Quarterly Report 30 September 2015

HIGHLIGHTS

CAMBAY PSC, ONSHORE GUJARAT, INDIA

» Preparation of the five well workover campaign largely completed during the quarter 

» Cambay-73 is on continuous production with stabilised draw down

» Temporary pipeline from Cambay-77H pad to Cambay-73 production facility completed and operational

» Three Cambay legacy wells connected to the temporary pipeline and supplying gas on an intermittent basis

» Techno-commercial evaluation for 13 of 14 tenders for the Cambay 2015/2016 drilling campaign nearly complete

BHANDUT FIELD, ONSHORE GUJARAT, INDIA

» During the quarter construction of the gas production facility commenced, with construction expected to be completed in November 2015

» Bhandut-3 production test results have resulted in an upgrade to previous internal estimate of 2C Contingent Resource to ~425MMscf (~170MMscf Oilex net)

CORPORATE

» During the quarter, Oilex announced a two tranche placement and underwritten rights issue to raise $30 million (Capital Raising)

» First tranche placement completed raising $1.8 million

» Fully underwritten rights issue completed raising $7.0 million

» Second tranche placement completed raising $11.8 million

» Issue of Zeta Deferred Shares and convertible notes to raise $9.4 million, approved by Shareholders at a General Meeting on 12 August 2015

HEALTH, SAFETY, SECURITY AND ENVIRONMENT

No Lost Time Incidents recorded during the quarter.

CAMBAY FIELD, GUJARAT, INDIA

(Oilex: Operator and 45% interest)

Preparation of the five well workover campaign was largely completed during the quarter, with field work commencing during October 2015. The workover campaign is targeting both oil and gas production which will contribute to the Indian operations becoming cash flow positive. The workover rig was mobilised during October to Cambay-19z, an oil producer from the Eocene (EP-IV) formation. Cambay-19z is located approximately 1.4 km to the west of Cambay-77H. The workover includes removal and cleaning of the production tubing and repositioning the downhole pump to improve well deliverability.

Subsequent to Cambay-19z, the rig will move to 1 of 4 candidates;

· Cambay-20, an oil producer currently on self-flow that requires a downhole pump to improve deliverability

· Cambay-70, located adjacent to Cambay-77H pad, a gas and oil producer from Eocene formation

· Cambay-60, tested gas and condensate from OSII formation but never put into production

· Cambay-77H, to remove the frac tree, install production tubing and tree

Delivery of components from overseas will determine the sequence of work in conjunction with optimising rig time. In addition, assessment of other wells continues such that the portfolio of workover candidates is continually hi-graded. The approved work programme and budget has a total of 5 workovers to complete.

During the September quarter, preparation work continued for the 2015/16 drilling campaign, with the contracting and procurement process nearing completion. Technical and commercial evaluations for 13 of 14 major tenders were completed after the end of the quarter and final evaluation and approval processes are in progress. Interest from top-tier service providers is high and competitive responses have been received on all tenders, including the drilling rig.

The JV is discussing the best opportunity to integrate Cambay-77H production data with the Cambay-78H and 80H drilling campaign and at the same time maximise the opportunity to secure contracting services at competitive rates in the current low oil price environment.

Tendering for the fracture stimulation, flowback and testing services commenced subsequent to the end of the quarter. These field activities will only commence upon completion of the special tight reservoir core analysis that will be undertaken in North America during H1 2016 following core recovery from Cambay -78H and 80H wells.

Production and Facilities

Cambay-73

Cambay-73 well continues to produce gas for the low pressure market in the immediate vicinity of the field at ~26 boepd with 100% availability. The well has been shut-in for a pressure build up study as part of ongoing reservoir engineering studies to better understand the Y zone reservoir. A temporary pipeline from Cambay-77H site to Cambay-73 production facility has been completed as part of a gas gathering system to assist in meeting market demand. Three legacy wells have been connected to this pipeline and provide additional gas to the low pressure market via the Cambay-73 production facility.

