26th Oct 2009 09:26
QUARTERLY REPORT TO SHAREHOLDERS 30 SEPTEMBER 2009SummaryJPDA 06-103 (Timor Sea)
- Key farm-out agreement concluded with Japan Energy resulting in Oilex being
carried for its share of two initial wells (up to an agreed cap) and being
reimbursed for some past costs
- "Songa Mercur" drilling rig secured to conduct a 2-well drilling program
following release from Woodside's current drilling program
- Drilling expected to start in late November 2009 targeting combined mean
prospective oil resources of 285 million barrels in two prospects (100% basis)
- Government approval received to extend the initial term of the Production
Sharing Contract (PSC)
WA-388P (North West Shelf, Australia)
- Processing of new 3D seismic completed in August 2009
- Encouraging initial results from seismic interpretation
West Kampar (Indonesia)
- Investment currently suspended. Resolution to Joint Venture dispute
required.
- Oilex positioned to restart work program
India Operations
- Net oil production of 8,408 barrels for the quarter
- Operations remain cash flow positive
Other Exploration and Appraisal
- Oman exploration program under review
Corporate
- Oilex retained A$11.4 million cash at the end of the quarter with no
corporate debt
- A$10.1 million placement announced following end of quarter
- Net operating and investing cash inflow for quarter of A$1.45 million
- Further reduction in net corporate overheads achieved
Overview
Oilex achieved a number of important milestones during the September quarterin preparation for drilling two large offshore oil prospects in the Timor SeaJPDA 06-103 contract area. Drilling is expected to start in late November2009. This is a highly attractive offshore oil exploration block with thepotential to host significant oil reserves. It is located near to a number ofexisting producing fields as well as Eni's recent Kitan oil discovery.In Australia, Oilex completed processing of new 3D seismic data over theWA-388P block, which is located outboard of North West Shelf, Pluto,Wheatstone and Gorgon fields, offshore Western Australia. The initial resultsof the seismic interpretation are encouraging and this block is considered tobe an emerging exploration asset.During the quarter, Oilex also continued to restructure its assets andoperations, reduce costs and maintain oil production. The Company's Indianoperations generated small positive cash flows and net corporate overheadcosts were further reduced. Oilex's investment in West Kampar remainssuspended. Oilex is pursuing a resolution to the Joint Venture dispute. Oilexis well positioned to resume the West Kampar work program, including furtherappraisal of the Pendalian oil discovery.
OPERATIONS REVIEW
Production
- Total net production from the Cambay, Bhandut and Sabarmati Fields was 8,408 barrels of oil for the quarter (Oilex share)
- Oil production from the Miocene Basal Sand (MBS) in the Cambay Field, Gujarat (Oilex Operator - 45%) continues to decline from the Cambay-74 and Cambay-64 wells.
- An artificial lift was installed on Cambay-64 in July to extend the production life of the well.
- The Cambay-19Z well is in production from the deeper Eocene oil zone.
- Intermittent production from Cambay-72, Cambay-63, Cambay-20 and Cambay-8 wells.
Exploration and Appraisal
JPDA 06-103, TIMOR SEA (Oilex Operator - 10%)
Figure 1. JPDA 06-103 Location with prospects and nearby fields (full report available on Oilex website)
- The JPDA 06-103 Joint Venture has approved the Lore and Lolotoe prospects asthe first two prospects for drilling in this highly prospective block in theTimor Sea. Both prospects are in water depths of less than 400 metres.- Prospective mean oil resources (see definitions below) are estimated to be195MMSTBO and 90MMSTBO for the Lore and Lolotoe prospects respectively (100%basis).- In August 2009, Oilex entered into an agreement to farm out a 15% interestin this block to Japan Energy E&P JPDA Pty Ltd, a subsidiary of Japan EnergyCorporation and all conditions precedent for this agreement were subsequentlysatisfied.
- Under the farm-out agreement Oilex is entitled to be carried for its remaining 10% share of all costs associated with the first 2 commitment wells (up to an agreed cap) and be reimbursed for some of its past expenditures.
- In September 2009, on behalf of the Joint Venture, Oilex signed a contractwith Songa Offshore Drilling Limited to secure the services of thesemi-submersible drilling rig "Songa Mercur". The rig will drill two wells inJPDA 06-103 (with an option of one additional well). The drilling rig isscheduled to start mobilising to the first well location, subject to meetingcertain contractual requirements, immediately after release from its currentcontract with Woodside Energy Ltd, which is anticipated to occur in November2009.- The JPDA Designated Authority also approved a 1 year extension to ContractYear 3 of the Production Sharing Contract. Contract Year 3, which previouslyended on 15 January 2010, will now end on 15 January 2011. The extension ofthe term allows adequate time to complete the drilling program to evaluatethis highly prospective block.
