31st Jan 2007 10:23
OILEX LTD
QUARTERLY REPORT TO SHAREHOLDERS 31 DECEMBER 2006
HIGHLIGHTS
* Government of India approved assignment of interests in Bhandut, Sabarmati
(Oilex 40% Operator) and Cambay Fields (Oilex 45%, Operator), onshore
Gujarat, India.
* 2 wells drilled and suspended in first phase drilling programme on Cambay
Field with indications of hydrocarbons
* Testing and completion of Eocene EP IV potential reservoir interval in
Cambay-72 commenced January
* 3D seismic acquisition over Cambay Field completed in early December
* Cambay 3D data set is excellent quality - 22 locations selected for
potential phase 2 drilling programme of up to 8 wells in 2007
* 2-3 wells planned in Block 56, Oman Q3 2007
* 8 prospects mapped with potential volumes of 40 to 150 million barrels of
oil in place on EPP 27
* Negotiations continuing for drilling rig for EPP 27, offshore Otway Basin
* Retain cash resources of approximately A$14.8 million
CORPORATE Board of Directors Principal & Registered Office DETAILS Max D.J. Cozijn Non-Executive Level 3, 50 Kings Park Road Chairman West Perth WA 6005, Australia Bruce McCarthy Managing Director Telephone: +61 8 9226 5577 Ray Barnes Technical Director Facsimile: +61 8 9226 2108 L. L. Bhandari Non-Executive Director Email: [email protected] Capital Structure Website: www.oilex.com.au Ordinary Shares 76,883,885 Share Registry Unlisted Options 26,025,100 Security Transfer Registrars Pty Ltd Stock Exchange Listing 770 Canning Highway Australian Stock Exchange Applecross WA 6153, Australia ASX Code: OEX Telephone: +61 8 9315 2333 AIM Market of London Stock Exchange Facsimile: +61 8 9315 2233 AIM Code: OEX Email: [email protected] OPERATIONS REVIEW INDIA assignment of interest - cambay, bhandut, sabarmati
Oilex holds The Government of India approved the assignment of 40% interest material in the Bhandut and Sabarmati Production Sharing Contracts interests in 3 ("PSC") to Oilex and 23.33% interest in the Cambay PSC, of which oil and gas Oilex agreed to assign 8.33% to Gujarat State Petroleum field
Corporation Ltd ("GSPC"). The last of these assignments is redevelopment pending Government approval. projects Interests in each of the PSC's is: onshore India Joint Venture Party Cambay PSC1 Bhandut PSC Sabarmati PSC Oilex (Operator) 45% 40% 40% GSPC 55% 60% 60% 1. Oilex acquired an additional 23.33% equity interest in the Cambay PSC from Nikoand GSPC acquired an additional 8.33% equity interest in the Cambay PSC from Oilex. Testing and Operations - CAMBAY FIELD, Gujarat completion of Cambay-72 OILEX OPERATOR 45% Eocene PHASE 1 DRILLING PROGRAMME potential reservoir The rig and equipment required for the completion of the interval Cambay-72 well at the level of the Eocene EP IV potential commenced reservoir interval have been procured and operations commenced on 23 January with a short wireline logging programme that will
3D seismic data be followed by a cased hole test. In the event that these tests is of excellent in Cambay-72 are successful, the well will be placed on quality production and the testing of the shallower potential oil and
gas bearing zones will be postponed to a later date. 8possible wells for Phase 2 The test and completion phase of the operations is expected to drilling in take up to 20 days, dependent on interim results. 2007 Cambay-72 spudded on 11 September 2006 and reached total depth (TD) of 1767 metres on 25 September 2006 at which point 51/2" casing was cemented in place and it was suspended. Cambay-71 followed in the sequence and was drilled to 1608m at which point it was suspended. The results from the testing and completion of the Eocene section at Cambay-72 will assist the JV in determining the preferred completion strategy for Cambay 71. It is planned to test the shallower horizons in both wells if they are not converted to production from the Eocene. The Cambay-71 well spudded on 29 September and reached the planned total depth (TD) of 1600m on 08 October. The well is located on the flank of the northern culmination of the Western High structure about 800 metres to the northeast of Cambay-72 and intersected a geological section in the Oligocene and Miocene similar to Cambay-72. Wireline logging and other formation evaluation programmes were carried out in Cambay-71. Attempts to acquire good quality pressure and fluid data failed, partly due to mechanical failure of tools and partly because of very friable sandstone plugging the tools. 3D seismic survey Oilex acquired a 3D seismic survey over the entire Cambay contract area at the end of 2006. The data are in the final stages of processing and we have completed mapping of 10 horizons on the interim processed data. The quality of the data is excellent. Fault patterns and deep seismic events are much more clearly defined on the new data and indicate some significant new plays that were not identifiable on the old data. Phase 2 drilling programme 22 possible locations have been selected for wells from which we will recommend 8 to the JV as the core of the phase 2 drilling programme on Cambay. Dependent on the availability of rig, services and equipment, we are planning to start the work with 2-3 wells slotted for drilling prior to the onset of the monsoon in June. Sabarmati Field Sabarmati Field, Gujarat on trend with large ONGC OILEX OPERATOR 40% fields The work programme and budget has been approved by the Joint
Workover of Venture. Oilex is initiating field rehabilitation activities on Sabarmati-1 the Sabarmati Field with the expectation of increasing the well planned production rate from Sabarmati-1 well from the current average for February 2-5 bopd to a sustainable rate of 75-90 bopd.
2007 The field is located on the southern culmination of a trend of producing oil fields operated by ONGC, on the outskirts of Ahmedabad, the largest city in Gujarat. Oil has been produced from the one well in the Sabarmati Field Contract Area at very low rates on an intermittent basis since 2001 when the Niko-GSPC Joint Venture intervened in the well. Planned Workover - Late last year, in anticipation of approval by the Government of the assignment of 40% interest from Niko in the field, Oilex commenced an influx study on the potential productive capacity of the existing well. The rate at which fluid flowed into the well bore under controlled pressure conditions was measured over a fixed period each day in 2 phases. The fluid was separated through the surface facilities, measured to ascertain the average water cut and the oil was stored for later sale to ONGC, the nominated buyer. The well has produced, in total, about 9,800 barrels of oil since it started producing in 2001 and is currently producing at 5-10 barrels of fluid (2-5 barrels of oil) per day under natural flow from an Eocene reservoir which is about 5m thick, through 2m of perforations. The results of the influx study indicate that the flow rate could be increased to an average sustainable rate of about 75-90 barrels of oil per day with the installation of a hydraulic sucker rod pump. The equipment is on order and is expected to be installed by the end of February. Existing production facilities at Sabarmati Field are capable of handling more than 600 barrels of fluid (oil plus water) per day. Planned Sesimic - From experience at the Cambay Field to the south, a critical component of the rehabilitation program is the acquisition of new seismic data. Although difficult to acquire in this built up area, Oilex is investigating the possibility of conducting a 2D survey within the next 4 months using an innovative low impact seismic technology which will greatly enhance the potential coverage of the contract area. A single vintage seismic line is the only existing coverage. In the event that the seismic survey and estimates of potential reserves justify further work, the intent is to drill additional wells, subject to Joint Venture approval, to improve the field production rate. Workover Bhandut field, Gujarat planned for Bhandut-6 OILEX OPERATOR 40% The field is located near to the Lakshmi, Gauri and Hazira Fields that are producing gas and oil from reservoir intervals similar to those intersected in the Bhandut wells. The Bhandut Field has produced about 700,000 barrels of oil since 1993. In 2002, Bhandut Field was producing oil at rates of about 400 barrels per day ("bopd") before suffering likely formation damage incurred during workover activities at which time the average daily rate declined to the current rate of about 20 bopd per well from 2 wells. The objective of the workover programme is to improve the production rate from Bhandut Field with the sidetrack or workover of Bhandut-6 and drilling of one additional well. The well location would be based on new, high resolution seismic data and a contract has been awarded to Geofizyka Toru...