Oilex - Status Cambay Field

25 May 2012

oilex - status cambay field

Oilex Ltd ("Oilex" ASX: OEX, AIM: OEX) advises that, following its announcement dated 7 May 2012, the Cambay-76H well has been suspended and a work programme to commercialise the value of the work completed on Cambay-76H at the earliest opportunity is being prepared.

The Company previously announced that operations at the Cambay-76H well were to be suspended as a direct consequence of an apparently poor integrity of drill pipe and potentially adverse consequences of continuing to use this equipment. The drill pipe had parted on three separate occasions while attempting to pull out of the well with the milling assembly. Analysis of the cause of the failures is still in progress.

Once all data is gathered, Oilex will also seek an independent review to ensure that the maximum value is derived from the work undertaken at Cambay-76H for its wider Cambay assets and work programme. The suspension of Cambay-76H has been concluded and services, equipment and support personnel have been demobilised from the site, thereby reducing costs while results from these reviews are obtained.

Cambay-76H was drilled, completed and fracture stimulated within 38 operational days. The issues with the milling of balls and seats arose only in the last two days of planned operations and were independent to the technical drilling of the well. A large volume of information was collected from the well that is also being analysed and will be applied to the next phase of work.

The Cambay Contract Area appears to have some unique geological characteristics that distinguish it from other areas within and marginal to the basin depocentres. In summary, Cambay-76H demonstrated that appropriate drilling and stimulation technology can be applied effectively and the flows of hydrocarbons to surface on numerous occasions during well control operations demonstrate the presence of a potential high energy reservoir.

Oilex and its Joint Venture Partner, Gujarat State Petroleum Corporation Ltd, are working closely together to formulate a drilling programme for the next phases of work on Cambay Field.

The first stage of work will comprise a well to be drilled from the Cambay-76H pad with the intention of re-entering and maximising the value of the large stimulated rock volume around the 610 metre well bore at Cambay-76H. The detailed design and precise location of the well will be finalised once engineering feasibility studies have been completed over the coming weeks and an update will be provided once drilling plans are finalised.

Following demonstration of hydrocarbon flow from this well, the intention is to proceed with a three well work programme. This subsequent phase is designed to acquire cores, modern wireline logs, reservoir fluid information and production test data that would assist the independent certifier to move contingent resources to reserves, generate sales of oil and gas for local markets as well as evaluating the significant potential of the deeper, tight reservoirs at Cambay Field.

The participating interests in the Cambay PSC are:

For further information, please contact:

This document may include forward-looking statements. Forward-looking statements include, but are not necessarily limited to, statements concerning Oilex Ltd's planned exploration programme and other statements that are not historic facts. When used in this document, the words such as "could", "plan", "estimate" "expect", "intend", "may", "potential", "should" and similar expressions are forward-looking statements. Although Oilex Ltd believes that its expectations reflected in these statements are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements.