Financial Report for Year Ended 30 June 2014

HIGHLIGHTS

SUMMARY

Cambay Field, Onshore Gujarat, India

· Oilex successfully drilled and completed the 2,370 metre MD Cambay-77H well which included a 350 metre horizontal section comprising of a four stage fracture stimulation programme. 

· Gas Sales Agreement for Cambay-73 future production was endorsed by the relevant Government of India authorities.

· Subsequent to the financial year milling operations were successfully completed with the commencement of flow-back of fluids with light oil/condensate being recovered at surface and separated for sale along with associated reservoir gas.

Canning Basin, Western Australia

· Oilex conducted an Aerial Gravity/Magnetic Survey over SPA 17 AO (formerly STP-SPA-0055) which included acquisition, processing and interpretation. Preliminary interpretation confirms Oilex's structural model that the Wallal Graben, which is clearly imaged by 2D seismic in Oilex's adjacent permits, extends into SPA 17 AO.

· The Wallal Graben appears to contain the important elements of a working petroleum system including source rocks, structure, thick sedimentary section and sufficient depth of burial to generate hydrocarbons.

· Company was successful in its application for contiguous gazettal blocks L12-08 and L12-09 gazettal blocks which cover the remainder of the Wallal Graben. The total land area covered by the two gazettal blocks is 6,444 km2 (~1,600,000 acres). The exploration permits awarded are STP-EPA-0106 for discrete area L12-08 and STP-EPA-0107 for discrete area L12-09.

Financial

· Oilex retained $7.5 million cash at the end of the year with no corporate debt.

· Oilex's financial position was strengthened after the year end by the placement of 18.6 million shares to raise $2.13 million. In addition the conversion of more than 7 million listed options raised an additional $1 million.

Contents

Chairman's Review

Business Review

Permit Schedule

Corporate Governance Statement

Directors' Report

Remuneration Report - Audited

Auditor's Independence Declaration

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Directors' Declaration

Independent Audit Report

Shareholder Information

Business Directory

Corporate Information

CHAirman's review

Dear Shareholder,

Your Company has continued to make significant progress in evaluating the potential of the extensive, Eocene low permeability "tight" reservoirs in the Cambay Field, onshore Gujarat, India as well making significant progress in the Canning Basin of Western Australia.

The Company's strategy in commercialising the Cambay Field "tight" reservoirs is to apply proven "tight" reservoir evaluation, drilling and production technologies and techniques that have been developed in recent years in the rapidly expanding "tight" and shale gas industry in North America.

The Cambay Contract Area is a large acreage position of 161 km2 and is located at the hub of India's largest gas distribution network close to the existing gas grid in the State of Gujarat. The Indian gas market is expected to be one of the fastest growing in the world over the next two decades. The inherent advantages of gas over alternate fuels, has resulted in the demand for gas in India to consistently outpace supply and the gas deficit in India is expected to increase. The Indian Government is looking to stimulate domestic gas production to fill this supply gap and is expected to shortly announce a new pricing formula for gas prices with the new rates still to be agreed however these are expected to be substantially higher.

During the year the Company successfully drilled and completed the 2,370 metre MD "proof of concept" Cambay-77H well. The well was spudded in March 2014 and intersected the primary reservoir target (Y zone) on prognosis with drilling being completed in April 2014. A comprehensive suite of logs was acquired and preliminary interpretation confirmed the wellbore encountered a significant sequence of hydrocarbon bearing reservoir similar to Cambay-76H. After the rig demobilised the well was ready for fracture stimulation in June 2014. During fracture stimulation gas was detected at surface and elevated overpressure of ~5000 psi was measured indicating a pressure increase of 670 psi.

Subsequent to the end of the financial year milling operations were successfully completed with the commencement of a controlled flow-back of fluids with light oil/condensate being recovered to surface and separated for sale along with associated reservoir gas. Gas associated with the well flow-back is currently being flared to ensure safety of all well-site personnel.

The well is currently cleaning up and Oilex will advise the market of a stabilized flow rate via a production test once frac fluid return and clean-up operations have been completed. The recovery of ~API 50 light crude during flow-back operations has been particularly encouraging indicating higher than expected liquid hydrocarbon production. Measuring these liquids will provide valuable information regarding the quality of the 8 fracture stimulations and deliverability of the reservoir.

A successful production test will provide the catalyst for a potential pilot development project and provide data which will enable Oilex to increase production and cash flow while confirming the commercial potential of the Cambay "tight" X and Y Zone reservoirs. The contingent drilling campaign of three vertical and two horizontal wells and a pilot development project will also provide data to support converting Contingent Resources into Reserves. Importantly Oilex has an Oil Sales Agreement in place and a refinery exists nearby.

In addition to Cambay-77H operations subsequent to the end of the year the Company received endorsement of the Cambay-73 Gas Sales Agreement from the relevant Government of India Authorities, a critical milestone for increasing production from the field and supplying gas to the local market. Tender evaluations for the results of Bhandut-3 gas sales remain with the Government of India for endorsement.

In August 2013 the Company agreed to sell 10% of the Cambay PSC to Magna Energy Limited ("Magna") for US$4 million. The Sale and Purchase Agreement entered into with Magna contained an unwind trigger process whereby any funds received by Oilex would be converted to shares in Oilex Ltd if one of the triggers provision was enacted. The unwind process was triggered in May 2014 when the Government of India consent for the sale of a 10% participating interest in the Cambay PSC was not received by the due date of 1 May 2014. The US$4 million received by Oilex was converted to shares in Oilex, resulting in Magna becoming a cornerstone investor in the Company.

During the year the Company conducted an Aerial Gravity/Magnetic Survey (the "Aerial Survey") in SPA 17 AO (formerly "SPA-0055") in the Canning Basin following signed agreements with three Traditional Owner Groups either holding Native title or claiming Native over portions of SPA 17 AO. The Aerial Survey, including acquisition, processing and interpretation, was awarded to CGG Aviation (Australia) Pty Ltd and was completed in April 2014. In June 2014 the Company announced the Preliminary interpretation of the Aerial Survey confirms Oilex's structural model that the Wallal Graben, which is clearly imaged by 2D seismic data in Oilex's adjacent permits extends into SPA 17 AO. The Wallal Graben appears to contain the important elements of a working petroleum system including source rocks, structure, thick sedimentary section and sufficient depth of burial to generate hydrocarbons.

During August 2013 the Company announced it had been successful in its bids for gazettal blocks L12-08 and L12-09, covering 6,444 km2 immediately adjacent to SPA 17 AO. The additional acreage is interpreted to contain an extension of the Wallal Graben to the north of SPA-0055, potentially capturing an entire newly-defined play fairway. The exploration permits awarded are STP-EPA-0106 and STP-EPA-0107.

Subsequent to the end of the year the Company on behalf of its Joint Venture participants in the Timor-Leste Joint Venture, received a further extension to the suspension of JPDA-06-103 Production Sharing Contract ("PSC") to 15 October 2014. The extension was granted for the ANP to complete an assessment of the application by the Joint Venture parties to terminate the PSC without liability following concerns over security of tenure after the Timor-Leste Government initiated formal arbitration proceedings against the Government of Australia to have the Certain Maritime Arrangements in the Timor Sea ("CMATS") declared void ab initio. 

During the year the Company raised $14.6 million in additional funds with the issue of approximately 236 million shares to progress the development of its assets.

The 2014 financial year has been an encouraging year for the Company with progression in the Company's flagship Cambay project as well as significant developments through the acquisition of the Company's Canning Basin acreage in Western Australia.

The Board is currently reviewing its composition, and will be addressing the structure pending developments at Cambay and an assessment of the optimal skills base required for the Company's future development.

On behalf of the Board I wish to record our appreciation for the support and dedication of our Executive Management, staff, joint venture partners, contractors, local communities, shareholders and stakeholders during the year, and in particular the team associated with the drilling and completion of Cambay-77H as the Company progresses the development of the Cambay project.

Mr MDJ Cozijn

Chairman

12 September 2014

BUSINESS REVIEW

Overview

Oilex continues its transition to becoming a leading "tight" oil and gas producer in India as well as acquiring some excellent exploration acreage in the Canning Basin of Western Australia. During the year the Company drilled Cambay-77H, the second horizontal multi-stage fracture stimulated well within the contract area for the Cambay PSC, with the well currently under test. Oilex remains focussed on near term production from Cambay-77H as well as two existing wells in India. Oilex continues to examine potential opportunities that fit its strategy of onshore unconventional assets.

INDIA

Oilex's focus remained firmly on the world-class unconventional energy potential in the Company's highly prospective acreage at Cambay, onshore Gujarat, India, driven by the large independently certified Contingent Resource within the Cambay PSC. In October 2011 Netherland, Sewell and Associates Inc. ("NSAI") completed an independent assessment of the Cambay Field "tight" reservoirs. NSAI assessed significant Contingent Resources and Prospective Resources with Unrisked Contingent Resources (2C net to Oilex's 45% equity share) of 222 billion cubic feet of gas and 37 million barrels of oil from the two uppermost zones of a very thick hydrocarbon bearing section (see Part A of Table 1.2). Promisingly, NSAI also concluded that the deeper zones within the Cambay contract area contain very substantial Prospective Resources, highlighting significant additional potential in a very concentrated area of 161 km2 (40,000 acres) (see Part B of Table 1.2).

In August 2013 the Company agreed to sell 10% of the Cambay PSC to Magna Energy Limited ("Magna") for US$4 million. The Sale and Purchase Agreement ("SPA") entered into with Magna contained an unwind trigger process whereby any funds received by Oilex would be converted to shares in Oilex Ltd if one of the triggers provision was enacted. The unwind process was triggered in May 2014 as the Government of India consent for the sale of a 10% participating interest in the Cambay PSC was not received before the due date of 1 May 2014. The US$4 million received by Oilex was converted to shares in Oilex resulting in Magna becoming a cornerstone investor in Oilex. The unwind process was then followed by on-market purchases by Magna, resulting in Magna holding a 19.1% interest as the end of the reporting period. Following the unwind process in May 2014 Oilex retains a 45% interest in the Cambay PSC with Magna having no rights under the SPA to acquire an interest.

Oilex's strategy is to utilise modern drilling and completion practices to pursue the tight resources in the Cambay contract area. Significant advancements in drilling and stimulation techniques have been extensively proven in North America in recent years, yet they have not been applied widely in India.

During the financial year Oilex successfully drilled and completed the 2,370 metre "proof of concept" Cambay-77H well. Subsequent to the end of the financial year Oilex successfully completed the fracture stimulation of four stages (8 fractures) in the 350 metre lateral section. Milling operations were successfully completed with the commencement of a controlled flow-back of fluids with light oil/condensate being recovered to surface and separated for sale along with associated reservoir gas. Gas associated with the well flow-back is currently being flared to ensure safety of all well-site personnel. The well is currently in the clean up phase and Oilex will advise the market of a stabilized flow rate via a production test once frac fluid return and clean-up operations have completed.

A successful production test will provide the catalyst for a potential pilot development project and provide data which will enable Oilex to increase production and cash flow while confirming the commercial potential of the Cambay "tight" X and Y Zone reservoirs. The contingent drilling campaign of three vertical and two horizontal wells and a pilot development project will also provide data to support converting Contingent Resources into Reserves.

India is also one of the world's fastest-growing energy markets. The International Energy Agency forecasts India's gas demand to increase by over 5% per annum over the next 15 years and to quickly outpace supply. During June 2013, the Government of India announced a new pricing mechanism which is anticipated to lead to a substantial increase in the price of domestic supplies natural gas to stimulate investment in the sector, thereby enhancing the value of the Cambay Project. Importantly, the Cambay Project is ideally located at the hub of India's largest gas distribution network and approximately 10 km from the existing gas pipeline grid and well-positioned to rapidly commercialise production in the fast-growing, demand-driven domestic energy market.

