Cambay-76H Well Operations Update

7 May 2012

Cambay-76H Well operations updaTE

Further to the announcement of 10 April 2012, Oilex Ltd (ASX: OEX, AIM: OEX) provides the following update on operations at the Cambay-76H horizontal well in the Cambay Field, onshore Gujarat, India.

As previously announced, Oilex has been conducting operations to recover and replace damaged drill pipe and recovering milling assemblies from down hole. During these operations while attempting to pull out of the well with the milling assembly the drill pipe has parted on three separate occasions at 282 metres (corrected from 600 metres as previously reported), 2,294 metres and, most recently, at 977 metres.

Prior to the last run in hole, the drill pipe was inspected at site in accordance with American Petroleum Institute Guidelines using non-destructive testing techniques and the drill pipe that was last run in hole was therefore understood to have good integrity. However, the latest failure at 977 metres brings into question the fundamental condition of the drill pipe.

As a direct consequence of the apparently poor integrity of the drill pipe and the potentially adverse consequences of continuing to use this equipment, the Joint Venture has decided to suspend operations until a better understanding is reached and the condition of the well bore is reviewed. An investigation including laboratory testing of drill pipe material is being undertaken to determine the cause of these failures.

Commenting on the current status of the Cambay Project and the Cambay-76H well, Bruce McCarthy, Managing Director said: "Clearly the current situation is disappointing. However, the Cambay tight reservoir project - with very substantial contingent resources independently certified by NSAI - has exciting potential for oil and gas from the overpressured Eocene reservoirs. The potential of the project is not diminished by the mechanical problems with the well that we have experienced. A lot of very important information has been gained from the well albeit that we have not yet been able to flow test it. The high energy in the reservoir exemplified by the high mud weights to control the well and flows of hydrocarbons and stimulation fluids to surface during recent operational phases at good pressure are highly encouraging. The intent is to resume operations, possibly as part of an expanded work program at the earliest opportunity."

The participating interests in the Cambay PSC are:

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This document may include forward-looking statements. Forward-looking statements include, but are not necessarily limited to, statements concerning Oilex Ltd's planned exploration program and other statements that are not historic facts. When used in this document, the words such as "could", "plan", "estimate" "expect", "intend", "may", "potential", "should" and similar expressions are forward-looking statements. Although Oilex Ltd believes that its expectations reflected in these statements are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements.