Interim Financial Report 31 December 2012

OILEX LTD

CONDENSED CONSOLIDATED INTERIM

FINANCIAL REPORT

For the half-year ended 31 December 2012

CONTENTS

Directors' Report

Auditor's Independence Declaration

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows

Notes to the Condensed Consolidated Interim Financial Report

Directors' Declaration

Independent Review Report

DIRECTORS' REPORT

The Directors present their report together with the interim financial report of the condensed consolidated entity, being Oilex Ltd (the "Company") and its controlled entities (the "Group") for the half-year ended 31 December 2012 and the review report thereon.

DIRECTORS

The directors of the Company at any time during the interim period and until the date of this report are detailed below. All directors were in office for this entire period unless otherwise stated.

Mr Max Cozijn Non-Executive Chairman

Mr Sundeep Bhandari Non-Executive Vice Chairman

Mr Ronald Miller Acting Managing Director (Previously Non-Executive Director to 31 December 2012)

Dr Bruce McCarthy Non-Executive Director (Previously Managing Director to 31 December 2012)

Mr Raymond Barnes Technical Director (Resigned 14 November 2012)

Mr Ben Clube Finance Director and Company Secretary (Resigned 14 September 2012)

REVIEW OF OPERATIONS

Financial Performance

The Group incurred a consolidated loss after income tax of $2,486,917 for the half-year (31 December 2011: loss of $2,623,374). The loss includes $1,013,999 incurred on exploration expenditure (with $601,857 expensed in India) and $1,239,218 incurred on employee and administrative expenditure. The Company is continuing its focus on cost reduction initiatives which do not impair its technical and commercial capabilities. Cash and cash equivalents held by the Group as at 31 December 2012 totalled $6,971,177 (30 June 2012: cash and cash equivalents $4,363,383).

Operations

Oilex Ltd is a dual listed (ASX and AIM) oil and gas exploration and production company. The Company is continuing its transition to an early mover unconventional energy producer, with primary focus on evaluating and commercialising the extensive Eocene low permeability ("tight") reservoirs in its onshore Cambay Field located in the state of Gujarat, India, where energy market fundamentals are attractive. The Company is applying leading-edge tight reservoir evaluation, drilling and production technologies and techniques which have been developed in recent years in the rapidly expanding "tight" and shale gas industry in North America. The Company also has interests in exploration assets offshore Western Australia, the Timor Sea and onshore Sumatra, Indonesia.

The main events for the Company during the period were:

·; The successful $7.09 million (before expenses of $1,792,385) capital raising via a fully underwritten entitlement offer.

·; The incorporation of the recommendations and insights, from an independent US expert who reviewed the Cambay-76H well operations, into work programme and development planning activities while continuing to work through the approval processes for Cambay.

·; The Company is in the process of finalising well design and assessing the availability of a rig and long lead time equipment for the Cambay offset well.

·; The Company continues working with the regulatory authority and the Directorate General of Hydrocarbons to secure approval of its application to resume production from Cambay-73. This effort includes a plan to sell small volumes of gas into a local market to minimise flaring. Potential gas buyers for Cambay-73 gas have been identified and approached as part of preparation for restarting production.

·; In JPDA 06-103 the Bazartete-1 well location has been selected as the site of the third commitment well. Please refer to the 31 December Quarterly Report to Shareholders released 29 January 2013 for further details including of the range of prospective resources.

·; The Initial Permit Period for JPDA 06-103 ended on 15 January 2013. Oilex as Operator in requested an extension to enable the Joint Venture to secure a rig to drill the Bazartete Well. The Autoridade Nacional do Petroleo of Timor Lesté on 18 January 2013 granted a conditional extension to the Joint Venture to 15 January 2014.

·; On 28 December 2013 the ANP approved two partial relinquishments of PSC JPDA 06-103, the remaining Contract Area is now 1871 km2.

·; The WA-388-P offshore exploration permit term expired in August 2012 and following discussion with the National Offshore Petroleum Titles Administrator ("NOPTA"), the Operator Apache Northwest Pty Ltd advised NOPTA on 8 October 2012 that the joint venture partners had elected not to proceed with the renewal of the permit. NOPTA advised on 25 October 2012 that the permit is deemed to have expired on 27 August 2012.

·; Negotiations are continuing as Oilex attempts to achieve a commercial resolution to the West Kampar Joint Venture dispute.

Further details are contained within releases made by the Company over this period.

Significant Events After Balance Date

The Cambay Joint Venture Operating Committee in January 2013 approved the work programme and budget for the offset well which has subsequently been submitted to the Management Committee for approval.

The Autoridade Nacional do Petroleo ("ANP") advised on 15 January 2013 that it had granted the JPDA 06-103 Joint Venture a conditional extension to test the Bazartete prospect by 15 January 2014 on the condition that the Joint Venture secures a letter of intent or a contract for a drilling rig by 15 June 2013.

On 29 January 2013 Oilex announced the proposed issue of 2 million unlisted options exercisable at 15 cents with a 3 year term, to Mr R Miller as part of the remuneration package in his capacity as Acting Managing Director, subject to shareholder approval.

On 30 January 2013 Oilex announced the appointment of Mr R Ierace as Chief Financial Officer and Company Secretary. Mr Ierace's remuneration package includes the granting of 1 million unlisted options exercisable at 15 cents expiring 30 January 2016 vesting on date of grant and 1 million unlisted options exercisable at 25 cents, expiring 30 January 2017 vesting after twelve months service.

There are no other significant subsequent events occurring after balance date.

CORPORATE MATTERS

Capital Structure

At 31 December 2012, Oilex Ltd retained cash of $6,971,177.

As at 31 December 2012 the company had total issued capital of 354,679,408 ordinary shares.

During the half-year ended 31 December 2012, Oilex successfully completed a fully underwritten entitlement offer. On 2 August 2012 Oilex announced a fully underwritten renounceable entitlement offer of 101,329,954 new shares on the basis of 2 new shares for every 5 shares held, at an issue price of $0.07 per new share with 1 attaching new option exercisable at $0.15 per share on or before 7 September 2015 for every 2 new shares subscribed for, raising $7,093,097 before expenses.

The issue of the new shares and options on 7 September 2012 increased the number of shares on issue from 253,324,885 to 354,654,839 and the number of listed options to 50,665,017.

Shareholders at a General Meeting on 7 September 2012 approved the allotment of 101,329,954 underwriter options at an exercise price of $0.15 expiring 7 September 2015, increasing the total number of listed options issued from 50,665,017 to 151,994,971.

During the half-year ended 31 December 2012, 2,569 listed $0.15 options were exercised and 18,687,500 unlisted options expired unexercised. Oilex also issued 6 million unlisted options during the period to Mr M Maloney following his appointment as Chief Operating Officer responsible for the development of the Cambay tight oil and gas project. Mr Maloney has over 30 years experience in the oil and gas industry.

The 6 million unlisted options granted to Mr Maloney were comprised of 3 million unlisted options exercisable at 15 cents expiring 17 December 2015 vesting after twelve months service and 3 million unlisted options exercisable at 25 cents, expiring 17 December 2016 vesting after two years service.

As at 31 December 2012 there were 151,992,402 listed options exercisable at $0.15 and a total of 19,037,500 unlisted options exercisable at prices of between $0.15 and $0.63, full details are shown below.

LEAD AUDITOR'S INDEPENDENCE DECLARATION

The lead auditor's independence declaration is set out on page 4 and forms part of the Directors' Report for the half-year ended

31 December 2012.

Signed in accordance with a resolution of the Board of Directors.

Mr R Miller Mr M Cozijn

Acting Managing Director Chairman

Leederville

Western Australia

15 February 2013

KPMG

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 review for the half-year ended 31 December 2012there have been:

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

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

KPMG

Graham HoggPartner

Perth, Western Australia15 February 2013

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

 Liability limited by a scheme approved under Professional Standards Legislation.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

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

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2012

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

(1) Capital raising costs include the fair value of listed options granted to the underwriter and sub-underwriter following shareholder approval.

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

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

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

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

1. REPORTING ENTITY

Oilex Ltd (the "Company") is a company domiciled in Australia. The condensed consolidated interim financial report of the Company as at and for the half-year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the "Group" and individually as "Group Entities") and the Group's interest in associates and jointly controlled entities. Oilex Ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange ("ASX") and on the AIM Market of the London Stock Exchange. The Group is a for-profit entity and is primarily involved in the exploration, evaluation, development and production of hydrocarbons.

The consolidated annual financial report of the Group as at and for the year ended 30 June 2012 is available upon request from the Company's registered office at Level One, 660 Newcastle Street, Leederville, Western Australia 6007 or at www.oilex.com.au.

2. BASIS OF PREPARATION

(a) Statement of Compliance

The condensed consolidated interim financial report is a general purpose condensed financial report which has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. The condensed consolidated interim financial report does not include all of the notes and information included in an annual financial report and accordingly this report should be read in conjunction with the consolidated annual financial report of the Group as at and for the year ended 30 June 2012 and any public announcements made by Oilex Ltd during the period ended 31 December 2012.

This condensed consolidated interim financial report was authorised for issue by the Board of Directors on 15 February 2013.

(b) Going Concern

The financial report has been prepared on the going concern basis which contemplates realisation of assets and settlement of liabilities in the normal course of business. The Group has incurred a loss of $2,486,917 during the half year and as at 31 December 2012, the Group's current assets exceeded current liabilities by $6,977,441. The Group will continue to manage its expenditure to ensure that it has sufficient cash reserves for the next twelve months. The Group will require funds within the next twelve months in order to meet planned joint venture arrangements for its projects, noting that the timing and amount of these expenditures may be able to be varied as economic circumstances allow although some commitments exist in the medium term.

Given the current macro-economic environment, the Directors note that uncertainty exists in the Group's ability to access funds to meet these arrangements and therefore realise the value of the assets. Possible funding options available to the Group may include the sale of interests in the Group's assets, farm out opportunities or a future capital raising.

Notwithstanding these uncertainties, the Directors believe it is appropriate to prepare the consolidated financial statements on a going concern basis as, and in the opinion of the Directors, the Company has adequate plans in place to meet its minimum administrative, evaluation and development expenditures for at least twelve months from the date of this report.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by Oilex in this condensed consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2012.

4. ESTIMATES

The preparation of an interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 30 June 2012.

5. OPERATING SEGMENTS

The Group has identified its operating segments based upon the internal management reports that are reviewed and used by the executive management team, including the Managing Director (the Group's chief operating decision maker), in assessing performance and in determining the allocation of resources.

There were no significant inter-segment transactions during the year.

(1) Joint Petroleum Development Area.

(2) Corporate represents a reconciliation of reportable segment revenues, profit or loss and assets to the consolidated figure.

6. REVENUE AND EXPENSES

7. EXPLORATION AND EVALUATION

The Cambay asset is currently under evaluation. It has minimal production from ongoing well tests that is sold to a third party. Exploration and evaluation assets are reviewed at each reporting date to determine whether there is any indication of impairment or reversal of impairment.

8. SHARE-BASED PAYMENTS

The Company has an established share option program that entitles directors, key management personnel and advisors to purchase shares in the Company. The terms and conditions of the share option program are disclosed in the consolidated financial report as at and for the year ended 30 June 2012. In the half-year ended 31 December 2012 further grants on similar terms were made to key management personnel.

The Company had established an Employee Performance Rights Plan ("the Plan"), approved by shareholders in 2006, and updated by shareholders in 2009, which entitled employees to options and performance rights. The terms and conditions of the Plan are disclosed in the consolidated financial report as at and for the year ended 30 June 2012. No performance rights were granted in the half-year ended 31 December 2012. The Board resolved not to seek shareholder approval to renew the Plan in 2012, allowing the Plan to lapse.

The basis of measuring fair value of options and performance rights granted is consistent with that disclosed in the consolidated financial report as at and for the year ended 30 June 2012. The terms and conditions of the grants made during the half-year ended 31 December 2012 are as follows:

During the half-year ended 31 December 2012, the following options lapsed unexercised due to service conditions not being met:

Fair value of options granted during the half-year ended 31 December 2012 has been determined using the following assumptions:

The fair value of the options is calculated at the date of grant using the Black-Scholes Model.

As at 31 December 2012 Oilex Ltd had 19,037,500 unlisted options exercisable at prices of between $0.15 and $0.63 and no performance rights on issue.

During the half-year ended 31 December 2012 an allotment of 101,329,954 underwriter and sub-underwriter options were approved by shareholders. Refer Note 9 for further details.

9. ISSUED CAPITAL

As at 31 December 2012 there were 19,037,500 unlisted options exercisable at prices of between $0.15 and $0.63.

On 2 August 2012 Oilex announced a fully underwritten renounceable entitlement offer of 101,329,954 new shares on the basis of 2 new shares for every 5 shares held, at an issue price of $0.07 per new share with 1 attaching new option exercisable at $0.15 per share on or before 7 September 2015 for every 2 new shares subscribed for, to raise $7,093,097 before expenses of $1,792,385, including $911,970 related to the issue of the underwriter and sub-underwriter options.

The issue of the new shares and options on 7 September 2012 increased the number of shares on issue from 253,324,885 to 354,654,839 and the number of listed options to 50,665,017.

Shareholders at a General Meeting on 7 September 2012 approved the allotment of 101,329,954 underwriter and sub-underwriter options at an exercise price of $0.15 expiring 7 September 2015, increasing the total number of listed options issued from 50,665,017 to 151,994,971. The fair value of these listed options is $911,970, as determined based upon the closing trading price of the first day of trading of the options. This amount is treated as a capital raising cost and recorded as a reduction in share capital.