Cambay-77H

It is planned to complete the installation of a production tree and production tubing during the December quarter. Subsequent to these activities, Cambay-77H will be connected to the temporary pipeline to provide gas to the low pressure market via Cambay-73, without having to construct a dedicated low pressure production facility at the Cambay-77H site. It is estimated this will result in a saving of ~US$150K after the eventual replacement of the temporary pipeline with a permanent pipeline during 2016.

Gas Market

Gas is currently marketed on a competitive tender basis to buyers and is being sold into a low pressure local market, commencing with production from Cambay-73.

Gas marketing activities have commenced for the volume of gas equivalent to the gross 1P Reserves of 90Bcf[1]. In conjunction with the marketing effort, a field development plan has been prepared for the initial gross 20Bcf that is anticipated to be established and produced through a 5MMscfd gas treatment plant located near the Cambay-77H site.

TOTAL NET OIL AND GAS PRODUCTION - 338 BBLS and 6.1 MMscf for the quarter (~1,393 boe)

The Cambay Field delivered net oil and gas production of 338 barrels and 6.1 MMscf for the three months to 30 September. This is an increase of 1,008 boe on the previous quarter, reflecting the positive impact of additional gas production.

BHANDUT FIELD, GUJARAT, INDIA

(Oilex: Operator and 40% interest)

Harvesting Conventional Gas

During the quarter Oilex progressed the establishment of production facilities for Bhandut-3. Design and procurement activities have been completed and field construction has commenced at Bhandut. Construction of the gas production facility, including commissioning activities is expected to be completed in November 2015. Bhandut-3 should be ready to commence production prior to the end of December 2015 subject to availability of the interconnecting gas transportation infrastructure. Gas transportation is the responsibility of the buyer and under the terms of the gas sales agreement, the latest possible commencement date is 31 December 2015.

The Bhandut-3 production test results have been further analysed and the internal deterministic estimate of 2C Contingent Resource has been upgraded to ~425MMscf (~170MMscf Oilex net) as at 21 August 2015. An independent reserve assessment has commenced to support Oilex's recently upgraded internal estimate.

____________[1] Categorised as 1P subject to securing financing for development, refer ASX announcement dated 16 April 2015.

WALLAL GRABEN - WESTERN AUSTRALIA (CANNING BASIN)

(Oilex: Operator and 100% interest)

The Wallal Graben asset is located adjacent to the Pilbara, a global resource centre for iron ore and LNG in Western Australia. Oilex has a low cost entry into a province with the key determinates for successful development, being:

· Markets

· Infrastructure

· Geology

An internal technical evaluation of the 3 exploration areas encompassing approximately 11,900 km2 (~3 million acres) has recently been completed, including a leads and prospects portfolio utilising 2D seismic data that covers only 20% of the Wallal Graben play fairway. An extensive suite of 14 conventional prospects have been evaluated using probabilistic methods. The full portfolio will be further assessed to identify the best prospects to mature to drillable status.

A detailed petroleum systems analysis, incorporating source rock maturity and thermal modelling, has also been completed. Results of these studies have concluded that the interpreted source rocks within the play fairway are currently mature for hydrocarbon generation and a significant portion of the interpreted source rocks are within the oil and wet gas maturity windows.

An evaluation of the unconventional prospectivity was undertaken which highlighted that significant unconventional plays are interpreted to exist consistent with those identified by drilling in the Canning Basin.

The first Heritage Agreement is expected to be signed shortly with the Nyangumarta people in relation to the 2 northern blocks, which is a key milestone for this acreage. Consultations on the Heritage Agreements for the third block are ongoing. 

The leads and prospects inventory comprises multiple play-types ranging from simple structural traps to well-defined fan systems..

The Goldwyer Formation, a well acknowledged tight (shale) play, is interpreted to exist within the Wallal Graben and is a focus objective for Oilex. The Wallal Graben may be a relative sweet spot for these organic-rich source rocks due to its geological history. Also numerous conventional plays are interpreted to exist within the Wallal Graben, enhancing the attractiveness of the acreage. 

Farmout efforts continue.

JPDA 06-103, TIMOR SEA

(Oilex: Operator and 10% interest)

Oilex in its capacity as Operator, on behalf of the Joint Venture Participants in the Joint Petroleum Development Area (JPDA) 06-103 Production Sharing Contract (PSC), received in the previous quarter, a Notice of Intent to Terminate the PSC (Notice) from the Autoridade Nacional do Petroleo (ANP). The Notice follows on from the rejection by the ANP of the Joint Venture Request to Terminate the PSC by mutual agreement, in good standing and without penalty.

The Notice asserted a monetary claim against the Joint Venture for payment of the estimated cost of exploration activities not carried out in 2013 and certain local content obligations set out in the PSC. The total amount sought to be recovered by the ANP in the Notice is approximately US$17 million (Oilex share US$1.7 million).

During the quarter the ANP advised that it had terminated the PSC effective 15 July 2015.

The Company has not provided for a monetary settlement in its financial statements. As the Joint Venture has made significant overpayments in the work programme, it is of the opinion that the excess expenditure should be included as part of any financial assessment incorporated in the termination process.

The Joint Venture continues to discuss the financial liability of the Contractor upon termination with the ANP.

WEST KAMPAR PSC, CENTRAL SUMATRA, INDONESIA

(Oilex: 45% interest and further 22.5% secured1)

A Court approved Scheme of Arrangement has been implemented over the Operator, however Oilex continues to pursue enforcement of the Arbitration Award and a commercial settlement.

NEW OPPORTUNITIES

The Company maintained a watching brief for new opportunities that fit its onshore Indian Ocean Rim Strategy. Specifically, the Company is focused on leveraging its first mover position in India to supply hydrocarbons to a premium growth market.

CORPORATE

At the end of the quarter the Company retained cash resources of $15.6 million.

During the quarter, Oilex announced a two tranche placement and underwritten rights issue to raise $30 million (Capital Raising). The Capital Raising comprised the following components:

» First tranche placement raising $1.8 million, completed in July

» Fully underwritten rights issue raising $7.0 million, completed in August

» Second tranche placement raising $11.8 million, completed in August

» Zeta deferred shares and convertible notes to raise $9.4 million to be settled by 12 November 2015

At a general meeting on 12 August 2015, Shareholders approved the issue of 287 million Tranche Two Shares to raise $11.8 million. Shareholders also approved the issue of 124 million deferred shares at a price of $0.0418 to Zeta Resources Limited (Zeta) to raise $5.2 million before expenses and the issue of $4.2 million 20 year zero coupon unsecured convertible loan notes to Zeta, which will be convertible into shares at Zeta's option at any time, subject to compliance with Australian law, at a conversion price of $0.0418 per share. The issue of these convertible notes will occur contemporaneously with the issue to Zeta of the 124 million ordinary shares under Tranche Two. Zeta is an active, resource focused holding and development company incorporated under the Bermuda Companies Act and is listed on the ASX.

A total of 502 million shares were issued during the quarter, raising $17.48 million net of costs.

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 19 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.

(i) 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 PT Sumatera Persada Energi (SPE) following the failure of SPE to repay funds due. The assignment has been provided to BPMigas (now SKKMigas) but has not yet been approved or rejected. If Oilex is paid the funds due it will not pursue this assignment.

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/07/96. Origin: Appendix 8. Amended 1/07/97, 1/07/98, 30/09/01, 1/06/10, 17/12/10, 01/05/13.

Name of entity

Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX.

2 This statement does give a true and fair view of the matters disclosed.

Date: 30 October 2015

CFO & Company Secretary

Print name: Chris Bath