Cambay-77H Delivering proof of concept objectives

31 October 2014

· Efficient drilling operations demonstrating the repeatability of targeting the Y zone

· Y zone reservoir properties are laterally consistent, having variability within expectations

· Successful completion of 8 fracture treatments

· Successfully demonstrated "Plug and Perf" completion technique in India

· First horizontal well in the Cambay Basin with multiple fracture treatments to achieve flowback

· Flowback data used to calibrate horizontal well model for the first time

Oilex Ltd (ASX: OEX, AIM: OEX) is pleased to announce significant progress in achieving the proof of concept objectives for Cambay-77H. These objectives are critical to demonstrating the Cambay Field can be commercially developed using multi-stage fracture treatments (fracs) in horizontal wells. Cambay-77H has a very short lateral section of 350m with 8 fracs that were successfully completed in 4 stages.

The key objectives achieved include:

· Efficient drilling operations that demonstrated repeatability by successfully intersecting the Y zone at the predicted depth, while steering around other existing wells

a. Well logs confirm the Y zone is hydrocarbon bearing

b. Provides confidence that the Y zone reservoir properties are laterally consistent, and any variability is within expectation

· Successfully perforated, isolated and treated 8 fractures in 4 stages

· All fracs interpreted to extend ~ 60m into the reservoir from the well bore which is interpreted to be sufficient for commercial production in longer laterals

· "Plug and Perf" completion method is achievable and repeatable in India

· Flowback activities, including recovery of Operations water from this type of well can be successfully executed in the Cambay Field

Other key outcomes that influence the future commercialisation of Cambay Field are:

· The hydrocarbon liquid to gas ratio (LGR) during flowback has been ~100 bbls of liquids per MMscfd of gas. This ratio is 250% higher than expected which if sustained, leads to a much higher unit revenue stream in barrels of oil equivalent (Boe).

· Oil and gas recovery started on the first day of flowback and gas sales during flowback operations in future wells is possible as the gas market is readily available. This leads to early cash flow and faster payback of well costs.

· Well modelling calibrated to flowback production over ~ 85 days indicates that frac spacing in future wells with longer laterals can be increased. Fewer fracs per unit length can lead to significant cost savings.

· Cambay-77H sustained production rate of 0.5 - 1.0MMscfd has been predicted using the well model calibrated to flowback production and is up to 185% greater than Cambay-73, which has a single frac in a vertical well. Cambay-73 was flowing 0.35MMscfd when shut in during June 2012 and will be returned to production subsequent to the installation and commissioning of facilities.

· The recovery of Operations water is >79% and therefore at the high end of expectation and North American experience. No formation water has been recovered to date which continues to confirm the thesis that no direct oil water contact (OWC) is accessible within the Y zone.

· As Cambay-77H is on "self-flow" with no artificial lift, a significant proportion of reservoir energy within the drainage area of the well has been used to recover large volumes of Operations water. This means less reservoir energy is available to produce oil and gas during the flowback period.

· Future wells with longer laterals and wider fracture spacing will have larger drainage areas and access more reservoir energy. Proportionately less energy should be needed to recover Operations water, resulting in higher gas and oil production rates.

The Cambay JV's progress at the Cambay Field compares favourably to other experiences in which a single operator is applying unconventional multi-stage fracture treatments in a new basin or field. Range Resources Corporation ((NYSE: RRC) "Range Resources") successfully applied Barnett Shale style fractures to the Marcellus Field from 2004 to 2008, which is now one of the largest producing gas fields in the world.

The enclosed charts compare Cambay horizontal wells to the initial Marcellus well results for Range Resources.

For charts, please click on, or paste the following link in to your web browser, to view the PDF file: http://www.rns-pdf.londonstockexchange.com/rns/7801V_-2014-10-31.pdf

Range Resources "cracked the code" in the Marcellus with Well #4 when it achieved a flow rate of 3.2 MMscf/d. Oilex continues to draw on the experience of others to shorten the learning curve for Cambay Field development.

Managing Director of Oilex, Ron Miller, said;

"Oilex's first mover strategy compares favourably to other successful companies that have been early entrants into newly identified tight/unconventional gas and oil plays. Delivering Cambay-77H with its proof of concept objectives is now almost complete. Upon completion of these objectives, Oilex will continue to focus on commercialising the Cambay Field and generating sustainable cash flow and profits for shareholders."

 For and on behalf of Oilex Ltd

 Ron Miller

Managing Director

For further information, please contact:

Information related to Range Resources and the Marcellus Gas Field has been extracted from the May 2013, American Association of Petroleum Geologists (AAPG) presentation; "Path to discovery and commercialization of the Marcellus Shale - the largest producing gas field in the United States" by Jeffery Ventura, Chief Executive Officer of Range Resources.