- 2 additional wells to be drilled on the Block in 2010
WA-388P, Australia, (Oilex Operator - 14%)
- Processing of 3D seismic was completed in August 2009.
- Initial results of seismic interpretation are encouraging with possible direct hydrocarbon indicators evident.
- Preparation of a portfolio of prospects and leads is currently underway with a potential drilling decision in 2010.
West Kampar PSC, Central Sumatra (Oilex - 45% + entitled further 22.5%)
- Oilex's investment in this Production Sharing Contract (PSC) is currently suspended due to the failure of the Operator (PT Sumatera Persada Energi) to pursue the work program as well as non-compliance with other operating obligations.
- Oilex's priorities for this asset remain to:
1. Recover over US$4.1 million owed to it by SPE by enforcement of security held (international arbitration against operator's parent company PT Asiabumi Petroleo and exercising power of attorney rights in respect of the 22.5% interest previously held by the Operator).
2. Ensure transfer of Operatorship to Oilex or an acceptable third party.
3. Resume the seismic and drilling work program.
4. Obtain approval of BPMigas, the Indonesian regulator, for development of the Pendalian oil field.
CAMBAY FIELD, Gujarat, India (Oilex Operator - 45%)
- Oilex has commenced a farm out process for its existing India assets.
- Exploration and appraisal potential remains untested in the following areas:
1. OS II Gas - The OS II interval in the eastern part of the block hasuntapped gas potential and could underpin a Cambay gas project. The presenceof gas has also been proven in the Miocene, Oligocene and Eocene by many oldwells and Oilex wells drilled last year.
2. Eocene Gas / Condensate - substantial in-place wet gas resources remain in the Eocene. Technical potential exists to enhance recoveries to commercial rates if horizontal wells are utilized together with fracture stimulation. Oilex is considering options to introduce parties with tight gas experience.
3. Basal EPIV / Deccan - The fractured Deccan basement and Basal EP IV playsin the western flank remain untested following the decision to terminate thedrilling of Cambay-74 at the shallower MBS zone and to complete the well as anoil producer.
Block 56, Oman, (Oilex Operator - 25%)
- On behalf of the Joint Venture, Oilex is currently reviewing its options for Block 56, including potential sale and farm-out.
Corporate
- At the end of the September quarter Oilex had cash in bank of A$11.4 million and no debt.
- Subsequent to the end of the September quarter, Oilex announced a placement to raise A$10.1 million to fund exploration and appraisal activities on its oil and gas assets.
- Operating cash outflows and corporate overheads were further reduced during the September Quarter with additional cost reduction programs being implemented at all locations.
Safety, Health and environment
No lost time incidents were recorded in Oilex's operational areas during the Quarter.
Oilex regularly updates its website at www.oilex.com.au
For and on behalf of the Board
B. H. McCarthyManaging Director26 October 2009The information in this report has been compiled by the Managing Director ofOilex Ltd, Bruce McCarthy B.Sc. (Hons) PhD (Geology) who has over 30 yearsexperience in petroleum geology. The estimates of hydrocarbons in place werereviewed by Ray Barnes B.Sc. (Hons), the Technical Director of Oilex Ltd whohas over 37 years experience in petroleum geology and is a member of the AAPG.Mr Barnes reviewed this announcement and consents to the inclusion of theestimated hydrocarbons in place in the form and context in which they appear.The resource estimates contained in this report are in accordance with thestandard definitions set out by the Society of Petroleum Engineers, PetroleumResources Management System, 2007. Further information is available atwww.spe.org.
Oilex's nominated advisor in relation to the AIM market is RFC Corporate Finance Ltd, contact: Stuart Laing, [email protected]
CORPORATE DETAILS
Board of Directors Share RegistryMax D.J. Cozijn Non-Executive Security Transfer Registrars Pty Ltd Chairman 770 Canning HighwayBruce McCarthy Managing Director Applecross WA 6153, AustraliaRay Barnes Technical Director Telephone: +61 8 9315 2333Ben Clube Finance Director Facsimile: +61 8 9315 2233Laxmi Bhandari Non-Executive Director Email: [email protected] MIller Non-Executive Director Capital Structure Stock Exchange ListingOrdinary Shares 176,074,885 Australian Stock Exchange Code: OEXUnlisted Options 36,475,000 AIM Market of London Stock Exchange Code: OEXUnlisted Performance Rights 555,000
LIST OF ABBREVIATIONS AND DEFINITIONS USED HEREIN
Associated Gas Natural gas found in contact with or dissolved in crude oil in the reservoir. It can be further categorized as Gas-Cap Gas or Solution Gas.BOPD barrels of oil per dayMCF/DAY thousand standard cubic feet (of gas) per dayMMCF/DAY million standard cubic feet (of gas) per dayMMSTBO million stock tank barrels of oil (recoverable)MMSTBOIP million stock tank barrels of oil in placeProspective Those quantities of petroleum which are estimated, as of aResources given date, to be potentially recoverable from undiscovered accumulationsSCF/BBL standard cubic feet (of gas) per barrel (of oil) Permit SchedulePERMIT BASIN / STATE / JOINT VENTURE PARTIES EQUITY % OPERATOR COUNTRY Cambay Cambay / Gujarat Oilex Ltd 30.0 Oilex LtdField PSC / India Oilex NL Holdings (India) 15.0 Limited Gujarat State Petroleum 55.0 Corp. LtdBhandut Cambay / Gujarat Oilex NL Holdings (India) 40.0 Oilex NLField PSC / India Limited Holdings (India) Limited Gujarat State Petroleum 60.0 Corp. LtdSabarmati Cambay / Gujarat Oilex NL Holdings (India) 40.0 Oilex NLField PSC / India Limited Holdings (India) Limited Gujarat State Petroleum 60.0 Corp. LtdBlock 56 South Oman / Oilex Oman Limited 25.0 Oilex OmanEPSA Oman Limited GAIL (India) Limited 25.0 Videocon Hydrocarbon 25.0 Holding Ltd Bharat Petroresources Ltd 12.5 Hindustan Petroleum Corp 12.5 LtdWest Kampar Central Sumatra Oilex (West Kampar) Limited 67.5 (1) PT SumateraPSC / Sumatra/ Persada Energi Indonesia PT Sumatera Persada Energi 32.5JPDA 06-103 Flamingo / Joint Oilex (JPDA 06-103) Ltd 10.0 Oilex (JPDAPSC Petroleum 06-103) Ltd Development Area / Timor-Leste & Australia Japan Energy E&P JPDA Pty 15.0 Ltd GSPC (JPDA) Limited 25.0 Global Energy Inc. 25.0 Bharat Petroresources JPDA 25.0 Ltd
WA-388-P Carnarvon / WA / Oilex Ltd 14.0 Oilex Ltd
Australia Gujarat State Petroleum 14.0 Corp Ltd Videocon Industries Ltd 14.0 Bharat Petroresources Ltd 14.0 Hindustan Petroleum Corp 14.0 Ltd Sasol Petroleum Australia 30.0 Ltd
(1) Oilex is entitled to the assignment of the additional 22.5% to its 45% holding, through exercise of its rights under a Power of Attorney granted by SPE following the failure by SPE to repay funds due to Oilex.
Appendix 5B Mining exploration entity quarterly report Listing 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 entityOILEX LTDABN Quarter ended ("current quarter")50 078 652 632 30 SEPTEMBER 2009
Consolidated statement of cash flows
Current quarter Year to date
Cash flows related to operating activities $A'000 (3 months)
$A'0001.1 Receipts from product sales and related 463 463 debtors1.2 Payments for (a) exploration and 1,993 1,993 evaluation (b) development (272) (272) (c) production (178) (178) (d) administration (net) (505) (505)1.3 Dividends received - -1.4 Interest and other items of a similar 14 14 nature received1.5 Interest and other costs of finance paid - -1.6 Income taxes paid - -1.7 Other (provide details if material) - - Net Operating Cash Flows 1,515 1,515
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - - (b) equity investments - - (c) other fixed assets (119) (119)1.9 Proceeds from sale of: (a) prospects - - (b) equity investments - - (c) other fixed assets 28 281.10 Loans to other entities - -1.11 Loans repaid by other entities 28 281.12 Other (provide details if material) - - Net investing cash flows (63) (63)1.13 Total operating and investing cash flows (carried forward) 1,452 1,4521.13 Total operating and investing 1,452 1,452
cash flows (brought forward)
Cash flows related to financing
activities
1.14 Proceeds from issues of shares, - - options, etc1.15 Proceeds from sale of forfeited - -
shares
1.16 Proceeds from borrowings (net) - -1.17 Repayment of borrowings - -1.18 Dividends paid - -1.19 Other (provide details if - - material) Net financing cash flows - - Net increase (decrease) in cash 1,452 1,452 held
1.20 Cash at beginning of quarter/year 10,506 10,506
to date1.21 Exchange rate adjustments to item (545) (545)
1.20
1.22 Cash at end of quarter 11,413 11,413
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 298
included in item 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 Under the Farmout Agreement between Oilex and Japan Energy E&P JPDA Pty Ltd Oilex received a refund of part of its past costs. In addition Oilex will be carried for its share of the costs on the first two commitment wells up to an agreed cap.