Subsequent to the end of the year the Company received endorsement of the Cambay-73 Gas Sales Agreement from the relevant Government of India Authorities, a critical milestone from increasing production from the field and supplying gas to the local market.

AUSTRALIA

During the financial year the Company announced it had been successful in its bids for gazettal blocks L12-08 and L12-09, covering 6,444 km2 immediately adjacent to SPA 17 AO. The additional acreage is interpreted to contain an extension of the Wallal Graben to the north of SPA 17 AO, potentially capturing an entire newly-defined play fairway. The exploration permits awarded are STP-EPA-0106 and STP-EPA-0107. The Company also conducted an Aerial Gravity/Magnetic Survey (the "Survey") in SPA 17 AO in the Canning Basin. In June 2014 the Company announced that the preliminary interpretation of the Survey confirms Oilex's structural model that the Wallal Graben, which is clearly imaged by 2D seismic data in Oilex's adjacent permits extends into SPA 17 AO.

Cambay Field, Onshore Gujarat, India

(Oilex - 45%, Operator)

Work Programme

In April 2014 the Management Committee approved the Cambay Work Programme and Budget for the year ended 31 March 2015. The approved Work Programme and Budget consists of Cambay-77H to be drilled from the same drill pad as the Cambay-76H well with the intention to conduct a long term production test.

Subsequent to Cambay-77H being drilled and tested, a contingent work programme of three additional horizontal and a vertical wells to test the prospective deeper zones will be considered. This phase of work is designed to acquire cores, modern wire line logs, reservoir fluid information and production test data that would generate sales of oil and gas for local markets, assist an independent certifier to move contingent resources to reserves and evaluate the significant potential of the deeper, "tight" reservoirs at Cambay.

Cambay-77H Well

Cambay-77H well was engineered and designed taking into consideration recommendations of an independent expert review of Cambay-76H undertaken in October 2012. The independent in-depth engineering comprised of an analysis of the issues with milling operations at Cambay-76H which led to the well being suspended before a flow test could be conducted.

The well has a 350 metre lateral section which has been designed with four stages of fracture stimulations, each containing two fracture initiation points for a total of 8 fractures along the length of the lateral section. The fracture stimulations were undertaken using a "plug and perf" technique also widely used in tight formations in North America.

Cambay-77H was spudded in March 2014 and drilled and completed ready for fracture stimulation in April 2014. Cambay-77H intersected the primary reservoir target (Y Zone) on prognosis. A comprehensive suite of logs was acquired and preliminary interpretation confirmed the wellbore encountered a significant sequence of hydrocarbon bearing reservoir similar to Cambay-76H. Following the rig demobilising the fracture stimulation equipment arrived at site in June 2014. Stage 1 of the four stage fracture stimulation was completed during June 2014 with subsequent gas detected at surface and elevated overpressure of ~ 5,000 psi was measured indicating a pressure increase of 670 psi.

Subsequent to the end of the reporting period fracture stimulation stages 2-4 were completed with no decrease in the elevated overpressure noted to stage 1 and the reservoir section responded to all fracture stimulations in a similar manner. Plug milling operations were completed with gas flowing to surface during the milling operations.

Figure 1: Location Map - Cambay Basin Gujarat, India

Cambay-73 Well

In April 2012 a previously stimulated well, Cambay-73 which is located about 1 km to the south of Cambay-77H, was reopened to allow the well to clean up and enhance production from the Cambay PSC. Production was halted by the Government on 28 June 2012 pending Oilex securing an arrangement to sell the small quantities of produced gas. In April 2013 Oilex announced a Gas Sales Agreement ("GSA") was signed for "offspec" gas from Cambay-73 and was submitted to the Government for endorsement. The initial term is for two years and additional wells can be added to the contract if potential production exists.

In July 2014, subsequent to the reporting period, the relevant authorities within the Government endorsed the GSA. This is a critical milestone for increasing production from the field and supplying gas to the local market.

Cambay-73 also provided additional data to evaluate the potential of the Y Zone reservoir. The Cambay-73 well is a vertical well drilled and completed in 2008 with smaller scale fracture stimulation and 10 metres of active perforations in the Y Zone. The Y Zone in Cambay-73 well is geologically similar to the Cambay-76H and 77H reservoir by comparison of well logs. The pressure and fluid data recorded during production can be directly used to model Y Zone reservoir performance for a horizontal multistage fracture stimulated well.

Figure 2: Cambay-77H Well Position Relative to Cambay-76H & Cambay-73

Figure 3: Chief Geoscientist Pete Bekkers with an Oil Sample Recovered From Cambay-77H

Background to Cambay Project

Oilex operates the Cambay Field Production Sharing Contract ("PSC") in the Cambay Basin onshore Gujarat, India on behalf of its Joint Venture with Gujarat State Petroleum Corporation Limited.

The Cambay Basin lies in the heart of Gujarat's industrial corridor which is India's largest centre of heavy industry. There is an extensive existing infrastructure of oil and gas pipelines connecting the Cambay Basin fields to local industries and other major centres as far north as Delhi. Gujarat accounts for a large proportion of India's industrial output, is one of the fastest growing states in India and has a large and expanding energy market.

The 161 km2 Cambay contract area contains thick, low permeability reservoirs in the Eocene section. The contract area was previously explored and developed by Oil and Natural Gas Corporation ("ONGC"), India's largest state-owned oil and gas company in the period from 1957 through to the 1980's. However it was developed as a gas field mainly from the shallower Oligocene ("OSII") reservoirs in the southern part of the contract area. Since its inception, the Cambay Field has produced about 52 billion cubic feet of gas until it was shut-in in the early 1990's due to water and sand production problems.

ONGC drilled over 30 wells to variable total depths through the Eocene "tight" reservoirs, using conventional drilling and completion technology. The deepest well, Cambay-40 was drilled in 1963 to a depth of more than 3,200 metres with gas shows at the total depth of the well. The flow rates from conventional tests in the Eocene section of the various historical, conventional wells were relatively low, in the range of 0.3 - 4.2 MMscfd and production volumes were minimal.

Oilex acquired a 30% equity interest in the Cambay PSC in March 2006 and a further 15% equity in 2007, having identified the low permeability Eocene reservoirs as a potentially under-exploited section. To evaluate this potential Oilex and GSPC completed the following work programme between 2006 and 2008:

· acquired 3D seismic over the entire contract area;

· drilled 5 conventional vertical wells all of which had strong indications of oil and gas while drilling including oil and gas in mud at surface;

· tested oil or gas condensate from vertical wells with conventional completions in the Eocene section;

· conducted small scale fracture stimulations on the Eocene zones in 3 wells;

· conducted pre and post fracture stimulation well tests from those 3 wells resulting in flows of oil or gas and condensate to surface from the Eocene section;

· initiated long term production testing on Cambay-19Z;

· Cambay-73 was shut in as a potential gas condensate producer; and

· Cambay-74 was completed as an oil production well at the shallow Miocene interval.

Oilex concluded from this work programme that the potential of the Eocene "tight" reservoirs could be best harnessed by drilling horizontal wells and undertaking larger scale, multi-stage fracture stimulation of the "tight" reservoirs. The technology was not available in India at the time and the understanding of "tight" reservoir development was in its infancy outside of North America.

In 2009 the sophisticated "tight" reservoir evaluation, drilling and production technology which had driven the North American "shale gas" revolution became more widely accessible and Oilex sought to acquire access to those technologies to facilitate the evaluation and commercialisation of the Eocene reservoirs. Oilex was well placed to exploit these technologies on behalf of the Cambay Joint Venture given the existing comprehensive technical data base that it had acquired or improved upon since 2005, its international industry contacts and its experience of operating in India.

Figure 4: Cambay Basin - Location Map, Infrastructure and Oil and Gas Fields

Independent Resource Assessment

In October 2011 Netherland, Sewell and Associates Inc. ("NSAI") completed an independent hydrocarbon in-place evaluation and recoverable resources assessment of six potential Eocene reservoirs (X, Y, Z, 180-200, 200-300, 300-400 Zones) in the Cambay Contract Area.

NSAI assessed two shallower Zones (X and Y) to have combined Best Estimate (100% basis) Discovered gross in-place volumes of 1,314.1 billion cubic feet of gas ("BCF") and 1,633.1 million barrels of oil ("MMbo") and unrisked gross recoverable volumes of 494.7 BCF of gas and 83.3 MMbo. NSAI assessed the four deeper Zones (Z, 180-200, 200-300, 300-400) to have combined Best Estimate (100% basis) Undiscovered gross in-place volumes of 12,644 BCF (12.6 trillion cubic feet) of gas and 11,592.3 MMbo and unrisked gross recoverable volumes of 934.8 BCF of gas and 140.4 MMbo.

NSAI's assessment concluded that potential exists for in place crude oil and associated gas as well as primary gas and associated condensate from each of the reservoirs analysed. NSAI has used a ratio of crude oil to primary gas in-place for each reservoir of 60-65% to 40-35% and identified this ratio as a key uncertainty.

The recoverable hydrocarbons in the shallower zones assessed (X and Y) have been classified by NSAI as Contingent Resources in accordance with SPE-PRMS requirements and are summarised in Part A of Table 1.2 below.

The 4 deeper zones (Z, 180-200, 200-300 and 300-400) have been classified by NSAI as Prospective Resources in accordance with SPE-PRMS requirements and are summarised in Part B of Table 1.2 below. The Z Zone has 29 full or partial well penetrations with log responses that may indicate the presence of hydrocarbons but testing of this Zone has not been undertaken in the past. Consequently moveable hydrocarbons have yet to be recovered in commercial quantities from this Zone. The 180-200 Zone has 14 full or partial well penetrations with log responses that indicate hydrocarbons are present and moveable hydrocarbons have been produced by conventional drill stem and production test from a thin inter-bedded sand section in the near-vertical Cambay-19Z well. The well still produces hydrocarbons from this zone. Moveable hydrocarbons have yet to be demonstrated from the wider area of the 180-200 Zone. The limited nature of the data available in the deeper Zones, including as noted above, makes direct comparison with established North American unconventional and "tight" gas producing basins difficult.

The in-place and unrisked recoverable hydrocarbon volumes estimated by NSAI for the six defined zones are as shown in the following tables:

Table 1.1 - Hydrocarbons In-Place

Part A - Discovered hydrocarbons in-place

Part B - Undiscovered hydrocarbons in-place

Table 1.2 - Unrisked Recoverable Hydrocarbons

Part A - Contingent Resources

Part B - Prospective Resources

Notes to Tables

(1) The in-place and resource volume estimates prepared by Netherland, Sewell & Associates Inc. and stated in the tables above have been prepared in accordance with the definitions and guidelines set forth in the Petroleum Resources Management System, 2007 approved by the Society of Petroleum Engineers ("SPE").

(2) The contingent resources shown in the tables above have been estimated using probabilistic methods. The prospective resources shown in the tables above have also been estimated using probabilistic methods and are dependent on a petroleum discovery being made.

(3) Oil volumes shown comprise crude oil and condensate.

(4) Gas volumes shown comprise free gas and associated gas.

(5) The estimates included in the table for Prospective Resources have not been adjusted for both an associated chance of discovery and a chance of development (see definitions).

(6) The estimates included in the table for Contingent Resources have not been adjusted for the chance of development due to one or more contingencies (see definitions).

(7) The gross (100% working interest) and net to Oilex (45% working interest) estimates include Government share of production applicable under the Production Sharing Contract and are reported net of royalties.

(8) None of the petroleum resources contained within the overall in-place and resource volume estimates prepared by Netherland Sewell & Associates Inc. constitutes petroleum reserves.

BHANDUT FIELD, Onshore Gujarat, India

(Oilex - 40%, Operator)

The field was discovered and developed initially by ONGC. The field was acquired by the GSPC and Niko Joint Venture in 1995 and Oilex subsequently acquired Niko's interest in 2006. The first 3D seismic survey over Bhandut Field was acquired in February 2007. The main reservoir units in the shallower Miocene section are sandstones with irregular distribution. The field has produced 19,353 bbls of oil since acquisition.

During the financial year, Oilex received a final report relating to an isochronal production test of a gas sand above the depleted oil reservoir in Bhandut-3. Bhandut-3 flowed at a maximum rate of 6.5 MMscfd (184,370 m3/d) through a 10 mm choke with a flowing tubing head pressure of 1,190 psi. The isochronal test was conducted to obtain more precise reservoir performance data as part of attempting to realise value from Bhandut Field and the test confirmed the reservoir sand has a high permeability, making it a conventional reservoir.

Modern well logs show the reservoir section at the well is 3.5m thick as such, the lateral extent of the gas sand and in-place gas volumes cannot be accurately estimated from static data at present. Dynamic production test flow and pressure data suggests the (best estimate) Contingent Resource (100% basis) may be ~250 MMscf (~7,000,000 m3). The estimated petroleum resources have been generated by Oilex in accordance with the SPE-PRMS guidelines and have not been independently certified. This volume, together with appropriate low and high estimates, can only be confirmed through further production, which requires appropriate gas sales arrangements. During a meeting in September 2013 with the Indian Government, Oilex was informed that the same competitive tendering process required at Cambay is also required for Bhandut to demonstrate an arm's length price structure. Gas Sales Agreement ("GSA") tenders for Bhandut-3 future production were received and evaluated during October 2013. The evaluation results were submitted to the Government for endorsement and as the date of this report remain to be endorsed.

Potential buyers are interested and considering the use of compressed natural gas ("CNG") bullet trucks for transportation of natural gas from the well head in the field to end users. This provides flexibility to adjust the offtake rate between 0.5-1.0 MMscfd to suit the deliverability of Bhandut-3 gas sand over time. Discussions continue towards reaching a similar "off-spec" GSA as has been signed for Cambay-73 production. Given the uncertainties, Oilex currently ascribes a commercialisation risk factor of 75% to the Contingent Resource estimate.

Bhandut-3 is a lean gas composition with 98.9% hydrocarbons, of which 94% is methane, and 1.1% is inert gases (Nitrogen and Carbon Dioxide). As such minimal treatment is required.

Figure 5: Bhandut Field

SABARMATI FIELD, Onshore Gujarat, India

(Oilex - 40%, Operator)

The Sabarmati Field is located on the southern culmination of a trend of producing oil fields operated by ONGC, on the outskirts of Ahmedabad, the largest city in Gujarat. Oil has been produced from the Eocene section from one well at low rates since inception of the PSC in 1994. The field was discovered and developed initially by ONGC. The field was acquired by the GSPC and Niko Joint Venture in 1995 and Oilex subsequently acquired Niko's interest in 2006.

During the year the Sabarmati Field produced an average of approximately 8 barrels of oil per day (3 barrels net to Oilex).

SPA 17 AO (formerly STP-SPA-0055) Wallal Graben, CANNING BASIN, WESTERN AUSTRALIA

The Company announced in April 2013 that it has accepted an offer for Special Prospecting Authority SPA 17 AO (Formerly STP-SPA-0055) which covers acreage in the onshore Canning Basin of Western Australia. SPA 17 AO encompasses a large area of approximately 11,400 km2 (~2,800,000 acres), which includes the previously overlooked undrilled Wallal Graben that may be prospective for oil and liquids-rich gas.

Under the terms of the offer, Oilex will have an exclusive Acreage Option ("AO") to negotiate the conversion of a portion (30% to 50% of the total area) of SPA 17 AO into a

Petroleum Exploration Permit. The programme included the acquisition of airborne gravity gradiometry/magnetic data processing and interpretation.

An objection period for interested Native Title parties to object to the grant of SPA 17 AO expired in September 2013 with three objections received. In February 2014 following discussions, Oilex signed agreements with three Traditional Owner Groups either holding Native Title or claiming Native Title over portions of Oilex's Special Prospecting Authority area, SPA 17 AO. Entering into these agreements facilitated overflight access for acquisition of the Survey and represents a key milestone for this asset.

The Survey, including acquisition, processing and interpretation, was awarded to CGG Aviation (Australia) Pty Ltd ("CGG"). Acquisition commenced on 29 March 2014 and completed on 3 April 2014 ahead of schedule. The CGG Aviation (Australia) Pty Ltd FALCON airborne gravity gradiometry and magnetic survey consisted of 4,060 line-km of data and was acquired using a tighter grid than the existing data, thus enhancing the structural elements of the area. The interpretation integrates regional gravity, magnetic, 2D seismic, regional surface geological and well data in adjacent areas with the newly acquired Survey data.

In August 2014 Oilex received the final interpretation report from CGG.

The final interpretation confirms Oilex's structural model that the Wallal Graben, which is clearly imaged by 2D seismic data in Oilex's adjacent permits, extends into SPA 17 AO. The report identifies north-west oriented transtensional faults that subdivide the basin into a series of Palaeozoic rift grabens and half-grabens separated by structural highs in the Precambrian basement (Figure 8). The graben is now confirmed to be present in Oilex's three, 100%-owned exploration areas encompassing approximately 17,900 km2 (~4.4 million acres). The interpretation report has been submitted to the Department of Mines and Petroleum ("DMP") and negotiations to convert the prospective areas of SPA 17 AO into a formal Exploration Permit have commenced.

The Wallal Graben appears to contain the important elements of a working petroleum system including source rocks, structure, thick sedimentary section and sufficient depth of burial to generate hydrocarbons.

Pilbara area mining activity near Oilex's Wallal Graben acreage has led to the development of a significant amount of infrastructure. The Telfer Gas pipeline traverses the SPA 17 AO acreage and any future pipelines from the Canning Basin to the main export terminals at Port Hedland and Karratha would have to pass through the acreage.

Figure 6: Canning Basin - Location Map

Figure 7: Cessna 208b used to acquire falcon airborne gravity gradiometry and magnetic survey

Figure 8: Wallal Graben Structural Interpretation overlain on the magnetic depth to basement horizon (in meters relative to sea level)

Technical Background

A review of prospective onshore basins in Australia resulted in the identification of a deep, undrilled half graben (Wallal Graben) in the south-west Canning Basin.

Only low resolution gravity/magnetic data and sparse vintage 2D seismic data of variable quality have been acquired over this area. No wells have been drilled sufficiently deep to penetrate the graben-fill. Comparing interpretations of the different geophysical surveys revealed possible discrepancies. While the gravity/magnetic data interpretation defined a relatively shallow graben feature, the 2D seismic data and subsequent depth conversion facilitated the interpretation of an extensive half graben up to 5.5 km deep, which is viewed positively for the generation of hydrocarbons.

The nearby Samphire Graben is well imaged on both gravity/magnetic and 2D seismic data, resulting in it being clearly defined on published structural maps of this area. A regional 2D seismic line acquired in 1985 ties both the Wallal and Samphire Grabens.

Extensional tectonics in the Ordovician initiated the growth of a major rotational fault that forms the south-west margin of the Wallal Graben with down to north-east rotation. 2D seismic data interpretation clearly defines a prospective "mid-basin ridge" structure that consists of a tilted fault block from Basement to late Ordovician levels, and associated anticlinal drape of the overlying Devonian and Permian sediments (Figure 9 East Africa Rift Basin).

The Goldwyer Formation, a well acknowledged unconventional play, is interpreted to exist which is a focus objective for Oilex. Significant, high value farmin activity by industry majors targeting the Goldwyer Formation has occurred. The Wallal Graben may be a relative sweetspot for these organic-rich source rocks due to the geological history of this area of the Canning Basin. Also numerous conventional plays are interpreted to exist within the Wallal Graben, enhancing the attractiveness of the acreage.

Based upon the sparse information the Goldwyer Formation is interpreted to be favourably located in the oil/condensate maturity window and within normal drilling depths (2,000-3,000m). Horizontal wells with multi-stage fracture stimulation programmes may enable the economic extraction of hydrocarbons from this interval. Oilex has significant experience in unconventional plays as this is the main focus of Oilex's flagship project in Cambay, India. Oilex's extensive database of analogous North American resource plays facilitating the understanding of the plays present in the Wallal Graben.

Figure 9: East Africa rift basin and Wallal graben play type comparison

Figure 10: Aerial Photo Showing Current Day Drainage Patterns of the Canning Basin

STP-EPA-0106, STP-EPA-0107, CANNING BASIN, WESTERN AUSTRALIA

Oilex submitted bids during April 2013 for gazettal blocks L12-08 and L12-09, covering 6,444 km2 (~1,600,000 acres) immediately adjacent to SPA 17 AO. The additional acreage is interpreted to contain an extension of the Wallal Graben to the north of SPA 17 AO, capturing an entire newly-defined play fairway. In August 2013 the Company announced it had been successful in its application for contiguous gazettal blocks L12-08 and L12-09. The exploration permits awarded are STP-EPA-0106 for discrete area L12-08 and STP-EPA-0107 for discrete area L12-09.

During the financial year Oilex completed an initial interpretation of the available 2D seismic data in STP-EPA-0106 and STP-EPA-0107 and compiled an extensive well log dataset for the greater Canning Basin. This effort has identified a range of large structural and stratigraphic leads. These play-types are expected to continue into SPA 17 AO. Oilex continues to engage with traditional owner groups regarding the license areas and has made significant progress towards the signing of a heritage agreement.

JPDA 06-103, TIMOR SEA

(Oilex - 10%, Operator)

Subsequent to the end of the year the Company on behalf of its Joint Venture participants in the Timor-Leste Joint Venture, received a further extension to the suspension of JPDA 06-103 Production Sharing Contract ("PSC") to 15 October 2014. The extension was granted for the ANP to complete an assessment of the application by the Joint Venture parties to terminate the PSC without liability following concerns over security of tenure after the Timor-Leste Government initiated formal arbitration proceedings against the Government of Australia to have the Certain Maritime Arrangements in the Timor Sea ("CMATS") declared void ab initio.

Figure 11: Location Map, JPDA 06-103 Timor Sea

West Kampar PSC, Central Sumatra

(Oilex - 45% + further 22.5% secured - Non operator) 

Oilex continues to pursue a commercial resolution to the Joint Venture dispute with the Operator in the West Kampar PSC, in parallel with considering options to enforce its Arbitration Award in Jakarta. During the financial year Oilex received good faith payments from PT Sumatera Persada Energi ("SPE") toward the US$4.8 million arbitration award in favour of Oilex.

Figure 12: West Kampar PSC Location Map, Sumatra, Indonesia

Background

Oilex (West Kampar) Limited ("Oilex"), a wholly owned subsidiary of Oilex Ltd, was assigned a 45% participating interest in the West Kampar PSC pursuant to a farmout agreement entered into with SPE in May 2007. The initial area of the West Kampar PSC was 4,471 km2.

In August 2008, Oilex entered into a second farmout agreement to acquire 15% additional equity interest in the PSC thereby increasing its interest from 45% to 60% subject to meeting certain conditions precedent. In January 2009 Oilex terminated the second farmout agreement when conditions were not met by the due date and many issues remained unresolved with the Operator. With the termination of that agreement, SPE was required to reimburse the monies advanced by Oilex under the terms of that agreement. Oilex commenced International Chamber of Commerce ("ICC") Arbitration against PT Asiabumi Petroleo ("Asiabumi") in Singapore in April 2009 following the failure of SPE in early 2009 to repay a debt owing to Oilex. SPE's obligations to repay the debt were secured by a parent company guarantee granted by Asiabumi to Oilex in 2008.

On 24 June 2010, the International Court of Arbitration of the ICC found in favour of Oilex in its claim against Asiabumi for the recovery of US$4.8 million that is owed to Oilex. The Award granted in Oilex's favour took effect immediately. Oilex is pursuing the recovery of the monies owing under the Award.

Oilex maintains that it is further entitled to have assigned an additional 22.5% to its 45% holding through the exercise of its rights under a Power of Attorney granted by SPE following the failure of SPE to repay the funds due referred to above. The assignment documentation has been provided to the Indonesian regulator, BPMigas (now SKK Migas), but these have not yet been approved or rejected. If the debt due to Oilex is satisfied, Oilex will not pursue this assignment.

Following an action commenced by a supplier against SPE, the Commercial Court in Jakarta on 1 September 2014 has granted an application for "Temporary Suspension of Payment Obligation" for 45 days while a series of meetings are held with creditors to discuss a composition plan, managed by an administrator team appointed by the court. Oilex is currently obtaining legal advice to determine the appropriate course of action to ensure recovery of the secured debt.

Figure 13: Location Map, Central Sumatra Basin Fields and pipeline infrastructure

Financial

In August 2013 the Company completed a placement of 68 million shares to raise $3.4 million in gross proceeds at $0.05 per share with a 1 for 2 free attaching $0.15 cent option. In January 2014 the Company completed a further placement of 94.75 million shares to raise $6.8 million in gross proceeds at $0.072 per share.

In December 2013 the Company announced it had secured a £7.5 million, three year Equity Financing Facility ("EFF") with Darwin Strategic Limited ("Darwin"). Under the terms of the facility the Company may, at its discretion, issue placement shares to Darwin at any time over the next 36 months, up to a total aggregate value of £7.5 million.

Cash held at end of the year was $7.5 million with no corporate debt. The Company's net assets increased by 37%, compared with the previous year, the increase reflecting the current year funds received from share placements, the increase in other receivables including research and development grant income and exploration expenditure capitalised. Current liabilities have increased due to the drilling of Cambay-77H and the expenditure on the Canning Aerial Gravity/Magnetic Survey, as well as the recognition of employee entitlements for long service leave. Joint venture related trade receivables increased by 44% or $0.7 million reflecting the drilling of Cambay-77H, as well as the increased age of cash calls receivable from joint venture partners.

Subsequent to year end the Company strengthened its financial position by announcing a drawdown of the Equity Financing Facility with Darwin to raise $2.1 million before expenses through the issue of 18.6 million shares as well as raising a further $1 million before expenses through the conversion of 7 million listed options.

Revenue for the year increased by 28% mainly attributable to an increase in production from the Bhandut and Cambay Fields.

The Company's loss after tax for the current year reduced by $5.4 million. The reduction in the loss was due to $4,590,149 for the impairment of exploration and evaluation assets in the prior year, and $695,302 other income in the current year consisting of research and development tax grants as well as $800,645 net finance income.

The total issued capital of the Company at 30 June 2014 was 591,034,789 shares and 195,892,111 $0.15 listed options and 37,462,500 unlisted options.

Health, Safety, Security and Environment

Policy

Oilex is committed to protecting the health and safety of everybody who plays a part in our operations or lives in the communities where we operate. Wherever we operate, we will conduct our business with respect and care for both the local and global, natural and social environment and systematically manage risks to drive sustainable business growth. We will strive to eliminate all injuries, occupational illness, unsafe practise and incidents of environmental harm from our activities. The safety and health of our workforce and our environment stewardship are just as important to our success as operational and financial performance and the reputation of the Company.

Oilex respects the diversity of cultures and customs that it encounters and endeavours to incorporate business practices that accommodate such diversity and that have a beneficial impact through our working involvement with local communities. We strive to make our facilities safer and better places in which to work and our attention to detail and focus on safety, environmental, health and security issues will help to ensure high standards of performance. We are committed to a process of continuous improvement in all we do and to the adoption of international industry standards and codes wherever practicable. Through implementation of these principles, Oilex seeks to earn the public's trust and to be recognised as a responsible corporate citizen.

Qualified Petroleum Reserves and Resources Evaluator statement

Pursuant to the requirements of Chapter 5 of the ASX Listing Rules, the information in this report relating to petroleum reserves and resources is based on and fairly represents information and supporting documentation prepared by or under the supervision of Mr. Peter Bekkers, Chief Geoscientist employed by Oilex Ltd. Mr. Bekkers has over 17 years experience in petroleum geology and is a member of the Society of Petroleum Engineers and AAPG. Mr. Bekkers meets the requirements of a qualified petroleum reserve and resource evaluator under Chapter 5 of the ASX Listing Rules and consents to the inclusion of this information in this report in the form and context in which it appears. Mr. Bekkers also meets the requirements of a qualified person under the AIM Note for Mining, Oil and Gas Companies and consents to the inclusion of this information in this report in the form and context in which it appears.

LIST OF ABBREVIATIONS AND DEFINITIONS USED HEREIN

(1) Oilex (West Kampar) Limited is entitled to have assigned an additional 22.5% to its holding through the exercise of its rights under a Power of Attorney granted by SPE following the failure of SPE to repay funds due. The assignment has been provided to BPMigas (now SKK Migas) but has not yet been approved or rejected. If Oilex is paid the funds due it will not pursue this assignment.

Corporate Governance Statement

This statement outlines the main corporate governance practices in place throughout the financial year, which comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.

Oilex Ltd ("Company") has established a corporate governance framework, the key features of which are set out in this statement. In establishing its corporate governance framework, the Company has referred to the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations 2nd edition ("Principles & Recommendations"). The Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the "if not, why not" reporting regime, where, after due consideration, the Company's corporate governance practices do not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation.

The following governance-related documents can be found on the Company's website at www.oilex.com.au, under the section marked "Company Profile", "Corporate Governance":

Charters

Board

Audit Committee

Nomination Committee

Remuneration Committee

Policies and Procedures

Policy and Procedure for Selection and (Re)Appointment of Directors

Policy on Assessing the Independence of Directors

Process for Performance Evaluation

Securities Dealing Policy

Code of Conduct

Continuous Disclosure Policy

Continuous Disclosure Compliance Procedures (summary)

Procedures for the Selection, Appointment and Rotation of External Auditor

Shareholder Communication Policy

Risk Management Policy (summary)

Whistleblower Policy

Diversity Policy

Anti Bribery and Corruption Policy

The Company reports below on whether it has followed each of the Principles & Recommendations during the 2013/2014 financial year ("Reporting Period"). The information in this statement is current as at 12 September 2014.

Roles and responsibilities of the Board and Senior Executives

(Recommendations: 1.1, 1.3)

The Company has established the functions reserved to the Board and those delegated to senior executives, and has set out these functions in its Board Charter, which is disclosed on the Company's website.

The Board is collectively responsible for promoting the success of the Company through its key functions of overseeing the management of the Company, providing overall corporate governance of the Company, monitoring the financial performance of the Company, engaging appropriate management commensurate with the Company's structure and objectives, involvement in the development of corporate strategy and performance objectives, and reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal compliance.

Senior executives are responsible for supporting the Managing Director and assisting the Managing Director in implementing the running of the general operations and financial business of the Company in accordance with the delegated authority of the Board. Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at first instance to the Managing Director or, if the matter concerns the Managing Director, directly to the Chair.

Skills, experience, expertise and period of office of each Director

(Recommendation: 2.6)

A profile of each Director setting out their skills, experience and period of office is set out in the Directors' Report on page 28.

The mix of skills, experience and diversity for which the Board is looking to achieve in membership of the Board reflects the Company's strategy, which continues to be focussed on the Indian Ocean Rim, and in particular focussed on transferring and applying tight reservoir technologies from North America into the Cambay field in Gujarat, India. The Board is continuing to investigate how to increase the balance of independence on the Board, and achieve a mix of the following skills: tight reservoir technical expertise, industry and UK capital markets experience, India experience, international petroleum industry experience, finance and subsurface engineering expertise.

Director independence

(Recommendations: 2.1, 2.2, 2.3, 2.6)

The Board does not have a majority of directors who are independent. The Board considered that its current composition was an appropriate blend of skills and expertise, relevant to the Company's business. However, the Board will continue to review its composition in light of its strategy as outlined above and its changing requirements. The Board is aware of the importance of independent judgement and will seek to address the balance of independence on its Board as part of this review.

Independence is measured having regard to the relationships listed in Box 2.1 of the Principles & Recommendations and the Company's materiality thresholds. The Board has agreed on the following guidelines for assessing the materiality of matters, as set out in the Company's Board Charter:

· Balance sheet items are material if they have a value of more than 10% of pro-forma net assets.

· Profit and loss items are material if they will have an impact on the current year operating result of 10% or more.

· Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the ordinary course of business, could affect the Company's rights to its assets, if accumulated would trigger the quantitative tests, involve a contingent liability that would have a probable effect of 10% or more on balance sheet or profit and loss items, or will have an effect on operations which is likely to result in an increase or decrease in net income or dividend distribution of more than 10%.

· Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous provisions in the opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood that either party will default and the default may trigger any of the quantitative or qualitative tests, are essential to the activities of the Company and cannot be replaced or cannot be replaced without an increase in cost which triggers any of the quantitative tests, contain or trigger change of control provisions, are between or for the benefit of related parties, or otherwise trigger the quantitative tests.

The sole independent director of the Company is Max Cozijn. Mr Cozijn is independent as he is a non-executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of his judgement.

The non-independent directors of the Company are Sundeep Bhandari, Bruce McCarthy and Ron Miller.

The independent Chair of the Board is Max Cozijn.

The Managing Director is Ron Miller who is not also Chair of the Board.

Independent professional advice

(Recommendation: 2.6)

To assist directors with independent judgement, it is the Board's policy that if a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of their office as a director then, provided the director first obtains approval from the Chair for incurring such expense, the Company will pay the reasonable expenses associated with obtaining such advice.

Selection and (Re)Appointment of Directors

(Recommendation: 2.6)

In determining candidates for the Board, the Nomination Committee (or equivalent) follows a prescribed process whereby it evaluates the mix of skills, experience and expertise of the existing Board. In particular, the Nomination Committee (or equivalent) is to identify the particular skills that will best increase the Board's effectiveness. Consideration is also given to the balance of independent directors. Potential candidates are identified and, if relevant, the Nomination Committee (or equivalent) recommends an appropriate candidate for appointment to the Board. Any appointment made by the Board is subject to ratification by shareholders at the next general meeting.

The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. An election of directors is held each year. Each director other than the Managing Director, must not hold office (without re-election) past the third annual general meeting of the Company following the Director's appointment or three years following that director's last election or appointment (whichever is the longer). However, a Director appointed to fill a casual vacancy or as an addition to the Board must not hold office (without re-election) past the next annual general meeting of the Company. At each annual general meeting a minimum of one director or a third of the total number of directors must resign. A director who retires at an annual general meeting is eligible for re-election at that meeting. Re-appointment of directors is not automatic.

The Company's Policy and Procedure for the Selection and (Re)Appointment of Directors is disclosed on the Company's website.

Nomination Committee

(Recommendations: 2.4, 2.6)

The Board has not established a separate Nomination Committee. Given the size of the Board, it resolved that there were no efficiencies gained by having a separate Nomination Committee, and the role is performed by the full Board. The Board has adopted a Nomination Committee Charter which describes the role, composition, functions and responsibilities of the full Board in its capacity as the Nomination Committee, which is disclosed on the Company's website. During the Reporting Period, when the Board met in its capacity as the Nomination Committee, Mr Bhandari chaired the meetings. During the financial year Mr Bhandari took a more active role in Indian operations, assisting in strategy, commercial and joint venture related issues following the departure of Oilex's Chief Operating Officer. Whilst Mr Bhandari is performing this role Mr Max Cozijn has acted as Chairman of the Nomination Committee. Items that are usually required to be discussed by a Nomination Committee are marked as separate agenda items at Board meetings when required and when the Board convenes as the Nomination Committee it carries out those functions which are delegated to it in the Company's Nomination Committee Charter. The Board deals with any conflicts of interest that occur when it convenes in the capacity of the Nomination Committee by ensuring that the director with conflicting interests is not party to the relevant discussions.

Details of director attendance at meetings of the Board in its capacity as the Nomination Committee are set out in the table in the Directors' Report on page 29.

Audit Committee

(Recommendations: 4.1, 4.2, 4.3, 4.4)

The Board has established an Audit Committee. The Audit Committee is not structured in compliance with Recommendation 4.2 as set out in the table below. As the Board has only one independent director, the Board is unable to establish an Audit Committee that is structured in compliance with Recommendation 4.2. In addition whilst Mr Bhandari is classified as a non-executive director, he has taken a more active role in Indian operations, assisting in strategy, commercial and joint venture related issues following the departure of Oilex's Chief Operating Officer during the financial year. Whilst Mr Bhandari is performing this role, Mr Max Cozijn has acted as Chairman of the Audit Committee given his financial qualifications and independence, notwithstanding that Mr Cozijn is also Chair of the Board.

The Board considers that the members of the Audit Committee are the most appropriate, given their experience and qualifications, for the Company's current needs. The Board has adopted an Audit Committee Charter, which describes the committee's role, composition, functions and responsibilities. The Audit Committee Charter makes provision for the Audit Committee to meet with the external auditor, as required.

The Audit Committee held 4 meetings during the Reporting Period. Details of the directors' attendance at Audit Committee meetings during the Reporting Period are set out in a table in the Director's Report on page 29. Details of each of the director's qualifications are set out in the Directors' Report. All members of the Audit Committee are financially literate and Max Cozijn is an Associate of the Australian Society of Certified Practising Accountants. Mr Rob Ierace (Chief Financial Officer and Company Secretary) and Ms Andrea Bissett (Financial Controller) are both Chartered Accountants and attend Audit Committee meetings by invitation.

The Company has established a Procedure for the Selection, Appointment and Rotation of its External Auditor. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as recommended by the Audit Committee. Candidates for the position of external auditor must demonstrate complete independence from the Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company's business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Audit Committee and any recommendations are made to the Board.

The Company's Audit Committee Charter and Procedure for the Selection, Appointment and Rotation of External Auditor are disclosed on the Company's website.

Remuneration Committee

(Recommendations: 8.1, 8.2, 8.3)

The Board has established a Remuneration Committee. The Remuneration Committee is not structured in accordance with Recommendation 8.2 as set out in the table below. The Board's current structure does not permit it to establish a Remuneration Committee that meets the structural requirements of Recommendation 8.2 as the Board does not have a sufficient number of independent directors. In addition whilst Mr Bhandari is classified as a non-executive director, he has taken a more active role in Indian operations, assisting in strategy, commercial and joint venture related issues following the departure of Oilex's Chief Operating Officer during the financial year. Whilst Mr Bhandari is performing this role, Mr Max Cozijn has acted as Chairman of the Remuneration Committee.

The Board will continue to monitor the composition of the Remuneration Committee and make appropriate changes to the composition of its Remuneration Committee should further independent directors be appointed to the Board.

The Remuneration Committee held 1 meeting during the Reporting Period. Details of the directors' attendance at Remuneration Committee meetings during the Reporting Period are set out in a table in the Director's Report on page 29.

The Board has adopted a Remuneration Committee Charter which describes the role, composition, functions and responsibilities of the Remuneration Committee.

Details of remuneration, including the Company's policy on remuneration, are contained in the "Remuneration Report" which forms part of the Directors' Report. Non-executive directors are remunerated at a fixed fee for time, commitment and responsibilities. Remuneration for non-executive directors is not linked to individual performance. Given the stage of development of the Company and the financial constraints applicable to it, the Company may consider it appropriate as an additional incentive or reward, to issue unquoted options to non-executive directors, subject to obtaining the relevant Board and shareholder approvals. This policy is subject to annual review. Pay and rewards for executive directors and senior executives consists of a base salary and performance incentives. Long term performance incentives may include options granted at the discretion of the Board and subject to obtaining the relevant approvals.

There are no schemes for termination or retirement benefits for non-executive directors (other than for superannuation). The Company's Remuneration Committee Charter includes a statement of the Company's policy on prohibiting transactions in associated products which limit the risk of participating in unvested entitlements under any equity based remuneration schemes.

The Company's Remuneration Committee Charter is disclosed on the Company's website.

Senior executives

(Recommendations: 1.2, 1.3)

The Managing Director is responsible for evaluating the performance of senior executives. The performance evaluation of senior executives comprises informal discussions on group and individual performance; evaluations are held as part of strategy and business reviews coupled with the annual remuneration review.

During the Reporting Period the evaluation of the Company's two senior executives took place in accordance with the process disclosed above.

Board, its committees and individual directors

(Recommendations: 2.5, 2.6)

The Chair of the Nomination Committee is responsible for evaluation of the Board and, when deemed appropriate Board committees and individual directors.

The process for evaluating the performance of the Board, individual directors and any applicable committees is as follows:

· questionnaires are completed by each director;

· the Chair of the Nomination Committee meets with each director to discuss the director's responses to the questionnaire;

· the responses to each of the questionnaires are then summarised and collated and the Chair of the Nomination Committee reports back to the Board; and

· the Board then review and discuss the report and address any issues as required.

During the Reporting Period an evaluation of the Board, its committees, and individual directors took place in July 2013 in relation to the previous year in accordance with the process disclosed. In addition the Board held a three day strategy session in May 2014 during which the performance of individual directors, the Board and Board committees, together with the Board composition and structure were discussed. For the Reporting Period, the strategy session replaced the process outlined above for evaluation of the Board, its committees, and individual directors.

The Chair of the Nomination Committee is responsible for evaluating the Managing Director. The process for evaluating the performance of the Managing Director is by way of a formal discussion with the Chair of the Nomination Committee whereby the following individual performance measures are assessed; progression of assets through their exploration and evaluation cycle; investment community engagement and ensuring adherence to the Company's corporate governance principles and recommendations.

During the Reporting Period an evaluation of the Managing Director took place in July 2013 in relation to the previous year in accordance with the process disclosed. The Managing Director's performance was also discussed as part of the strategy session in May 2014. For the Reporting Period, the strategy session replaced the process outlined above for the evaluation of the Managing Director.

The Company's Process for Performance Evaluation is disclosed on the Company's website.

Code of Conduct

(Recommendations: 3.1, 3.5)

The Company has established a Code of Conduct which includes the practices that the Board considers necessary to maintain confidence in the Company's integrity; practices necessary to fulfil the Company's legal obligations and to meet the expectations of the Company's stakeholders; and outlines the responsibility and accountability of individuals within the Company for reporting and investigating reports of unethical practices. The Company has also established a Whistleblower Policy and an Anti-Bribery and Corruption Policy.

The Company's Code of Conduct, Whistleblower Policy and Anti-Bribery and Corruption Policy are disclosed on the Company's website.

Diversity Policy

(Recommendations: 3.2, 3.3, 3.4, 3.5)

The Company has established a Diversity Policy, which includes requirements for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress towards achieving them.

The following measurable objectives for achieving gender diversity were set by the Board in accordance with the Diversity Policy:

The Board has adopted the following measurable objectives for the 2014/15 financial year.

Oilex Ltd will report on the progress against these objectives in the 2014/15 Annual Report.

The proportion of female employees in the whole organisation, including India, is set out in the following table. There are no female senior executives or women on the Board. Senior executives are those employees that directly report to the Managing Director.

The Company's Diversity Policy is disclosed on the Company's website.

Continuous Disclosure

(Recommendations: 5.1, 5.2)

The Company has established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements, and accountability at a senior executive level for that compliance.

The Company's Continuous Disclosure Policy and a summary of its Continuous Disclosure Compliance Procedures are disclosed on the Company's website.

Shareholder Communication

(Recommendations: 6.1, 6.2)

The Company has designed a communications policy for promoting effective communication with shareholders and encouraging shareholder participation at general meetings.

The Company's Shareholder Communication Policy is disclosed on the Company's website.

Risk Management

(Recommendations: 7.1, 7.2, 7.3, 7.4)

The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy, the Board is responsible for approving the Company's policies on risk assessment and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control.

Under the policy, the Board delegates day-to-day management of risk to the Managing Director, who is responsible for identifying, assessing, monitoring and managing risks. The Managing Director is also responsible for updating the Company's material business risks to reflect any material changes, with the approval of the Board.

In fulfilling the duties of risk management, the Managing Director may have unrestricted access to Company employees, contractors and records and may obtain independent expert advice on any matter they believe appropriate, with the prior approval of the Board.

The Board has established a separate Audit Committee to monitor and review the integrity of financial reporting and the Company's internal financial control systems and risk management systems. Before the adoption of the financial statements the Audit Committee receives a written declaration from the Managing Director and Chief Financial Officer in accordance with Recommendation 7.2 confirming the operation of the Company's risk management and internal control system.

As part of preparing this declaration, each finance and business unit manager is required to provide a signed letter of representation reporting to both the Managing Director and the Chief Financial Officer.

In addition, the following risk management measures have been adopted by the Board to manage the Company's material business risks:

· the Board has established authority limits for management, which, if proposed to be exceeded, requires prior Board approval;

· the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's continuous disclosure obligations; and

· the Board has adopted a corporate governance manual which contains other policies to assist the Company to establish and maintain its governance practices.

The Company's risk management system includes the preparation of a risk register by management to identify the Company's material business risks and risk management strategies for these risks. In addition, the process of managing material business risks is allocated to members of senior management. The risk register is reviewed by management and the Board at least quarterly and updated as required.

The categories of risk reported on or referred to as part of the Company's systems and processes for managing material business risk include exploration, appraisal, reserves, development, production, financial, commercial, sovereign, legal / regulatory, operations (including weather), environmental, health and safety, retention of personnel, security and information systems.

The Board has required management to design, implement and maintain risk management and internal control systems to manage the Company's material business risks. The Board also requires management to report to it confirming that those risks are being managed effectively. Risk is a standing agenda item at each meeting of the Board. The Board has received a report from management as to the effectiveness of the Company's management of its material business risks.

The Managing Director and Chief Financial Officer have provided a declaration to the Board in accordance with section 295A of the Corporations Act and have assured the Board that such declaration is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risk.

A summary of the Company's Risk Management Policy is disclosed on the Company's website.

