1st Aug 2007 07:00
ABN 50 078 532 632 Level 3, 50 Kings Park Road, West Perth WA 6005 Telephone: +61 8 9485 3200 Facsimile: +61 8 9485 3290 E-mail: [email protected] Web Site: www.oilex.com.au
QUARTERLY REPORT TO SHAREHOLDERS
30 June 2007HIGHLIGHTS
Oilex acquires 45% in West Kampar PSC, Central Sumatra with first appraisal well Pendalian 3 in August 2007.
6 locations approved for Cambay phase 2 drilling programme in Q3-Q4 2007.
Rig contract for 9 month Cambay and Bhandut Field programme awarded.
3 well locations approved in Block 56 Oman for drilling Q4 2007
Seismic acquisition contracts awarded in Oman (onshore 2D) and JPDA (offshore 3D)
Shareholders approve placement of 50 million shares to raise A$67.5 million gross
Retain cash resources of approximately A$66.8 million
CORPORATE Board of Directors Principal & Registered Office DETAILS Max D.J. Cozijn Level 3, 50 Kings Park Road Non-Executive Chairman West Perth WA 6005, Australia Bruce McCarthy Managing Director Telephone: +61 8 9485 3200 Ray Barnes Facsimile: +61 8 9485 3290 Technical Director L. L. Bhandari Non-Executive Director Email: [email protected] Website: www.oilex.com.au Capital Structure Ordinary Shares Share Registry 129,383,885 Security Transfer Registrars Pty Unlisted Options Ltd 30,825,100 770 Canning Highway Applecross WA 6153, Australia Stock Exchange Listing Telephone: +61 8 9315 2333 Australian Stock Exchange Facsimile: +61 8 9315 2233 ASX Code: OEX AIM Market of London Stock Exchange Email: [email protected] AIM Code: OEX OPERATIONS REVIEW INDIA Assignment of interest - Cambay Oilex acquired interests in Production Sharing Contracts ("PSC's") over three fields (Cambay, Bhandut and Sabarmati)
Oilex holds onshore Gujarat from Niko Resources under an agreement made material interests in 2006. The Government of India approved the final in 3 oil and gas assignment of interest in the sequence, by Oilex Ltd of 8.33% field redevelopment to Gujarat State Petroleum Corporation Ltd ("GSPC"), in July.
projects onshore The final approved interests in the Cambay PSC are Oilex India (comprising Oilex Ltd and Oilex NL (India) Holdings Ltd) 45%, GSPC 55%. Operations - CAMBAY FIELD, Gujarat (Oilex Operator 45%) Work programme and The work programme and budget has been approved by the JV andbudget approved. Management Committee. Six firm wells to test Oligocene, Eocene and deeper potential reservoir horizons will be drilled from existing well locations with the objective to prove an independently certified reserve as the basis for a
6 wells to be re-development project to start in 2008. A contract for a rig drilled at Cambay. has been issued and delays in the construction and shipping
have occurred. Oilex is considering options to enter into a contract with an alternate contractor to provide a rig in the immediate term to expedite the drilling of the first 2 wells in Cambay and one at Bhandut Field. The Crude Oil Sale Agreement (COSA) amendments have been completed to include Oilex in place of Niko. Work on the mapping of the hydrocarbon distribution is continuing and the remaining uncertainty in calculating hydrocarbon volumes are expected to be resolved with the benefit of the information that will be gathered in the Phase 2 drilling campaign this quarter. PHASE 1 DRILLING PROGRAMME- well tests The Cambay-72 well was tested successfully at the level of
Oil to surface in the Eocene EP IV and the Oligocene OS II with both zones tests of both flowing oil to surface at unstabilised rates due to potential reservoir limitations on the test equipment and reservoir
intervals in characteristics. Cambay-72 Workover operations resumed at Cambay -72 with re-entry of the well and installation of sand screens. Erratic flow again indicated the likelihood of blocking downhole equipment. Fluid and rock data collected during the test are being analysed in various laboratories. Rig contract awarded for 9 month Stabilised flow was not established due in part at least to campaign sub-optimal downhole conditions in this well including the probability of formation damage by the heavier mud weight that was needed to control over-pressure in the deeper Eocene when the well was drilled; limitations on the maximum possible flow rate caused by the downhole gauges and the sand screens; the limited zone of perforations (3.6m of a gross 16 m interval); and the small diameter surface choke (6 mm) that was used in the initial tests to limit the potential for sand production. Cambay-72 has proven the presence of the oil interval in the OS II sandstone with no evidence of formation water on the western High area. This zone will be drilled as either the primary or secondary objective in three of the wells that have been chosen with the benefit of the 3D seismic interpretation and confirmed for the next phase of drilling, planned to commence in August or September. Phase 2 drilling programme A selective work programme based on the 3D seismic mapping and designed to prove a reserves base by the end of 2007 is the centrepiece of the 2007-2008 Cambay Field Work Program. The main element is a drilling programme of 6 firm wells currently approved by the Cambay Joint Venture for immediate drilling. More than 30 possible locations have been selected for future wells in Cambay Field that will constitute the core of the long term, phase 2 drilling programme. A 9 month continuous drilling contract was awarded in April. A combination of re-entry, sidetrack and new wells has been agreed with the primary objective of acquiring new reservoir and fluid data for the Oligocene and Eocene hydrocarbon zones that have been identified from the field's production and well testing history. Along with data from existing wells, this information will be used to determine oil and gas reserves in the major compartments of the field and will form the basis for planning the re-development of the Cambay field. A number of wells are also planned to be extended to target deeper exploration objectives in settings analogous to nearby oil discoveries. Sabarmati Field, Gujarat (Oilex Operator 40%) Sabarmati-1 is the sole producing well in the Sabarmati Production Sharing Contract area. This well was the subject of a fluid influx study in 2006 which indicated that crude oil production could be increased on a sustainable basis withWorkover of the installation of an hydraulic sucker rod pump. Sabarmati-1 well successfully The pumping unit was installed at Sabarmati-1 and the well completed brought into production. The previous production rate of 2-5 barrels of oil per day (bopd) plus water has been substantially increased to an initial average rate of 97 bopd plus water. The flow rate has been consistently maintained at about 60 bopd while on production since the installation of the pump. Bhandut field, Gujarat (Oilex Operator 40%) The field is located near to the Lakshmi, Gauri and Hazira Fields that are producing gas and oil from reservoir Drilling and intervals similar to those intersected in the Bhandut wells. workover planned The Bhandut Field has produced about 200,000 barrels of oil for 2007 since 1993. Detailed mapping of the 3D seismic data is continuing. The drilling of Bhandut Field is being expedited with Bhandut 6 likely to be drilled as the first of the locations in the forthcoming programme subject to accessibility during the monsoon. Further drilling on Bhandut will depend on detailed results from the 3D work and approvals for new well sites being granted. OMAN Block 56 South Oman (Oilex Operator - 25%) The contract area comprising about 5,809 km2, is located adjacent to PDO major oil producing area in the South Oman Seismic to be Salt Basin. Productive trends are interpreted to extend into acquired in Q3 Block 56. Reprocessing existing seismic data is in process and results have been incorporated into the existing data set. Mobilization of crews for the acquisition of 1,080 km seismic in the SW part of the block commenced in late July. On the basis of existing 3D and reprocessed 2D seismic data,
3 wells planned to a suite of well locations was selected for drilling in 2007. be drilled early in Three locations (3, 4 and 7, see map below) have been 4th quarter 2007 approved for drilling (see map), anticipated to start in Q4
2007 depending on availability of drilling rig and services. Indonesia West Kampar PSC (Oilex 45%) Oilex Ltd, through a wholly owned subsidiary, entered into an agreement to acquire a 45% interest in the West Kampar Production Sharing Contract (PSC), onshore Sumatra, Indonesia from PT Sumatera Persada Energi (SPE). The block has an existing oil discovery that can be brought into production quickly, if justified by appraisal drilling and a number of highly prospective structural trends that will be the subject of an intensive exploration program. The participating interests in the West Kampar PSC are: Joint Venture Party Participating Interest Oilex (West Kampar) Limited 45% Sumatera Persada Energi (Operator) 55% The consideration for this interest includes Oilex refunding certain past costs and funding the drilling of the Pendalian-3 exploration/appraisal well, planned for August 2007, and the acquisition of 2D and 3D seismic work commitment programs. The contract area is located in central Sumatra adjacent to the most prolific oil producing province in Indonesia (see map below). Awarded in October 2005, the PSC work program commitment provides for the acquisition of 250 kms of 2D seismic and 50 sq kms of 3D seismic along with drilling of the Pendalian-3 well and an additional 4 exploration wells by November 2008. Appraisal Well - The Pendalian-3 well planned for August 2007 will appraise the oil field discovered in 1993 by the Pendalian-1 well, a cored slim hole which encountered a number of oil zones at depths ranging from 250 metres to 500 metres. Two of the zones flowed oil from drillstem tests in Pendalian-1 with maximum rates achieved of up to 530 barrels of oil per day. Independent technical work carried out for Oilex indicates that the best estimate of the "in place resource" for the field is 12 million barrels of oil. If commercial productivity is confirmed by the Pendalian-3 well, the West Kampar Joint Venture plans to acquire a 3D seismic survey over the Pendalian Field and a number of satellite structures and to accelerate development. Shallow, low cost wells and the proximity to infrastructure are attractive incentives for the rapid development of the field. Early cash flow generated by Pendalian production will be applied to the exploration of highly prospective trends that have been recognized on the block. AUSTRALIA EPP 27 - Otway basin offshore SOUTH AUSTRALIA Oilex Operator earning 20% Eight prospects in water depths of 70-105 metres have been mapped in the southeastern sector of the block and a preferred
Permit term drilling location has been selected on a prospect that may extended to contain 80 mmstboip (mean estimate). Site surveys have been February 2008 acquired at two locations in preparation for drilling.
Oilex is a member of a consortium of Operators led by Apache that have drilling commitments in the southeastern Australian
Awaiting rig basins. The consortium is negotiating to deliver a rig that
would guarantee a slot for a well in EPP 27 in early to mid-2008. WA-388-P carnarvon basin, offshore western australia (Oilex Operator- 20%) 2D seismic reprocessing of approximately 1200 km of data continued and additional 2D data were purchased. Seismic acquisition to The block is located to the north of the Goodwyn / North start late 2007 or Rankin gas fields trend and to the northeast of the Jansz-Io early 2008 gas discoveries in the Exmouth Sub-basin. The commitment work programme comprises reprocessing of existing seismic data and acquisition of 3D seismic over parts of the block which is anticipated to commence in 2008. ATP 548P INLAND OIL JV (Oilex 11.35%) Oilex has issued a notice to the other Parties in the Joint Venture regarding the sale of Oilex's interest in the permit to Bow Energy. Joint Petroleum JPDA 06-103, FLAMINGO BASIN OFFSHORE Joint petroleum Development Area development area Between Timor-Leste And (Oilex Operator - 25%) Australia Five companies tendered for the Maura 3D seismic survey and the contract was awarded to Wavefield Inseis to secure the vessel "Geowave Champion". The survey will cover an area of 1657 sq km and is expected to commence late 2007 or early 2008, dependent on current work commitments. With the purchase of modern third party 3D data and the addition of the new 3D data to the existing data set, the JV will have a comprehensive seismic data base over the entire prospective area of the block by mid 2008. The block was offered in a competitive bidding round that closed on 26 May 2006. It is located immediately to the east of the Laminaria, Corallina, Kakatua, Kuda Tasi and Elang discoveries/oil and gas fields and to the north of the Bayu-Undan gas condensate field. As part of its training obligation under the PSC, Oilex established a medical assistance and training programme in conjunction with the Ministry of Health. This programme is expanding its area of operations and is being run by Australian Aid International. Professional doctors and nurses are attending the needs of rural communities and training local staff to run clinics, concentrating on the south coast and hinterland of Timor-Leste. Corporate Share placement Shareholders of Oilex Ltd, at a general meeting held on 6 June 2007 approved a resolution to raise $67.5 million through the issue of 50 million ordinary shares at an issue price of $1.35 per share. The shares were issued predominantly to international and domestic institutional investors. The monies raised will allow Oilex to expedite its global exploration and development programme and may include: * undertaking drilling of up to 8 wells in Cambay Field and allowing for completion costs plus additional wells in the event of success as part of the 9 month drilling contract; * drilling and completion of one well and one work over well on Bhandut Field; * acquiring 3D seismic on Sabarmati Field; * drilling and completion of one well on Sabarmati Field; * drilling and appraisal of one well on Otway Basin Block EPP27; * acquiring 2D and 3D seismic on Oman Block 56; * drilling and completion of up to 3 wells on Oman Block 56; * acquiring 2D and 3D seismic on JPDA 06-103 Block; and * participation in any new activities around the Indian Ocean rim. In addition to progressing the Company's exploration activities, the Company may also use some of the funds raised to retire some of its existing debt facilities and to provide additional working capital. Contingent liability Oilex reached an agreement on confidential terms for full and final settlement of the claim made by Abrolhos Oil & Gas Pty Ltd and Pacific & Oriental Investments Ltd in relation to Oilex's former interest in a portion of Queensland ATP794. This contingent liability was referred to in the Company's March 2007 quarterly report. Company structure The Company presently has 129,383,885 shares on issue. These shares are traded on the ASX in Australia and on the AIM market of the London Stock Exchange under the code: OEX. Oilex also has 30,825,100 unlisted options on issue, the majority of these being held by executive staff. Net cash resources
of A$66.8 million At 30 June, 2007 the Company retained net cash resources of
approximately A$66.8 million.
Oilex regularly updates its website at www.oilex.com.au
For and on behalf of the Board
Dr B. H. McCarthyManaging Director31 July 2007
The information in this report has been compiled by the Managing Director of Oilex Ltd, Bruce McCarthy B.Sc. Hons. PhD (Geology) who has over 27 years experience in petroleum geology. The estimates of hydrocarbons in place were reviewed by Ray Barnes, the Technical Director of Oilex Ltd who has over 35 years experience in petroleum geology and is a member of the AAPG. Mr Barnes reviewed this announcement and consents to the inclusion of the estimated hydrocarbons in place in the form and context in which they appear. The resource estimates contained in this report are in accordance with the standard definitions set out by the Society of Petroleum Engineers, further information on which is available at www.spe.org.
Oilex's nominated advisor in relation to the Aim market is RFC Corporate Finance Ltd, contact: Stuart Laing, [email protected]
PERMIT SCHEDULE
Offshore Australian Joint Ventures:
PERMIT BASIN PARTIES % HELD OPERATOR Oilex Ltd 20.00 EPP 27 Gujarat State Petroleum Corporation Ltd 20.00 Otway Offshore Oilex Note 1 Videocon Industries Ltd 20.00 Great Artesian Oil & Gas Ltd 40.00 Oilex Ltd 20.00 Gujarat State Petroleum Corporation Ltd 20.00 WA-388-P Carnarvon Offshore Videocon Industries Ltd 20.00 Oilex Bharat Petroleum Corporation Ltd 20.00 Hindustan Petroleum Corporation Ltd 20.00 Note 1: Oilex, Gujarat State Petroleum Corporation Ltd and Videocon Industries Ltd are each earning 20% interest in return for funding 33.3% each of an agreed work programme. International Joint Ventures: COUNTRY/ % PERMIT PARTIES HELD OPERATOR STATE Oilex NL Holdings 53.33 (India) Limited Note Cambay 2, 3 Field India / Gujarat Oilex Gujarat State 46.67 Petroleum Corporation Ltd Oilex NL Holdings 40.00 (India) Limited Note Bhandut 2 Field India / Gujarat Gujarat State 60.00 Oilex Petroleum Corporation Ltd Oilex NL Holdings 40.00 (India) Limited Note Sabarmati India / Gujarat 2 Field Gujarat State 60.00 Oilex Petroleum Corporation Ltd Gujarat State 60.00 Petroleum Corporation Ltd Oilex Oman Limited 25.00 Note 2 Videocon Industries 25.00 Limited Block 56 Oman GAIL (India) Limited 25.00 Oilex Hindustan Petroleum 12.50 Corporation Ltd Bharat Petroleum 12.50 Corporation Ltd GAIL (India) Ltd 25.00 JPDA Joint Petroleum Development Oilex (JPDA 06-103) 25.00 06-103 Area between Timor Leste and Ltd Note 2 Australia Videocon Industries 25.00 Limited Oilex Gujarat State 25.00 Petroleum Corporation Ltd Bharat Petroleum 25.00 Corporation Ltd West Indonesia / Sumatra Oilex (West Kampar) 45.00 Kampar Limited Sumatera Persada Energi Sumatera Persada 55.00 Energi Note 2: wholly owned subsidiary of Oilex Ltd
Note 3: pending approval by Government of India of the assignment of 30% participating interest held by Oilex Ltd to Oilex NL Holdings (India) Ltd. Approval of assignment of 8.33% interest to GSPC from Oilex was received in July.
Note 4: Oilex is earning 45% interest in return for funding past costs, a seismic acquisition and drilling work programme.
