18th Apr 2006 09:25
OILEX NLLevel 3, 50 Kings park RoadWEST PERTH WA 6005Tel: (618) 9226 5577Fax; (618) 9226 210818 April 2006Alternative Investment MarketLondon UKDear Sir/Madam,RE: ACQUISITION OF ADDITIONAL EQUITY INTERESTS - CAMBAY, BHANDUT AND SABARMATIFIELDS, GUJARAT, INDIAOilex NL (Oilex) is pleased to advise that it has acquired an additional 15%interest in the Cambay Field and 40% in each of Bhandut and Sabarmati Fieldsonshore Gujarat, from Niko Resources Ltd (Niko) subject to the approval of theGovernment of India. Each of these fields is producing oil at low rates on anintermittent basis and they are anticipated to be good candidates forre-development.In all of these joint ventures, Oilex is the Operator and its co-venture partyis Gujarat State Petroleum Corporation Limited (GSPC). Oilex has received allapprovals necessary for the initial farmin on GSPC and Niko for 30% equity inCambay Field, subject to formal amendment of the Production Sharing Contract(PSC).The Cambay, Bhandut and Sabarmati fields are located in one of the mostprolific petroleum provinces onshore India close to existing pipeline andindustrial infrastructure and with the purchase from Niko of the additional 15%equity in Cambay and the 40% participating interest in the Bhandut andSabarmati PSC's, Oilex is well placed to develop a production base in Gujaratat the earliest opportunity (refer map attached).Oilex will become the Operator under the existing PSC and Joint OperatingAgreement and in consideration of the assignment by Niko of its interests andadjustment for Niko's share of the original farmin, Oilex will pay an amount ofUS$5.49 million which will be due when approval of the Government of India isreceived. This amount is equal to the proportional value of the costs incurredby GSPC and Niko in the past that have not been recovered under the costrecovery provisions of the PSC.The fields were all discovered and developed initially by Oil & Natural GasCorporation (ONGC) of India. Hydrocarbons were found in Oligocene and Eocenesandstones and continued to be produced on an intermittent basis after thefields were acquired by the GSPC and Niko Joint Venture in 1995. Productionfrom the fields has suffered because of sand and water influx and decline inreservoir pressure most likely due to formation damage. Oilex has undertakengeological studies of existing well data and is planning a phased seismicacquisition and drilling programme to commence in May-June of this year.FIELD OILEX NET INTEREST Cambay 45% Operator Bhandut 40% Operator Sabarmati 40% Operator CAMBAY BHANDUT & SABARMATI FIELD LOCATION - GUJARAT, INDIA For and on behalf of the BoardB. H. McCarthyManaging Directorcc: Directors: MC/GIJ/RGBInformation in this report has been compiled by the Managing Director of OilexNL Dr B.H. McCarthy B.Sc Hons. PhD (Geology) who has over 26 years experiencein petroleum geology.Level 3, 50 Kings Park Road West Perth Western Australia 6005 P.O. Box 588 West Perth Western Australia 6872 Telephone (61 8) 9226 5577 Facsimile (61 8) 9226 2108 email: [email protected] www.oilex.com.au ENDOILEX NLRelated Shares:
OEX.L