ASX Corporate Governance Council recommendations checklist

The following table sets out the Company's position with regard to adoption of the Principles & Recommendations as at the date of this statement:

In compliance with the "if not, why not" reporting regime, where, after due consideration, the Company's corporate governance practices do not follow a recommendation, the Board has explained above its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation.

2014 FINANCIAL REPORT

CONTENTS

Directors' Report

Remuneration Report - Audited

Lead Auditor's Independence Declaration

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Directors' Declaration

Independent Audit Report

Shareholder Information

DIRECTOR'S REPORT

For the year ended 30 June 2014

The directors of Oilex Ltd present their report together with the consolidated financial statements of the Group comprising of Oilex Ltd (the "Company") and its subsidiaries for the financial year ended 30 June 2014 and the auditors' report thereon.

DIRECTORS

The names and details of the directors of the Company in office during the financial year and until the date of this report are detailed below. Directors were in office for this entire period unless otherwise stated.

Mr Max Dirk Jan Cozijn

(Non-Executive Chairman)

BCom CPA MAICD

Chairman since the Company listed on the Australian Securities Exchange ("ASX") in 2003, Mr Cozijn has over 35 years of experience in the administration of listed mining and industrial companies. He is a Non-Executive Director of Jacka Resources Limited, Carbon Energy Limited and Energia Minerals Limited, and is a director of various private companies.

During the last three years Mr Cozijn has been a director of the following listed companies:

· Carbon Energy Limited (from September 1992 to current)

· Energia Minerals Limited (listed on ASX 24 December 2009) (from 13 May 1997 to current)

· Jacka Resources Limited (from May 2014 to current)

· Magma Metals Limited (from June 2005 to 25 June 2012)

· Malagasy Minerals Limited (from September 2006 to 8 August 2013)

Mr Sundeep Bhandari

(Non-Executive Vice Chairman)

BCom

Mr Bhandari was appointed as a Director (Vice Chairman) in November 2011. Mr Bhandari has over 30 years of business experience in India, of which more than 20 years have been in the energy business. He has worked with several multinational petroleum companies, including Cairn Energy, Mobil, Marathon, ENI, PGS and Command Petroleum. Mr Bhandari was also Chairman of the Corporate Advisory Board of Cairn India Ltd from 2006 to March 2014. Mr Bhandari is also a director and shareholder of India Hydrocarbons Ltd.

During the last three years Mr Bhandari has not been a director of any other listed companies.

Mr Ronald Miller

(Managing Director)

MSc Engineering and BSc Ocean Engineering, MAICD (Retired Chartered Engineer)

Initially appointed as a Non-Executive Director in July 2009, Mr Miller was appointed Managing Director from 1 January 2013. A chartered professional engineer (1989 - 2011), Mr Miller has more than 38 years of experience in the international petroleum industry. Further details of Mr Miller's qualifications and experience can be found in the Executive Management section of the Directors' Report. 

During the last three financial years Mr Miller has been a director of the following listed company:

· Neon Energy Limited (formerly Salinas Energy Limited) (from March 2006 to 17 November 2010)

Dr Bruce Henry McCarthy

(Non-Executive Director)

BSc (Hons) PhD Geology

Appointed Managing Director in February 2005, Dr McCarthy stepped down as Managing Director to become a Non-Executive Director on 1 January 2013. Dr McCarthy has onshore and offshore experience of over 35 years gained in the United Kingdom, Australia and India working for independent and large multinational companies, including Cairn Energy PLC (UK), Command Petroleum India Ltd, Cairn Energy India Pty Ltd and Marathon Oil Corporation.

During the last three years Dr McCarthy has not been a director of any other listed companies.

DIRECTORS' MEETINGS

Directors in office, committee membership and directors' attendance at meetings during the 2013/14 financial year are as follows:

a) Please refer to the Corporate Governance Report for details of the change to the composition of the Audit, Remuneration and Nomination Committees during the financial year.

b) "Held" indicates the number of meetings available for attendance by the director during the period of each director's tenure.

c) Chairman of respective meetings. When the Board meets in its capacity as the Nomination committee, Mr S Bhandari chairs the meeting. Mr Cozijn acted as Chair for 28 May 2014 Nomination Committee Meeting.

d) Mr S Bhandari chairs the meetings. Mr Cozijn acted as Chair for 24 June 2014 Audit Committee Meeting.

e) Mr S Bhandari chairs the meetings. Mr Cozijn acted as Chair for 28 May 2014 Remuneration Committee Meeting.

f) "Attended" indicates attendance by invitation. Where a director is not a member of a Committee but attended meetings during the period only the number of meetings attended, rather than held, is disclosed.

During the financial year the Directors considered 25 Circular Resolutions, which include one Remuneration Committee Resolution.

EXECUTIVE MANAGEMENT

Mr Ronald Miller

(Managing Director)

MSc Engineering and BSc Ocean Engineering, MAICD (Retired Chartered Engineer)

Mr Miller was appointed as a Non-Executive Director in July 2009 and Managing Director from 1 January 2013. A chartered engineer in Australia from 1989 to 2011, Mr Miller brings more than 38 years of experience in the international petroleum industry including corporate governance, extensive background in leading multi-disciplinary upstream organisations and project developments, including the design and construction of oil and gas projects. Mr Miller has extensive experience in commercialising and developing oil and gas discoveries. During his career, Mr Miller held a range of senior positions including with Mobil, Ampolex, Clough and Hyundai Heavy Industries.

Mr Robert Ierace

(Chief Financial Officer & Company Secretary)

BCom ACA CSA

Mr Ierace was appointed Oilex Chief Financial Officer and Company Secretary in January 2013. Mr Ierace is responsible for financial compliance and corporate governance as well as implementation of the Company's business plans. Mr Ierace has over 18 years of experience in finance, commercial management, taxation and banking. Mr Ierace's most recent position was CFO and Company Secretary of ASX listed mid cap oil and gas exploration and production company Amadeus Energy Ltd (now Lonestar Resources Ltd). Previous financial roles have included senior finance positions with Credit Suisse First Boston Investment Bank (London), Rio Tinto Iron Ore, Arc Energy Ltd and Kimberley Diamond Company NL.

Mr Peter Bekkers 

(Chief Geoscientist)

BSC (Hons) Geology and Geophysics

Mr Bekkers joined Oilex in 2007 as the Senior Explorationist. He has over 17 years of experience in Australian and international oil and gas exploration activities including the Far East, Middle East, West Africa and South East Asia. Prior to joining Oilex, Mr Bekkers held various roles with Woodside Energy Ltd, Santos Ltd and Boral Energy Ltd in exploration and new ventures evaluation. Mr Bekkers was appointed Chief Geoscientist for Oilex in April 2010.

Mr Michael Maloney

(Chief Operating Officer - Until 4 October 2013)

B Engineering - Civil (Hons) 

Mr Maloney joined Oilex in July 2012 as Chief Operating Officer based in India and ceased working for Oilex Ltd in October 2013. Mr Maloney previously held senior management positions with Nexus Energy, BHP Petroleum, Exxon Mobil, ENI Group, AGR Asia Pacific and Clough and had 42 years of experience in the oil and gas industry.

COMPANY SECRETARIES

The following individuals have acted as company secretary during the year ended 30 June 2014:

Mr Robert Ierace

BCom ACA CSA

Mr Robert Ierace was appointed Company Secretary effective 30 January 2013.

Mr Cathal Smith

LLB, LLM, MBA

Mr Smith was appointed Alternate Company Secretary effective 14 April 2014.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the course of the financial year included:

· Exploration for oil and gas;

· Appraisal and development of oil and gas; and

· Production and sale of oil.

There were no significant changes in the nature of these activities during the year.

OPERATING RESULTS

The loss after income tax of the consolidated entity for the year ended 30 June 2014 amounted to $3,752,611 (2013: loss of $9,110,457). The reduction in the loss was due to $4,590,149 for the impairment of exploration and evaluation assets in the prior year, and $695,032 other income in the current year consisting of R&D income as well as $800,645 net finance income.

DIVIDENDS

No dividend was paid or declared during the year and the directors do not recommend the payment of a dividend.

REVIEW OF OPERATIONS

A review of the operations of the Group during the financial year and the results of those operations are set out in the Business Review on pages 4 to 15 of this report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the financial year Oilex successfully drilled and completed the 2,370 metre MD Cambay-77H well which included a 350 metre horizontal section and the first of the four stage fracture stimulation programme. A comprehensive suite of logs was acquired and preliminary interpretation confirms the wellbore intersected a significant sequence of hydrocarbon-bearing reservoir similar to Cambay-76H. The Cambay-77H logs also compare favourably to Cambay-73 vertical well which produced from the Y zone at ~1 MMscfd plus condensate and is located approximately one kilometre from Cambay-77H. Subsequent to year end the remaining fracture stimulation stages were completed.

The Gas Sales Agreement for Cambay-73 future production was endorsed by the relevant Government of India authorities.

Oilex conducted an Aerial Gravity/Magnetic Survey (the "Survey") over SPA 17 AO (formerly STP-SPA-0055) located in the Canning Basin. This included the acquisition, processing and interpretation by CGG Aviation (Australia) Pty Ltd ("CGG"). Acquisition by CGG commenced on 29 March 2014 and was completed on 3 April 2014 ahead of schedule. The Survey consisted of 4,060 line-km of data and was acquired using a tighter grid than existing data, thus enhancing the definition of the area. The interpretation integrates regional gravity, magnetic, 2D seismic, regional surface geological and well data in adjacent areas with the newly acquired Survey data. Preliminary interpretation confirms Oilex's structural model that the Wallal Graben, which is clearly imaged by 2D seismic in Oilex's adjacent permits, extends into SPA 17 AO.

Oilex submitted bids during April 2013 for gazettal blocks L12-08 and L12-09, covering 6,444 km2 (~1,600,000 acres) immediately adjacent to SPA 17 AO. The additional acreage is interpreted to contain an extension of the Wallal Graben to the north of SPA 17 AO, potentially capturing an entire newly-defined play fairway. In August 2013 the Company was advised that it was successful in its application for contiguous gazettal blocks L12-08 and L12-09. The exploration permits awarded are STP-EPA-0106 for discrete area L12-08 and STP-EPA-0107 for discrete area L12-09.

During the financial year Oilex completed an initial interpretation of the available 2D seismic data in STP-EPA-0106 and STP-EPA-0107 and compiled an extensive well log dataset for the greater Canning Basin. This effort has identified a range of large structural and stratigraphic leads. Oilex continues to engage with traditional owner groups regarding the license areas.

On 9 August 2013 the Company announced that it had agreed to sell a 10 per cent participating interest (gross) in the Cambay Production Sharing Contract for US$4,000,000 to Magna Energy Limited ("Magna"). Magna also has an option to acquire an additional 5 per cent participating interest (gross) for US$2,000,000. These payments would have included the working interest share of the 2013/14 Cambay Work Programme and Budget and the value of the corresponding share of joint venture assets. Unless otherwise mutually agreed, in the event that certain conditions, including the approval of the Government of India have not been satisfied or, where applicable, waived prior to 1 May 2014, the parties had agreed that any payments made by Magna to the Company, to the extent practicable, be converted into shares in Oilex. Shareholders approved the unwind provisions at a General Meeting held 4 October 2013.

On 1 May 2014 Magna requested that Oilex issue the unwind shares in accordance with the Sale and Purchase Agreement, with Oilex issuing 73,505,090 ordinary shares to Magna for the US$4,000,000 the Company had received, with Oilex retaining its full 45% direct interest in the Cambay Production Sharing Contract. At the date of the unwind Magna acquired 12.46% of Oilex's expanded issued shares, and held 17.37% at the date of issue of shares, 15 May 2014.

The JPDA 06-103 Joint Venture became aware that a condition of the Certain Maritime Arrangements in the Timor Sea ("CMATS") had lapsed, enabling either Australia or Timor-Leste to move to extinguish this Treaty. Based upon legal advice, this change to CMATS may have implications for the Joint Venture's tenure in JPDA 06-103. During the reporting period Oilex (JPDA 06-103) Ltd, on behalf of the JPDA 06-103 Joint Venture participants, submitted to the Autoridade Nacional do Petróleo ("ANP"), a request to terminate the Production Sharing Contract ("PSC") by mutual agreement in accordance with its terms and without penalty or claim due to the ongoing uncertainty in relation to security of tenure.

There have been no other significant changes in the state of affairs of the Group that occurred during the financial year not otherwise disclosed in this report or the financial statements.

SIGNIFICANT EVENTS AFTER BALANCE DATE

Subsequent to the financial year Oilex successfully completed the remaining stages two to four of the Cambay-77H well fracture stimulation programme. Plug milling operations were completed with gas flowing to the surface and light crude oil recovered during flow-back operations and gas sent to flare.

On 15 July 2014 the Company announced that it had raised £1,171,800 or $2,131,560 before expenses, estimated at $127,894, with a placement utilising the Company's 15% placement capacity under ASX Listing Rule 7.1 of 18,600,000 shares at 6.3 pence or 11.46 cents per share, via a drawdown on the Equity Financing Facility ("EFF") negotiated with Darwin Strategic Limited ("Darwin"). Of the final number of shares issued 2,350,000 shares were contracted to be issued as at 30 June 2014.

On 14 July 2014 the ANP with prior consent of the Timor Sea Treaty Joint Commission, advised of the approval to further extend the JPDA 06-103 PSC temporary suspension period to 15 October 2014.

Subsequent to the reporting period the Company issued a further 7,208,078 shares on the exercise of listed options with an exercise price of $0.15.

Following an action commenced by a supplier against PT Sumatera Persada Energi, the Commercial Court in Jakarta on 1 September 2014 has granted an application for "Temporary Suspension of Payment Obligation" for 45 days while a series of meetings are held with creditors to discuss a composition plan, managed by an administrator team appointed by the court. Oilex is currently obtaining legal advice to determine the appropriate course of action to ensure recovery of the secured debt.

There were no other significant subsequent events occurring after year end.

LIKELY DEVELOPMENTS

Additional comments on expected results on operations of the Group are included in the Business Review on pages 4 to 15.

Further disclosure as to likely developments in the operations of the Group and expected results of those operations have not been included in this report as, in the opinion of the Board, these would be speculative and not in the best interests of the Group.

FINANCIAL POSITION

Capital Structure and Treasury Policy

On 28 October 2013 shareholders at a General Meeting ratified the issue of 38 million tranche 1 ordinary shares and approved the issue of an additional 30 million tranche 2 ordinary shares and 34 million listed options. The placement was priced at an issue price of $0.05 per new share, including a one for two attaching listed option exercisable at $0.15 per share on or before 7 September 2015.

On 17 April 2014 shareholders at a General Meeting ratified the issue of 93 million ordinary shares and approved the issue of a further 1.75 million ordinary shares at an issue price of $0.072 per new share. In addition shareholders approved the issue, to the joint lead managers of this placement, of 10 million listed options exercisable at $0.15 per share on or before 7 September 2015.

On 2 May 2014 the Company announced that it was required to issue 73,505,090 new ordinary shares to Magna Energy Limited ("Magna") under the terms of the unwind provisions approved by shareholders at a General Meeting on 4 October 2013.

During the financial year 1,200 listed $0.15 options were exercised with an additional 7,208,078 listed $0.15 options exercised subsequent to the reporting period.

At the date of this report, the Company had a total issued capital of 616,842,867 ordinary shares, 188,684,033 listed options exercisable at $0.15, and 38,962,500 unlisted options exercisable at prices between $0.15 and $0.63 per share.

Cash management is reviewed on a regular basis by the Group's Chief Financial Officer and reported to the Board on a monthly basis to ensure the Group is able to meet its financial obligations as and when they fall due. Until sufficient operating cash flows are generated from its operations, the Group remains reliant on equity or debt funding, as well as assets divestiture or farmouts to fund its expenditure commitments.

Liquidity and Funding

As at 30 June 2014 the Group had no loan borrowings.

In December 2013 the Company secured a £7,500,000 three year Equity Financing Facility ("EFF") with Darwin Strategic Limited ("Darwin"). Under the terms of the EFF, the Company may at its discretion, issue placement shares to Darwin at any time until 5 December 2016, up to a total aggregate value of £7,500,000. Any drawdown of the facility and resultant issue of shares is limited to the Company's equity placing capacity under ASX Listing Rule 7.1 and 7.1A. The Company is under no obligation to make a draw down and may make drawdowns at its discretion, up to the total value of the EFF, by way of issuing subscription notices to Darwin. Each subscription notice specifies a minimum price below which ordinary shares will not be issued to Darwin.

Subsequent to year end the Company raised £1,171,800 or $2,131,560 before expenses, estimated at $127,894, with a placement of 18,600,000 shares at 6.3 pence or 11.46 cents per share, via a drawdown on the EFF. Of the final number of shares issued 2,350,000 shares were contracted to be issued as at 30 June 2014.

The Company continues to actively develop funding options in order that it can meet its expenditure commitments (see note 26) and its planned future discretionary expenditure.

ENVIRONMENTAL ISSUES

The Group's oil and gas exploration and production activities are subject to environmental regulation under the legislation of the respective states and countries in which they operate. The majority of the Group's activities involve low level disturbance associated with its exploration drilling programmes. The Board actively monitors compliance with these regulations and as at the date of this report is not aware of any material breaches in respect of these regulations.

DIRECTORS' INTERESTS

The relevant interest of each director in shares and options issued by the Company, as notified by the directors to the ASX in accordance with Section 205G (1) of the Corporations Act 2001, at the date of this report is as follows:

g) The number of unlisted options issued by the Company disclosed above excludes 250,000 unlisted options issued to a related party of Dr B H McCarthy, being Mrs R McCarthy.

h) On 29 January 2013 the Company announced that Mr R Miller would be granted, as part of his remuneration as Managing Director, 2,000,000 unlisted options exercisable at 15 cents per share, vesting from date of grant with a three year term, subject to shareholder approval. Shareholder approval was granted in the current financial year at a General Meeting held 28 October 2013.

SHARE OPTIONS

At the date of this report unissued ordinary shares of the Company under option (with an exercise price) are:

These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.

During the financial year, the following unlisted employee options were cancelled:

During or since the end of the financial year, the Company has not issued ordinary shares as a result of the exercise of unlisted employee options.

During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of listed options as follows (there were no amounts unpaid on the shares issued):

The Group paid a premium in respect of insurance cover for the directors and officers of the Group. The Group has not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors' liability and legal expense insurance contracts, as such disclosure is prohibited under the terms of the insurance contract.

PROCEEDINGS ON BEHALF OF THE COMPANY

No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company under Section 237 of the Corporations Act 2001.

NON-AUDIT SERVICES

The Company may decide to employ the Auditor on assignments additional to their statutory audit duties where the Auditor's expertise and experience with the Group is important.

The Board has considered its position and, in accordance with the advice received from the Audit Committee, is satisfied that the provision of the non-audit services is compatible with, and did not compromise, the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

· all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of the auditor; and

· the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

Details of the amounts paid to the auditor of the Group, KPMG Australia, and its network firms for audit and non-audit services provided during the year are set out below.

LEAD AUDITOR'S INDEPENDENCE DECLARATION

The Lead Auditor's Independence Declaration for the year ended 30 June 2014 has been received and can be found on page 48.

REMUNERATION REPORT - AUDITED

1. PRINCIPLES OF COMPENSATION - AUDITED

Remuneration is referred to as compensation throughout this report. The Remuneration Report explains the remuneration arrangements for directors and senior executives of Oilex Ltd who have authority and responsibility for planning, directing and controlling the activities of the Group ("key management personnel").

Compensation levels for key management personnel of the Group are competitively set to attract, retain and motivate appropriately qualified and experienced directors and senior executives. The Remuneration Committee obtains advice on the appropriateness of compensation packages of both the Company and the Group given trends in comparative companies both locally and internationally and the objectives of the Group's compensation strategy.

The compensation structures explained below are designed to attract, retain and motivate suitably qualified candidates, reward the achievement of strategic objectives and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:

· the capability and experience of the key management personnel;

· the ability of key management personnel to control the performance of the relevant segments;

· the Company's performance including:

· the Group's earnings; and

· the growth in share price and delivering constant returns on shareholder wealth;

· exploration success; and

· development of projects.

Compensation packages include a mix of fixed compensation and long term performance-based incentives. In specific circumstances the Group may also provide short term cash incentives based upon the achievement of Company performance hurdles.

Fixed compensation consists of base compensation, as well as leave entitlements and employer contributions to superannuation funds. Compensation levels are reviewed annually by the Remuneration Committee through a process that considers individual, sector and overall performance of the Group. In addition, reviews of available data on oil and gas industry companies provide comparison figures to ensure the directors' and senior executives' compensation is competitive in the market. Compensation for a senior executive is separately reviewed at the time of a promotion.

Executives that are permanently based in Gujarat India are paid an allowance up to 35 per cent of their base salary as an Indian Premium. Non-monetary benefits include living expenses and home travel whilst based in India.

Performance linked compensation includes both short-term and long-term incentives designed to reward key management personnel for growth in shareholder wealth. The short-term incentive ("STI") is an "at risk" bonus provided in the form of cash, while the long-term incentive plan ("LTI") is used to reward performance by granting options over ordinary shares of the Company.

Short-term incentive bonus

The Group has introduced short-term incentives to some of the executive team that are dependent upon the achievement of performance targets as determined by the Board. These targets include a combination of key strategic, financial and personal performance measures which may have a major influence over company performance in the short-term. Short-term incentives may also be utilised to retain, motivate or reward an executive.

The short-term incentive cash bonus applicable to Mr Bekkers, the Chief Geoscientist, set at $25,000 by the Remuneration Committee, was granted on the achievement of discovering and proving the hypothesis on the Wallal Graben.

Short-term incentives awarded in the current year were accrued as compensation and fully vested to key management personnel during the period. The short-term incentive for Mr Bekkers is to be paid in the following year.

Long-term incentive bonus

The Oilex Ltd Employee Performance Rights Plan ("the Plan") lapsed in the previous financial year, pending a revision of the Plan. Options issued to senior executives after 26 November 2012 are issued under the Australian Securities Exchange Rule 7.1.

The issue of options is designed to allow the Group to attract and retain talented employees. The issue of options aims to closely align the interests of senior executives and employees with those of shareholders and create a link between increasing shareholder value and employee reward.

The issue of unlisted options and the vesting dates are at the discretion of the Board following recommendations received from the Remuneration Committee.

The exercise price of the unlisted options is set at a premium to the share price at the time they are granted. The change in share price is the key performance criteria for achieving a benefit for the options issued as the value that may be generated on exercise of options is dependent upon an increase in the share price above the exercise price of the options.

Remuneration packages are not linked to profit performance as the Company is an exploration and appraisal company that is not generating profits or net operating cash inflows and as such does not pay any dividends. It is the performance of the overall exploration and appraisal programme and ultimately the share price that largely determines Oilex's performance. The Remuneration Committee therefore considers that fixed compensation combined with short-term and long-term incentive components is the best remuneration structure for achieving the Company's objectives to the benefit of shareholders. The table below sets out the closing share price at the end of the current and four previous financial years.