Rule 5.3Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity OILEX LTD ABN Quarter ended ("current quarter") 50 078 652 632 30 JUNE 2007
Consolidated statement of cash flows
Cash flows related to operating activities Current Year to quarter date $A'000 (12 mo) $A'000 1.1 Receipts from product sales and related debtors - 35 1.2 Payments for (a) exploration and evaluation (5,292) (14,511) (b) development - - (c) production - - (d) administration (net) (1,695) (4,300) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature 560 1,141 received 1.5 Interest and other costs of finance paid (266) (655) 1.6 Income taxes paid - - 1.7 Other (provide details if material) - - Net Operating Cash Flows (6,693) (18,290) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects - (4,723) (b) - - equity investments (61) (455) (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects - - (b )equity - - investments - - (c) other fixed assets 1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other (provide details if material) - - Net investing cash flows (61) (5,178)
1.13 Total operating and investing cash flows (carried (6,754) (23,468)
forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc 63,774 82,120 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings (net) - 4,900 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (provide details if material) - - Net financing cash flows 63,774 87,020 Net increase (decrease) in cash held 57,020 63,552 1.20 Cash at beginning of quarter/year to date 9,798 3,266 1.21 Exchange rate adjustments to item 1.20 - - 1.22 Cash at end of quarter 66,818 66,818
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the relatedentities Current quarter $A'000
1.23 Aggregate amount of payments to the parties included in item 209
1.2 1.24 Aggregate amount of loans to the parties included in item - 1.10 1.25 Explanation necessary for an understanding of the transactions -
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material
effect on consolidated assets and liabilities but did not involve cash flows N/A
2.2 Details of outlays made by other entities to establish or increase their
share in projects in which the reporting entity has an interest N/A
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used $A'000 $A'000 3.1 Loan facilities 10,000 10,000 3.2 Credit standby - - arrangements
Estimated cash outflows for next quarter
$A'000 4.1 Exploration and evaluation 8,000 4.2 Development - Total 8,000 Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in Current Previous the consolidated statement of cash flows) to the related items quarter quarter in the accounts is as follows.
$A'000 $A'000 5.1 Cash on hand and at bank 2,312 1,923 5.2 Deposits at call 64,506 7,875 5.3 Bank overdraft - - 5.4 Other (provide details) - - Total: cash at end of quarter (item 1.22) 66,818 9,798
Changes in interests in mining tenements
Tenement Nature of Interest at Interest reference interest beginning of at end of quarter quarter (note (2)) 6.1 Interests in mining Refer to Permit tenements relinquished, Schedule in reduced or lapsed - Quarterly Report - - 6.2 Interests in mining Refer to Permit tenements acquired or Schedule in increased Quarterly Report
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total Number Issue price per Amount paid up number quoted security (see per security note 3) (cents) (note 3) (cents) 7.1 Preference + securities (description) - - - 7.2 Changes during quarter - - - (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions 7.3 +Ordinary securities 129,383,885 129,383,885 Various 7.4 Changes during quarter 50,000,000 50,000,000 $1.35 (a) Increases through issues 2,500,000 2,500,000 $0.20 -- - - - - (b) Decreases through returns of capital, buy-backs 7.5 +Convertible debt securities (description) - - - - 7.6 Changes during - - - - quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options Exercise price Expiry date (description and 2,200,000 - $0.20 28/02/2008 conversion factor) 500,000 - $1.00 31/12/2009 3,000,000 - $1.50 31/12/2009 1,000,100 - $0.50 07/12/2008 2,000,000 - $0.40 14/12/2008 3,250,000 - $0.50 14/12/2008 4,250,000 - $0.80 14/12/2008 1,000,000 - $0.50 16/02/2009 4,500,000 - $0.50 31/03/2010 775,000 - $0.50 31/07/2009 775,000 - $0.65 31/07/2009 775,000 - $0.90 31/07/2010 250,000 - $0.45 31/07/2009 250,000 - $0.55 31/07/2009 500,000 - $1.50 31/10/2009 500,000 - $1.75 31/10/2009 500,000 - $2.00 31/10/2010 500,000 - $1.40 31/01/2010 450,000 - $2.00 31/01/2010 450,000 - $2.50 31/01/2011 2,500,000 - $2.00 31/03/2011 300,000 - $1.75 31/01/2010 300,000 - $2.25 31/01/2011 300,000 - $2.75 31/03/2012 Issued and quoted securities at end of current quarter (continued)
Description includes rate of interest and any redemption or conversion rights together with prices and dates
Total Issue price per security Amount paid up per number (see note 3) (cents) security (note 3) (cents) 279,000 Performance Rights Tranche 1 expire 1/07/2011 304,000 Performance Rights Tranche 2 expire 1/07/2011 299,000 Performance Rights Tranche 3 expire 1/07/2011 7.8 Issued during 300,000 $1.75 31/01/2010 quarter 300,000 $2.25 31/01/2011 300,000 $2.75 31/03/2012 10,000 Performance Rights Tranche 1 expire 1/07/2011 10,000 Performance Rights Tranche 2 expire 1/07/2011 5,000 Performance Rights Tranche 3 expire 1/07/2011 7.9 Exercised during - - - - quarter 7.10 Expired during - - - - quarter 7.11 Debentures (totals only) Nil Nil 7.12 Unsecured notes (totals only) Nil Nil Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Actor other standards acceptable to ASX.
2 This statement doesgive a true and fair view of the mattersdisclosed. Sign here: Date: 31 July 2007(Director/Company Secretary)
Print name: Max D.J. Cozijn
OILEX LTDRelated Shares:
OEX.L