6th Sep 2010 08:28
6th September 2010 AIM: OEX.L ASX: OEX.AX Oilex Ltd ("Oilex" or "the Company")
SIGNIFICANT RESERVES IDENTIFIED AT CAMBAY FIELD, INDIA
Summary
* Cambay Field Reserves and Contingent Resources significantly upgraded * Successful completion of detailed technical studies to unlock potential of "tight" reservoirs using leading-edge North American "shale gas" industry technology * Studies indicate a very good correlation between the Cambay Eocene reservoirs and the Eagle Ford and Haynesville "tight/shale" plays in the USA * Drilling and production tests through the first half of 2011
Oilex Ltd an oil & gas exploration and production company listed on AIM and ASX, is pleased to announce a significant upgrade to its Reserves and Contingent Resources for the Cambay Field low permeability ("tight") Eocene reservoirs in Gujarat, India. This follows a nine month program of extensive technical studies on the Cambay Field "tight" reservoirs using proprietary low permeability reservoir technologies derived from similar "tight/shale gas" projects in North America.
The following summary of Reserves (net recoverable to Oilex's 45% interest, unaudited) is provided:
* P90 - 248 billion cubic feet (BCF) of gas and 11 million barrels (MMbbls) of condensate * P50 - 384 BCF of gas and 17 MMbbls of condensate * P10 - 591 BCF of gas and 27 MMbbls of condensate
In its evaluation of the reserves and resources the Company was advised by two North American companies; NuTech Energy Alliance ("NuTech") a leader in advanced petrophysical, geological and fracture stimulation solutions for "tight" and "shale gas" reservoirs, and Morning Star LLC ("Morning Star"), a worldwide petroleum consulting group with expertise in reserve certification of "tight" reservoir projects.
The studies indicate a very good correlation between the Cambay Eocene reservoirs and the Eagle Ford and Haynesville reservoirs, two of the most prolific "tight/shale gas" plays in North America. The Cambay Eocene reservoirs that have been analysed display relatively good porosity for "tight reservoirs" and with a gross thickness of 200 to 500 metres these zones are substantially thicker than most North American "tight/shale" reservoirs. The studies have modelled Estimated Ultimate Recoveries (EUR's) of between 6 and 11 BCF gas with associated condensate per well.
Forward Plan
Oilex expects to submit data in October 2010 for independent reserves certification in early 2011.
Oilex will, subject to Joint Venture and Indian Government approval, further evaluate the "tight" reservoir potential with drilling and production testing using modern, multi-stage fracture stimulation technology. These operations are expected to continue through the first half of 2011 as equipment and materials become available.
Commentary
Oilex's Managing Director, Dr Bruce McCarthy (ex-Cairn Energy), who has been based in India to lead the "tight" reservoir project, said, "The Company has renewed its focus on India and has made significant progress in unlocking the potential of the Cambay "tight" Eocene reservoirs that extend over the 40,000 acre contract area. Key to this success has been applying leading-edge North American tight/shale gas industry expertise and proven technology to the extensive database on the Cambay Eocene reservoirs which includes: modern 3D seismic, wire line logs from 36 wells, drilling data, production and well test data and cores."
"Two years ago Oilex conducted well tests on the Eocene section that flowed hydrocarbons to surface from conventional vertical wells, a very encouraging result for "tight" reservoirs. Oilex now intends to apply horizontal drilling and multi-stage fracture stimulation technology to improve on the flow rates and confirm commerciality of the Eocene tight reservoirs."
Reserve and Resource Estimates
The following tables summarise the net (Oilex 45%) reserves and contingent resources for the Cambay Field "tight" Eocene reservoirs at 6 September 2010. These estimates have been prepared in accordance with generally accepted engineering and evaluation principles set forth by the Society of Petroleum Engineers (SPE) PRMS guidelines and are classified as Reserves Justified for Development and Contingent Resources Development Pending. The probabilistic unaudited estimates have been prepared by Oilex with advice from NuTech and Morning Star. It is the Company's view that the P90, P50 and P10 estimates prepared correspond to proved, proved plus probable, and proved plus probable plus possible reserves respectively under the ASX Listing Rules. The estimates have not been endorsed by the Government of India or the Directorate General of Hydrocarbons, India.
Oilex will commission an independent reserves certification after completion of further technical studies, well designs and well locations, in October, 2010.
Summary of Reserves Reserves Justified for Development Attributable to Oilex Net Working Interest (45%) Probability P90 P50 P10 Natural gas (BCF) 248 384 591 Condensate (MMbbls) 11 17 27
Net reserves presented above include Government share of production applicable under the PSC.
Summary of Contingent Resources
Contingent Resources Development Pending Attributable to Oilex Net Working Interest (45%) Probability P90 P50 P10 Natural gas (BCF) 186 324 568 Condensate (MMbbls) 8 14 26
Net contingent resources presented above include Government share of production applicable under the PSC.
Oilex (45%) operates the Cambay Field Production Sharing Contract on behalf of its Joint Venture with Gujarat State Petroleum Corporation Ltd (55%, "GSPC"). GSPC is India's most active State Government-owned oil and gas company. It is a large vertically integrated energy company with assets across India and overseas.
Further information can be found on the Company's website www.oilex.com.au including a background paper titled "Potential of the Cambay Field Low Permeability Reservoirs".
For further information, please contact:
Oilex Ltd +61 (0)8 9485 3200 (Western Australia) Bruce McCarthy Managing Director [email protected] Ben Clube, Finance Director [email protected] Read Corporate +61 (0)8 9388 1474 (Western Australia) Nicholas Read [email protected] Conduit PR +44 (0)20 7429 6610 (UK) Paul Youens +44 (0)7843 260 623 (UK) [email protected] Jonathan Charles +44 (0)7791 892 509 (UK) [email protected] RFC Corporate Finance Ltd +61 (0)8 9480 2506 (Western Australia) Stuart Laing [email protected] About Oilex
Oilex Ltd is an AIM and ASX-listed oil & gas exploration and production company based in Perth, Australia.
The Company's main area of focus is in India where it operates three onshore production sharing contracts in Gujarat on behalf of Joint Ventures with Gujarat State Petroleum Corporation Ltd (GSPC). Of these, the Cambay Field licence has considerable oil and gas resources and Oilex intends to further evaluate and exploit these through proven North American "shale gas" technology, including horizontal drilling and fracture stimulation. Oilex's, Managing Director, Bruce McCarthy (ex-Cairn Energy) is currently based in Gujarat to manage this project and the Company's other Indian interests.
In addition to the Cambay Field, Oilex has interests including the exploration permits WA-388-P, North-West Shelf, offshore Australia that has large gas potential and JPDA 06-103 in the Timor Sea.
About Gujarat and the Indian Gas Market
The Cambay Field is located in the heart of Gujarat's industrial corridor. Gujarat is the "growth engine of India" one of the fastest growing and most industrialised states in India. During the period 2002-2007, average GDP growth rate in Gujarat was 10.4% per annum and average industrial growth rate was 12.3%.
Gujarat is India's largest producer of petroleum products and chemicals (respectively 58% and 53% of the national total) with the world's third largest petroleum refinery located at Jamnagar. Gujarat has major industries in textiles, plastics, food processing salt and soda ash production. Its ports are a major gateway for India's international trade and it has two LNG terminals located in the Gulf of Cambay. (source: GIDB international road show presentation).
Gas demand in India is rising fast with increasing gas fired power generation capacity. Total gas consumption in India is expected to grow from 1.7 TCF per annum in 2009 to more than 3.1 TCF per annum in 2014 with forecast gas use in power generation is expected to grow from 0.8 TCF per annum to around 1.4 TCF per annum over the same period. Gas imports are forecast to increase to around 1.6 TCF pre annum by 2019, largely in the form of LNG, as demand outstrips the pace of domestic supply. (source: Business Monitor International India Oil and Gas Report Q2 2010).
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 37 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.
LIST OF ABBREVIATIONS AND DEFINITIONS
Associated Natural gas found in contact with or dissolved in crude oil in Gas the reservoir. It can be further categorized as Gas-Cap Gas or Solution Gas. Bbls Barrels of oil or condensate BCF Billion Cubic Feet at standard temperature and pressure conditions BOE Barrels of Oil Equivalent. Converting gas volumes to the oil equivalent is customarily done on the basis of the nominal heating content or calorific value of the fuel. Common industry gas conversion factors usually range between 1 barrel of oil equivalent (BOE) = 5,600 standard cubic feet (scf) of gas to 1 BOE = 6,000 scf. (Many operators use 1 BOE = 5,620 scf derived from the metric unit equivalent 1 m³ crude oil = 1,000 m³ natural gas). BOPD barrels of oil per day
Deterministic The method of estimation of Reserves or Resources is called
deterministic if a discrete estimate(s) is made based on known Estimate geoscience, engineering, and economic data. MMSCF/DAY million standard cubic feet (of gas) per day MMbbls million barrels of oil or condensate (recoverable) Contingent Those quantities of petroleum estimated, as of a given date, to Resources be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and /or characterized by their economic status. Development Pending - A discovered accumulation where project activities are ongoing to justify commercial development in the foreseeable future. Development Unclarified or on Hold - A discovered accumulation where project activities are on hold and/or where justification as a commercial development may be subject to significant delay. Prospective Those quantities of petroleum which are estimated, as of a given Resources date, to be potentially recoverable from undiscovered accumulations Reserves Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. Possible Reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than Probable Reserves.3P P90 refers to the quantity for which it is estimated there is at least a 90% probability the actual quantity recovered will equal or exceed; P50 refers to the quantity for which it is estimated there is at least a 50% probability the actual quantity recovered will equal or exceed; and P10 refers to the quantity for which it is estimated there is at least a 10% probability the actual quantity recovered will equal or exceed. TCF Trillion Cubic Feet Tight Gas The reservoir cannot be produced at economic flow rates or Reservoir recover economic volumes of natural gas unless the well is stimulated by a large hydraulic fracture treatment, a horizontal wellbore, or by using multilateral wellbores
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