut-3 gas is "lean" and therefore no material condensate production is expected.

As announced on 20 August 2013, Bhandut-3 flowed at a maximum rate of 6.5MMscfd through a 10mm choke with a flowing tubing head pressure of 1,190 psia during an isochronal test. The test confirmed the reservoir sand has a permeability of 124mD, making it a conventional reservoir. It is planned to deliver approximately 0.5-1MMscfd from the Bhandut-3 well. The Company anticipates the cost of the production facilities payback in 7 months from commencement of production based upon the contracted gas price.

Managing Director of Oilex, Ron Miller, said;

"We are very pleased to receive the endorsement from the Government of India to sell gas from Bhandut-3 and restart production from the field to provide gas to the local market. The contracted price was determined by a competitive bidding process and remains Commercial-in-Confidence. Oilex continues towards generating additional cash flow through increasing production from its assets in India."

For and on behalf of Oilex Ltd

 Ron Miller

Managing Director

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