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used $A'000 $A'0003.1 Loan facilities - -3.2 Credit standby arrangements - -
Estimated cash outflows for next quarter
$A'0004.1 Exploration and evaluation 1,3504.2 Development 150 Total 1,500Reconciliation of cash
Reconciliation of cash at the end of the Current quarter Previous quarter quarter (as shown in the consolidated statement of cash flows) to the related
$A'000 $A'000
items in the accounts is as follows.
5.1 Cash on hand and at bank 11,204 9,2975.2 Deposits at call 209 1,2095.3 Bank overdraft - -5.4 Other (provide details) - - Total: cash at end of quarter 11,413 10,506 (item 1.22)
Changes in interests in mining tenements
Tenement Nature of Interest Interest reference interest at at end beginning of (note (2)) of quarter quarter6.1 Interests in Refer to Permit mining tenements Schedule in relinquished, Quarterly Report reduced or lapsed 6.2 Interests in Refer to Permit mining tenements Schedule in acquired or Quarterly Report increased
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 Number Issue price Amount paid quoted per security up per security7.1 Preference +securities - - - - (description)7.2 Changes during quarter - - - - (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions7.3 +Ordinary securities 176,074,885 176,074,885 Various -7.4 Changes during quarter (a) Increases through 20,000 20,000 - issues (options exercised) (b) Decreases through returns of capital, - - buy-backs7.5 +Convertible debt - - - -
securities (description)
7.6 Changes during quarter - - - - (a) Increases through issues (b) Decreases through securities matured, converted7.7 Options Exercise Expiry date price (description and 500,000 - $1.50 31/10/2009 conversion Factor) 500,000 - $1.75 31/10/2009 4,250,000 - $0.80 14/12/2009 500,000 - $1.00 31/12/2009 3,000,000 - $1.50 31/12/2009 450,000 - $1.40 31/01/2010 400,000 - $2.00 31/01/2010 4,500,000 - $0.50 31/03/2010 300,000 - $1.75 31/03/2010 350,000 - $1.60 30/04/2010 350,000 - $2.10 30/04/2010 775,000 - $0.90 31/07/2010 500,000 - $2.00 31/10/2010 400,000 - $2.50 31/01/2011 2,500,000 - $2.00 31/03/2011 300,000 - $2.25 31/03/2011 350,000 - $2.70 30/04/2011 900,000 - $1.75 30/06/2011 900,000 - $2.25 30/06/2011 2,000,000 $0.30 30/06/2011 3,900,000 - $2.00 1/07/2011 3,900,000 - $2.50 1/07/2011 500,000 - $1.57 30/09/2011 300,000 - $2.75 31/03/2012 900,000 - $2.75 30/06/2012 3,250,000 $0.30 01/07/2014
Issued and quoted securities at end of current quarter (cont'd)
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number quoted Issue price Amount paid per security up per security 2006 Performance Rights 40,000 Tranche 1 expire 1/07/2011 2007 Performance Rights 120,000 Tranche 1 expire 1/07/2012 120,000 Tranche 2 expire 1/07/2012 120,000 Tranche 3 expire 1/07/2012 2008 Performance Rights 84,000 Tranche 1 expire 1/07/2013 35,000 Tranche 2 expire 1/07/2013 36,000 Tranche 3 expire 1/07/20137.8 Issued during - Exercise Expiry Date quarter Price 3,250,000 1/07/2014 $0.30 2,000,000 1/7/2011 $0.307.9 Exercised during 2006 Performance Rights quarter 20,000 Tranche 17.10 Expired during - Exercise Expiry Date quarter Price 775,000 31/07/2009 $0.50 775,000 31/07/2009 $0.65 2006 Performance Rights 178,000 Tranche 2 expire 1/07/2011 cancelled 173,000 Tranche 3 expire 1/07/2011 cancelled 7.11 Debentures Nil Nil (totals only)7.12 Unsecured notes Nil Nil (totals only)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.
Sign here: Date: 26 October 2009
(Director)Print name: Ben Clube == == == == ==
vendorRelated Shares:
OEX.L