Of these, 2,569 listed options had been exercised as at 31 December 2012.

10. CONTINGENCIES

The Directors are of the opinion that provisions are not required in respect of the following matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.

(a) Oilex Ltd has issued guarantees in relation to the lease of corporate offices in Leederville Western Australia, as well as corporate credit cards. The bank guarantees amounts to AUD$138,060. An equal amount is held in cash and cash equivalents as security by the banks.

(b) In June 2010 Oilex requested an extension to its Good Standing Agreement ("GSA") with the Australian Government on behalf of the Joint Venture partners for exploration permit EPP27 which the Joint Venture previously relinquished with the Australian Government's approval. Oilex's monetary share of the GSA is $2,101,225. In July 2010, the Australian Government extended the GSA until the conclusion of the 2011 Australian Offshore Petroleum Exploration Release, including re-release of any 2011 areas, which had bid closing dates in April and November 2012. Having assessed the available re-release areas, the Company decided not to enter a bid in the April or November rounds because it determined a bid would not be commercially or technically justified. Following discussions with the Department of Resources and Tourism in 2012, the Company had confirmed that the Company remains in Good Standing and that the GSA can be extended to participation in the 2012 release round, which has a second round bid closing date of 9 May 2013. The Company understands that the requirement for a GSA will no longer apply after 24 August 2013.

11. RELATED PARTIES

Arrangements with related parties continue to be in place. For details of these arrangements, refer to the consolidated annual financial report of the Group as at and for the year ended 30 June 2012.

12. CHANGE IN THE COMPOSITION OF THE GROUP

Since the last annual reporting date, there have been no significant changes in the composition of the Group.

13. EXPENDITURE COMMITMENTS

In order to maintain rights of tenure to exploration permits, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various state and national governments. These obligations are subject to renegotiation when application for an exploration permit is made and at other times. These obligations are not provided for in the financial report.

The Group's share of the expenditure commitments are currently estimated to be payable as follows:

When obligations expire, are re-negotiated or cease to be contractually or practically enforceable, they are no longer considered to be a commitment.

Further expenditure commitments for subsequent permit periods are contingent upon future exploration results. These cannot be estimated and are subject to renegotiation upon expiry of the exploration leases.

14. SUBSEQUENT EVENTS

The Cambay Joint Venture Operating Committee in January 2013 approved the work programme and budget for the offset well which has subsequently been submitted to the Management Committee for approval.

The Autoridade Nacional do Petroleo ("ANP") advised on 15 January 2013 that it had granted the JPDA 06-103 Joint Venture a conditional extension to test the Bazartete prospect by 15 January 2014 on the condition that the Joint Venture secures a letter of intent or a contract for a drilling rig by 15 June 2013.

On 29 January 2013 Oilex announced the proposed issue of 2 million unlisted options exercisable at 15 cents with a 3 year term, to Mr R Miller as part of the remuneration package in his capacity as Acting Managing Director, subject to shareholder approval.

On 30 January 2013 Oilex announced the appointment of Mr R Ierace as Chief Financial Officer and Company Secretary. Mr Ierace's remuneration package includes the granting of 1 million unlisted options exercisable at 15 cents expiring 30 January 2016, vesting on date of grant and 1 million unlisted options exercisable at 25 cents, expiring 30 January 2017 vesting after twelve months service.

There are no other significant subsequent events occurring after balance date.

DIRECTORS' DECLARATION

In the opinion of the Directors of Oilex Ltd (the "Company"):

1. the financial statements and notes set out on pages 5 to 15, are in accordance with the Corporations Act 2001 including:

a) giving a true and fair view of the Group's financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors.

Mr R Miller Mr M Cozijn

Acting Managing Director Chairman

Leederville,

Western Australia

15 February 2013

KPMG

Independent auditor's review report to the members of Oilex Ltd

Report on the financial report

We have reviewed the accompanying interim financial report of Oilex Ltd, which comprises the condensed consolidated statement of financial position as at 31 December 2012, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, notes 1 to 14 comprising a summary of significant accounting policies and other explanatory information and the directors' declaration of the Group comprising the company and the entities it controlled at the half-year's end or from time to time during the half-year.

Directors' responsibility for the interim financial report

The directors of the company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the interim financial report that is free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group's financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Oilex Ltd, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Oilex Ltd is not in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the Group's financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

(b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

KPMG

Graham Hogg

Partner

Perth, Western Australia

15 February 2013

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation