Quarterly Report to Shareholdes - 30 June 2012

QUARTERLY REPORT TO SHAREHOLDERS

30 june 2012

Summary

Cambay PSC (45% Operator) onshore Gujarat, India

·; Operations continued on the Cambay-76H "proof of concept well" to evaluate the significant independently verified contingent and prospective resources in the Cambay tight reservoirs.

·; Further positive indicators during Cambay-76H well operations included hydrocarbon flow to surface and sustained formation over-pressure.

·; Mechanical difficulties with drill pipe failures in Cambay-76H milling operations led to operations being suspended. Based on available data, Oilex believes the value proposition remains intact.

·; Preliminary results from Cambay-73 production and testing are encouraging.

·; The Joint Venture is formulating a work program, the proposed first stage of which is to drill an offset well to intersect the large volume of fracture stimulated rock around the Cambay-76H well bore. A production test will be conducted to evaluate the commerciality of the Cambay Y zone tight reservoir.

Post period end:

·; Michael Maloney has been appointed as Chief Operating Officer to be based in India with primary responsibility being the development of the Cambay Field tight reservoir project.

JPDA 06-103 PSC (10% Operator) offshore Timor Sea

·; Oilex estimates that the Bazartete prospect, selected by the Joint Venture as the location of the third commitment well, has the potential to contain 70.8 million barrels of mean prospective resources (unrisked, 100% basis) with a 23% chance of success.

·; Investigations are ongoing to secure a suitable rig for drilling the Bazartete prospect.

·; The current contract period expires on 15 January 2013

Overview

The Company has gained important information from the Cambay-76H well albeit a flow test was not able to be conducted. The high energy of the reservoir exemplified by the high mud weight required to control the well and flows of hydrocarbons and stimulation fluids to surface during recent operational phases at good pressure are viewed as highly encouraging.

The Company has identified a large prospect in the Timor Sea Contract Area, JPDA 06-103. Investigations are ongoing for identifying a suitable rig for drilling the Bazartete prospect. The Company is reviewing various options for funding its share of the proposed Bazartete well.

OPERATIONS REVIEW

CAMBAY FIELD, Gujarat, India

·; Operations continued on Cambay-76H proof of concept well that was designed to evaluate the potential of the Cambay Y Zone low permeability reservoir. Netherland Sewell and Associates ("NSAI") previously had assessed Contingent Resources of 222 BCF gas and 37 MMBO oil and condensate (2C, unrisked net to Oilex). In addition, NSAI assessed substantial Prospective Resources in deeper zones in the Cambay Contract Area.

·; In April milling and clean out of the Cambay-76H well was completed with six fracture stimulation stages successfully milled. Of the two remaining stages, one was partially opened. While attempting to pull out of hole to start flow back and testing, the drill pipe parted down hole, possibly after the milling assembly became mechanically stuck.

·; Operations to retrieve the drill pipe were then undertaken. During these operations while attempting to pull out of the well with the milling assembly the drill pipe parted on three separate occasions which has brought into question the fundamental integrity of the drill pipe. As a consequence the Joint Venture decided to suspend operations.

·; The suspension of Cambay-76H well operations was completed in May with equipment, services and personnel demobilised from site.

·; An investigation including laboratory testing of the drill pipe is ongoing in collaboration with the service provider to determine the cause of these failures.

·; The Joint Venture is conducting a review of Cambay-76H operations to ensure that maximum value is derived from the work undertaken on the Cambay-76H well and for its wider application for the Cambay asset and future work programme. This process is nearing completion and Joint Venture approval is expected soon for the unforeseen additional fishing and milling work undertaken and the associated increased budget.

·; In order to enhance production from the Cambay field, during the Quarter the Joint Venture conducted a production test on Cambay-73 well. The Cambay-73 well is a conventional vertical well drilled and completed in 2008 with smaller scale fracture stimulation and 10 metres of active perforations in the Y zone. The clean-up and production from Cambay-73 commenced in April and the well was shut-in on 28 June.

·; The Y Zone in Cambay-73 well is geologically similar to the Cambay-76H reservoir by comparison of well logs.

·; It is anticipated that the pressure and fluid data that can be recorded during production can be directly used to model Y zone reservoir performance for a horizontal multistage fracture stimulated well. Preliminary results have been encouraging and support previous Cambay-76H production modelling.

·; Oilex and Gujarat State Petroleum Corporation Ltd, are working together closely to formulate a work programme for the next phases of work on the Cambay Field. Further activities will start once Joint Venture approvals have been secured for the proposed work programme.

·; The first stage of work will comprise a well to be drilled from the Cambay-76H pad with the intention of accessing the large zone of fracture stimulated rock volume around the Cambay-76H well bore. The intention is to flow back the well and conduct a long term production test.

·; The detailed design and location of the well will be finalised once engineering feasibility studies have been completed.

·; After this well is drilled and tested the intention is to proceed with a three well work programme. This phase of work is designed to acquire cores, modern wire line logs, reservoir fluid information and production test data that would generate sales of oil and gas for local markets, assist an independent certifier to move contingent resources to reserves and evaluate the significant potential of the deeper, tight reservoirs at Cambay.

·; Recruitment efforts for drilling and project management expertise for the Cambay forward work program made good progress. The Company announced the appointment of Mr Michael Maloney as Chief Operating Officer, to be based in India, on 24 July.

The Cambay Tight Reservoir Project has three essential highly attractive components:

·; Large resource

Ø Large acreage position of approximately 40,000 acres

Ø Netherland Sewell and Associates Inc. completed an independent assessment of Cambay Eocene section determining Unrisked Contingent Resources (2C net Oilex) of 222 BCF gas and 37 MMB oil and substantial prospective resource upside in deeper zones

·; Strong Domestic Demand

Ø Indian economy projected to expand >8% annually by 2015

Ø Indian supply / demand gap is widening with LNG imports increasing

Ø High gas prices are expected

·; Applied Proven Technology

Ø Oilex is using horizontal drilling and hydraulic fracturing techniques that have been highly successful in the USA and Canada "shale gas" industry

Ø These technologies are being applied by Oilex at early stage of development in India

Ø Experience provides Oilex with early mover advantage in India

BHANDUT FIELD, Gujarat, India

·; Following a work-over in the prior quarter, Bhandut-3 flowed gas to surface from a thin gas zone. The zone has been tested and the results are being assessed. Commercial options are under investigation.

WA-388-P, Australia

·; The WA-388-P permit term will expire on 28 August 2012. The Operator has proposed a relinquishment and renewal programme to be submitted to the Designated Authority for consideration.

JPDA 06-103, TIMOR SEA

·; Pre-stack Depth Migration (PSDM) was applied to the Bazartete structure confirming it to be an attractive prospect. Oilex estimates that the Bazartete prospect has the potential to contain 70.8 million barrels of mean prospective resources (unrisked, 100% basis) with a 23% chance of success.

·; The proposed Bazartete-1 well has been selected by the JPDA 06-103 Joint Venture as the third commitment well.

·; Negotiations are ongoing to secure a suitable rig for drilling in the contract area. Well planning and design were undertaken during the quarter.

·; The permit period ends on 15 January 2013.

·; The Company is reviewing various options for funding its share of the Bazartete well.

West Kampar PSC, Central Sumatra

·; Negotiations are continuing as Oilex pursues a commercial resolution to the Joint Venture dispute. At the same time, the Company intends to protect its participating interest in the West Kampar PSC and to pursue enforcement of its Arbitration Award as appropriate.

CORPORATE

·; Oilex retained cash at the end of the Quarter of A$4.4 million.

Health, Safety, Security and Environment

No Lost Time Incidents were recorded for Oilex personnel or contractors at any location.

The Company's website www.oilex.com.au is regularly updated with current information.

For further information, please contact:

Information in this report relating to hydrocarbon reserves or resources has been compiled by Mr Ray Barnes B.Sc. (Hons), the Technical Director of Oilex Ltd who has over 38 years' experience in petroleum geology and is a member of the AAPG. Mr Barnes consents to the inclusion of the information in this report relating to hydrocarbon reserves and resources in the form and context in which it appears. Resource estimates contained in this report are in accordance with the standard definitions set out by the Society of Petroleum Engineers, Petroleum Resources Management System, 2007.

This document may include forward-looking statements. Forward-looking statements include, but are not necessarily limited to, statements concerning Oilex Ltd's planned exploration program 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 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."

LIST OF ABBREVIATIONS AND DEFINITIONS USED HEREIN

(1) 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 SPE following the failure of SPE to repay funds due. The assignment has been provided to BPMigas but has not yet been approved or rejected. If Oilex is paid the funds due then it will not pursue this assignment.

Rule 5.3

Appendix 5B

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/01, 1/6/10, 17/12/10.

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.

Sign here: Date: 31 July 2012

(Director and Company Secretary)

Print name: Ben Clube