The remuneration of directors, consists of a cash component as well as an equity component, and is designed to retain directors of a high calibre, whilst rewarding them for their ongoing commitment and contribution to the Company on a cost effective basis. The issue of options to directors, subject to shareholder approval, is judged by the Company, to further align the directors' interests with that of shareholders, whilst maintaining the cash position of the Company. The Board does not consider that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing options to directors.

Total compensation for all Non-Executive Directors is set based on comparison with external data with reference to fees paid to Non-Executive Directors of comparable companies. Directors' fees cover all main Board activities and membership of committees.

The Chairman's base annual fee including superannuation was set at $87,200 on 1 July 2009 and remains unchanged as at 30 June 2014 other than to include the legislated increases to the superannuation guarantee levy of 0.25 per cent.

The Vice-Chairman's base annual fee including superannuation was set at $65,400 on 29 July 2011 and remains unchanged as at 30 June 2014. 

The base annual fee including superannuation was set at $54,500 from 1 July 2011 for the other Non-Executive Directors and remains unchanged as at 30 June 2014, other than to include the legislated increases to the superannuation guarantee levy of 0.25 per cent.

The aggregate maximum fixed annual amount of remuneration available for Non-Executive Directors of $500,000 per annum was approved by Shareholders on 9 November 2011.

In addition to this fixed component, the Company can remunerate any director called upon to perform extra services or undertake any work for the Company beyond their general duties. This remuneration may either be in addition to or in substitution for the director's share of remuneration approved by Shareholders.

Gross fees paid to India Hydrocarbons Limited ("IHL"), a related party of Mr Bhandari, are for consultancy services provided in addition to directorial services and therefore are not part of the fixed component. Payments made for consultancy services to IHL are for services undertaken under a consultancy contract with the Company negotiated effective from 1 May 2006, six years prior to Mr S Bhandari becoming a Non-Executive Director on 9 November 2011. The gross annual amounts paid of $244,911 (2013: $87,625) relating to consultancy services are disclosed in the key management personnel disclosures in the Related Parties note 27 to the Consolidated Financial Statements. The Group's share of these fees of $115,108 (2013: $43,813) are disclosed in other related party transactions in the Related Parties note 27 to the Consolidated Financial Statements. The balance of 53% (2013: 50%) is payable by the Joint Operations.

Following the departure of Oilex's Chief Operating Officer during the financial year, Mr Bhandari has taken on a more active role in India and is assisting in strategy, commercial and joint venture related issues.

In addition Oilex paid an introduction fee during the year to IHL when Magna Energy Limited ("Magna") was introduced to Oilex by IHL, who assisted the Company in managing the negotiation of the Sale and Purchase Agreement, initially for the partial sale of its Cambay asset. In recognition of this the Company agreed to the payment of an introduction fee to IHL of 2.5% of the consideration received by the Company, payable only upon receipt of funds from Magna. This introduction fee was assessed on normal commercial terms and was on an arm's length basis. The amount paid of $108,849 (US $100,000) has been included in the remuneration of Mr Bhandari in the current year.

Shareholder approval was given on 17 April 2014 at Oilex Ltd's General Meeting to issue 4,000,000 options with an exercise price of $0.15, expiring 29 April 2019, to India Hydrocarbons Limited. These options are disclosed in the total remuneration of Mr Bhandari.

1.4 Remuneration Consultants

There were no remuneration recommendations made in relation to key management personnel by remuneration consultants in the financial year ended 30 June 2014.

2. EMPLOYMENT CONTRACTS - AUDITED

The following table summarises the terms and conditions of contracts between key executives and the Company:

(1) The Company may terminate the contract immediately if serious misconduct has occurred. In this case the termination payment is only the fixed remuneration earned until the date of termination and any unvested options will immediately be forfeited.

3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION - AUDITED

Details of the nature and amount of each major element of remuneration of each director of the Company and other key management personnel of the consolidated entity are:

The Directors of the Company may be Directors of the Company's subsidiaries. No remuneration is received for directorships of subsidiaries. All key management personnel are employed by the parent entity.

Refer to the following explanatory notes for additional information.

(1) The amount represents the STI earned in the reporting year ended 30 June, with the amount being paid in the following year.

(2) Non-monetary benefits include provision of home travel, accommodation and related expenses whilst working in Gujarat India, away from normal place of residence.

(3) Includes, where applicable, accrued employee leave entitlements.

(4) The fair value of the options is calculated at the date of grant using the Black-Scholes Model. The fair value of the options is allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options allocated to this financial year. In valuing the options, market conditions have been taken into account.

The following factors and assumptions were used in determining the fair value of 2014 options on grant date:

(5) Mr Bhandari was appointed a Non-Executive Director on 9 November 2011. Prior to this appointment, India Hydrocarbons Limited ("IHL") provided consultancy services to the Group, which continue to be provided. With the departure of the India Chief Operating Officer, additional responsibilities have been undertaken by IHL and Mr Bhandari. Mr Bhandari is assisting in strategy, commercial and joint venture related issues. The board considers that the additional remuneration is reasonable in the circumstances. Salary and fees since appointment consist of director fees of $65,400 (2013: $65,400) and the IHL consultancy service fees, the majority of work which is undertaken by Mr Bhandari, of $244,911 (2013: $87,625). The net cost to the Group (after Joint Venture recoveries) in relation to the consultancy service was $115,108 (2013: $43,813).

In addition the Company paid an introduction fee to IHL of 2.5% of the consideration received by the Company from Magna Energy Limited ("Magna"). Magna was introduced by IHL originally as a prospective purchaser of part of the Cambay Production Sharing Contract, but subsequently became a substantial shareholder in the Company, when consent from the Government of India was not received by the due date of 1 May 2014. The introduction fee, payable upon receipt of the funds from Magna, was on an arm's length basis and $108,849 (US$100,000) is included as remuneration in the current year.

Shareholder approval was granted at a General Meeting on 17 April 2014 to issue Mr Bhandari, or his nominee, 4,000,000 unlisted options exercisable at 15 cents per share, vesting from date of grant with a five year term. The unlisted options were granted in recognition of Mr Bhandari taking on a more active role in India.

(6) Dr McCarthy resigned as Managing Director on 31 December 2012 and became a Non-Executive Director from 1 January 2013. The amount paid for Non-Executive Director fees for the year ended 30 June 2014 was $54,625. The previous year included $27,250 paid for Non-Executive Director fees since 1 January 2013 and $256,320 paid as Managing Director, including $28,000 non-monetary benefits paid whilst working in Gujarat India.

(7) On 1 January 2013 Mr Miller was appointed as Managing Director, prior to this Mr Miller was a Non-Executive Director. Of the total amount of salaries, fees and superannuation paid to Mr Miller in the current year of $310,625 (2013: $138,500), $54,625 (2013: $54,500) is salary sacrificed into superannuation and $256,000 (2013:$84,000) was invoiced to the Group for his services as Managing Director. Mr Miller was paid an additional $40,000 in the current year to compensate for additional time spent in India working on the Cambay-77H well. The remuneration paid to Mr Miller in the prior year consisted of $27,250 Non-Executive Director fees plus $111,250 Managing Director fees.

On 29 January 2013 the Company announced that Mr Miller or his nominee, would be granted, as part of his remuneration as Managing Director, 2,000,000 unlisted options exercisable at 15 cents per share, vesting from date of grant with a three year term, subject to shareholder approval. Shareholder approval was granted in the current financial year on 28 October 2013. The fair value of these options was included as remuneration in 2013 and the $4,389 adjustment to the fair value of these options is included as remuneration in the current year.

Shareholder approval was granted at the Annual General Meeting on 11 November 2013 to issue Mr Miller or his nominee, 2,000,000 unlisted options exercisable at 15 cents per share, vesting from date of grant with a three year term and 2,000,000 unlisted options exercisable at 25 cents per share, vesting from date of grant with a four year term. The unlisted options were granted in recognition of Mr Miller's contribution to the Company.

(8) On 30 January 2013 Mr Ierace became key management personnel.

(9) On 1 July 2013 Mr Bekkers become key management personnel.

(10) Ceased employment on 4 October 2013.

Analysis of bonuses included in remuneration

Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to key management personnel are detailed below:

4. Equity Instruments - AUDITED

All options refer to unlisted options over shares of the Company, which are exercisable on a one-for-one basis.

Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the financial year and details on options that vested during the financial year are as follows:

With the exception of options that have vested, which can be retained by the employee in accordance with the timeframes in the option terms and conditions, all options expire on the earlier of their expiry date or termination of the individual's employment. Options that have vested can be retained by directors and some executives until expiry date, and do not expire on termination of employment. Further details, including grant dates and exercise dates regarding options granted to key management personnel are in note 19 to the financial statements.

Details of options over ordinary shares in the Company that were granted as compensation to key management personnel and executives since the end of the financial year are as follows:

With the exception of options that have vested, which can be retained by the employee in accordance with the timeframes in the option terms and conditions, all options expire on the earlier of their expiry date or termination of the individual's employment.

No terms of equity-settled share-based payment transactions (including options granted as compensation to key management personnel) have been altered or modified by the issuing entity during the financial year.

During the financial year no shares were issued on the exercise of options previously granted as compensation.

Details of vesting profiles of the options held by each key management person of the Group are detailed below:

(a) The options issued vested and were exercisable from 1 July 2010. All options that have been vested can be retained by the employee upon registration or termination of employment, within the timeframes specified under the now lapsed Employee Performance Rights Plan rules applicable at date of grant. All options that have vested can be retained by the director upon resignation or termination of employment.

(b) The options issued vested on date of grant. All options that have vested can be retained by the director upon resignation or termination of employment.

(c) The options issued vested and were exercisable from 10 November 2010. All options that have vested can be retained by the employee upon resignation or termination of employment, within the timeframe specified under the now lapsed Employee Performance Rights Plan rules applicable at date of grant. All options that have vested can be retained by the director upon resignation or termination of employment.

 (d) The options issued may vest and can be exercised as one half immediately and in full one year from grant date. All options that have vested can, upon resignation or termination of employee be retained by the employee within three months from the date on which the employee ceases employment. All options will lapse upon resignation or termination of employment prior to the option's vesting date.

(e) The options issued may vest and can be exercised as one half a year after grant date and one half two years from grant date. All options that have vested can be retained by employee upon resignation or termination of employment. All options will lapse upon resignation or termination of employment with the Company prior to the option's vesting date.

The movement during the financial year, by value, of options over ordinary shares in the Company held by each key management person is detailed below: 

There is no adjustment made to the value of options included in remuneration or the financial results where the option has a greater or lesser value as compared to the grant date value.

No options held by key management personnel are vested but not exercisable. The movement during the financial year in the number of options over ordinary shares in the Company held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

5. KEY MANANGEMENT PERSONNEL TRANSACTIONS - AUDITED

A number of key management persons, or their related parties, hold positions in other entities that result in them having control or joint control over the financial or operation policies of those entities.

A number of these entities transacted with the Group during the year. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm's length basis.

These transactions have all been disclosed in the remuneration table.

5.2 Movements in Shares

The movement during the financial year in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

5.3 Movements in Listed Options

The movement during the financial year in the number of listed options in the Company held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

END OF REMUNERATION REPORT - AUDITED

Signed in accordance with a resolution of the Directors.

Leederville

Western Australia

12 September 2014

Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of Oilex Ltd

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2014 there have been:

i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii) no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

Brent Steedman

Partner

Perth

12 September 2014

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENED 30 JUNE 2014

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014

The above Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2014