„, the same contractor that acquired the Cambay 3D survey, for the acquisition of a 3D seismic survey over the Bhandut block area. Acquisition is expected to be completed by the end of April 2007. These data will be used to refine our redevelopment plan for the field. OMAN Block 56 south Oman (OILEX OPERATOR - 25%) 2-3 wells Reprocessing of the existing seismic data base has commenced planned to be with trials being carried out by various seismic contractors. drilled early Results will be used in preparing specifications for the in 3rdquarter acquisition programme which is planned to commence in early 2007 2007, subject to availability of crews. In the western part of the block, on the flank of the South Oman Salt Basin, there is a significant area covered by 3D and dense 2D seismic surveys. Mapping of those data indicates several targets that could be drilled on the existing data base. Seven potential well locations in this area and along the main salt wall trend in the east central part of the block are being evaluated with the aim of selecting 2-3 for drilling in Q3 2007. Oilex has appointed a Project Office Manager, Adil Said and a Finance Manager V, Ganesh, based in the Project Office in Muscat. AUSTRALIA EPP 27 - Otway basin offshore SOUTH AUSTRALIA (OILEX OPERATOR earning 20%)
8 prospects Seismic Acquisition and Interpretation - The "Christine" 2D mapped with seismic survey has been completed and interpreted. Approximately range of 1300 line kilometres of data were acquired, extending an potential existing seismic grid and covering eight leads identified in the volumes of southeastern part of the permit. The interpretation of the 40-150 million integrated data set confirms the leads mapped previously and barrels of oil these have been elevated to prospect status. Eight prospects in in place water depths of 70-105 metres have been mapped in the
southeastern sector of the block where reactivation and
Negotiations intensity of faults is less severe. Prospects are in the range for a well slot of 40-150 mmstboip.
under way The survey is the first phase of the work programme that Oilex, GSPC and Videocon Industries Ltd ("Videocon") are conducting as part of the farmin agreement signed with Great Artesian Oil & Gas Ltd ("GOG") in February. Oilex, Videocon and GSPC are funding the seismic programme 33.3% each as part of their commitment to earn 20% each in the permit. GOG holds the balance of 40% equity in the permit. Rig Contract - Oilex is in negotiations with drilling contractors as a member of a consortium of Operators in the southeastern Australian basins, to deliver a rig that would guarantee a slot for a well in EPP 27 late 2007 or early 2008. Discussions are continuing in the face of very heavy demand and a shortfall in supply of offshore rigs worldwide. Permit Term - An application for extension of the permit term has been submitted to the Designated Authority in South Australia (PIRSA). The basis of the request for seeking a further extension to the EPP 27 permit is the difficulty in securing a rig. We anticipate that a decision will be forthcoming through PIRSA in the near future. WA-388-P Carnarvon Basin, offshore Western Australia (OILEX OPERATOR - 20%) Work to start WA-388-P was offered in the bid round that closed on 26 April late 2008 2006 as block W05-11. It is located to the north of the Goodwyn / North Rankin gas fields trend and to the northeast of the Jansz-Io gas discoveries in the Exmouth Sub-basin. The JV comprises Oilex (Operator, 20%), GSPC (20%), Videocon (20%), Hindustan Petroleum Corporation Ltd ("HPCL" 20%) and Bharat Petroleum Corporation Ltd ("BPCL" 20%). The work programme comprises reprocessing of existing seismic data and acquisition of 3D seismic over parts of the block, anticipated to commence in 2008.
Joint petroleum JPDA 06-103, FLAMINGO BASIN OFFSHORE Joint petroleum development area development area
between TIMOR-LESTE AND (OILEX OPERATOR - 25%) AUSTRALIA The Production Sharing Contract ("PSC") for the offshore permit JPDA 06-103 located in the northern part of the Joint Petroleum Development Area was signed at a ceremony in Dili, Timor-Leste on 16 November 2006. The effective date of the PSC is 15 January 2007. 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. The successful bidding group comprises Oilex (Operator, 25%) and major Indian companies GSPC (25%), Videocon (25%) and BPCL (25%). This award completes another element of the company's stated strategy of acquiring high quality exploration acreage in countries around the Indian Ocean rim in joint ventures with its Indian alliance members. The Timor Sea Designated Authority was created on 2 April 2003, pursuant to the Timor Sea Treaty between the Governments of Timor-Leste and Australia. The role of the TSDA is to administer the Joint Petroleum Development Area (JPDA) on behalf of the Governments of Timor-Leste and Australia. Oilex sells ONSHORE QUEENSLAND onshore Queensland The shareholders of Bow Energy Limited approved the purchase interests to Bow of Oilex's Queensland assets at a meeting of shareholders heldfor securitiesin on 31 October 2006. Oilex received, as consideration for the Bow sale of these assets, 13.3 million fully paid ordinary shares and 13.3 million options to purchase Bow shares at 50 cents per share on or before 5 years from the issue date. Oilex's holding in Bow represents approximately 12.3% of Bow's issued capital (undiluted) and approximately 22% (diluted). The securities are escrowed for a period of 2 years from the date of issue. Pre-emptive rights pertaining to Oilex's remaining interest in ATP 548P (11.35%) remain to be resolved. CORPORATE General Meeting of shareholders At the Annual General Meeting of the company held on 23 November 2006, shareholders passed, on a show of hands, all of the resolutions put to the General Meeting. Net cash The Company presently has 76,883,885 shares on issue. These resources of A$1 shares are traded on the ASX in Australia and on the AIM 4.8million market of the London Stock Exchange under the code: OEX. Oilex also has 26,025,100 unlisted options on issue, the majority of these being held by Executive staff. At 31 December 2006, the Company retained net cash resources of approximately A$14.8 million Oilex regularly updates its website at www.oilex.com.au
For and on behalf of the Board
Dr B. H. McCarthyManaging Director31 January 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 27years experience in the oil and gas exploration and production industry.
PERMIT SCHEDULE Australian Joint Ventures: PERMIT BASIN PARTIES % HELD OPERATOR EPP 27 Otway Oilex Ltd 20.00 Oilex Note 5 (Offshore) Gujarat State Petroleum 20.00 Corporation Ltd 20.00 Videocon Industries Limited 40.00 Great Artesian Oil & Gas Ltd WA-388-P Carnarvon Oilex Ltd 20.00 Oilex (Offshore) Gujarat State Petroleum 20.00 Corporation Ltd 20.00 Videocon Industries Limited 20.00 Bharat Petroleum Corporation Ltd 20.00 Hindustan Petroleum Corporation Ltd
Note 5: Oilex, Gujarat State Petroleum Corporation Ltd and Videocon Industries Limited are each earning 20% interest in return for
funding 33.33% each of an agreed work programme.
International Joint Ventures:
Bhandut FieldIndia / Gujarat
PERMIT COUNTRY/ PARTIES % HELD OPERATOR STATE Cambay Field India / Oilex NL Holdings (India) 45.00 Oilex Gujarat Limited Note 6, 7, 8 (Onshore) Gujarat State Petroleum 55.00 Corporation Ltd
40.00Sabarmati FieldIndia / Gujarat
(Onshore) Oilex NL Oilex Holdings (India) Limited Note 6, 7 Gujarat State Petroleum 60.00 Corporation Ltd 40.00 (Onshore) Oilex NL Oilex Holdings (India) Limited Note 6, 7 Gujarat 60.00State Petroleum Corporation Ltd Block 56 Oman Oilex Ltd 25.00 Oilex (Onshore) Videocon Industries Limited 25.00 GAIL (India) Limited 25.00 Hindustan Petroleum Corporation 12.50 Ltd Bharat Petroleum Corporation 12.50 Ltd
JPDA 06-103 Joint Oilex (JPDA 06-103) Ltd Note 6 25.00 Oilex
Petroleum Development Videocon Industries Limited 25.00 Area between Gujarat State Petroleum 25.00 Timor-Leste Corporation Ltd & Australia Bharat Petroleum Corporation 25.00 (Offshore) Ltd
Note 6: wholly owned subsidiary of Oilex Ltd
Note 7: pending completion of agreement with Niko Resources Ltd
Note 8: pending approval by Government of India of the assignment of 30% participating interest held by Oilex Ltdto Oilex NL
Holdings (India) Ltd. Rule 5.3 Appendix 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 31 December 2006
Consolidated statement of cash flows
Cash flows related to operating activities Current quarter Year to date
$A'000 (6 months) $A'000 1.1 Receipts from product sales and - 35 related debtors 1.2 Payments for (304) (716) (a) exploration and evaluation (2,410) (4,098) (b) development - - (c) production (1,037) (1,961) (d) administration 1.3 Dividends received - - 1.4 Interest and other items of a 307 464 similar nature received 1.5 Interest and other costs of finance (127) (265) paid 1.6 Income taxes paid - - 1.7 Other (provide details if material) - - Net Operating Cash Flows (3,571) (6,541) Cash flows related to investing activities 1.8 Payment for purchases of: - - (a) prospects - - (b) equity investments (227) (277) (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 (227) (277) 1.13 Total operating and investing cash (3,798) (6,818) flows Cash flows related to financing activities 1.14 Proceeds from issues of shares, 100 18,346 options, etc. 1.15 Proceeds from sale of forfeited - - shares 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (provide details if material) - - Net financing cash flows 100 18,346 Net increase (decrease) in cash (3,698) 11,528 held 1.20 Cash at beginning of quarter/year 18,488 3,266 to date 1.21 Exchange rate adjustments to item 4 - 1.20 1.22 Cash at end of quarter 14,794 14,794
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 163 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 N/A
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount Amount used available $A'000 $A'000 3.1 Loan facilities 5,000 5,000 3.2 Credit standby arrangements - -
Estimated cash outflows for next quarter
$A'000 4.1 Exploration and evaluation 1,250 4.2 Development 3,750 Total 5,000Reconciliation 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 1,271 535 5.2 Deposits at call 13,523 17,953 5.3 Bank overdraft - - 5.4 Other (provide details) - - Total: cash at end of quarter (item 14,794 18,488 1.22)
Changes in interests in mining tenements
Tenement Nature of interest Interest at Interest at reference beginning end of (note (2)) of quarter quarter 6.1 Interests in mining Refer to Permit tenements Schedule in relinquished, Quarterly Report reduced or lapsed 6.2 Interests in mining Refer to Permit tenements acquired Schedule in or 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 Number Issue price Amount paid up quoted per security per security (see note 3) (see note 3) (cents) (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 76,883,885 76,883,885 Various - securities 7.4 Changes during 19,566 19,566 $1.32 - quarter 250,000 250,000 $0.40 - (a) Increases through issues (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 2,200,000 - Exercise Expiry date (description and price conversion factor) 500,000 - 28/02/2008 $0.20 3,000,000 - 31/12/2009 $1.00 1,000,100 - 31/12/2009 $1.50 2,000,000 - 07/12/2008 $0.50 3,250,000 - 14/12/2008 $0.40 4,250,000 - 14/12/2008 $0.50 1,000,000 - 14/12/2008 $0.80 4,500,000 - 16/02/2009 $0.50 775,000 - 31/03/2010 $0.50 775,000 - 31/07/2009 $0.50 775,000 - 31/07/2009 $0.65 250,000 - 31/07/2010 $0.90 250,000 - 31/07/2009 $0.45 500,000 - 31/07/2009 $0.55 500,000 - 31/10/2009 $1.50 500,000 - 31/10/2009 $1.75 31/10/2010 $2.00 7.8 Issued during 500,000 - $1.50 31/10/2009 quarter 500,000 - $1.75 31/10/2009 500,000 - $2.00 31/10/2010 7.9 Exercised during 250,000 - $0.40 14/12/2008 quarter 7.10 Expired during - - - - quarter 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: 31 January 2007(Director/Company Secretary)
Print name: Max Dirk Jan Cozijn
ABN 50 078 532 632 Level 3, 50 Kings Park Road, West Perth WA 6005 Telephone: +61 8 9226 5577 Facsimile: +61 8 9226 2108 E-mail: [email protected] Web Site: www.oilex.com.au
OILEX LTDRelated Shares:
OEX.L