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Oilex eyes gas sales and production ramp-up from India frack wells

19th January 2015

Oilex has received endorsement from the relevant authorities of the government of India for the sale of gas from Cambay Field, specifically from the Cambay-77H well

Oilex has received endorsement from the relevant authorities of the government of India for the sale of gas from Cambay Field, specifically from the Cambay-77H well
Cambay-77H is the first horizontal multistage fracked well to be successfully production tested in India

This latest endorsement by the government follows the announcements made by the company on 15 July 2014 and 5 December 2014, in which it was reported that Oilex was authorised to sell gas from Cambay-73 and Bhandut-3 respectively.

The Cambay Joint Venture will now establish the appropriate production facilities for Cambay-77H and initially connect Cambay-77H to a low pressure pipeline grid to service the local area.

An approval to sell gas from Cambay-77H and Cambay-73 removes part of the contingency in the assessment of recoverable quantities of gas as reserves.

“We are very pleased to receive this endorsement from the government of India to sell gas from Cambay-77H,” said Ron Miller, managing director of Oilex.

“The contracted price remains commercial-in-confidence, and revenue from Cambay-77H will significantly move the India assets towards our 2015 goal of cash flow positive operations.”

Oilex has now engaged NSAI (Netherland Sewell and Associates Inc.) to prepare an updated Independent Resource Assessment based on the additional production and other acquired data. This update may result in some Contingent Resources being classified as Reserves.

Cambay-77H is the first horizontal multistage fracked well to be successfully production tested in India.

The production test results were announced by the company on 8 December 2014 and are interpreted to demonstrate that commercial development of the Cambay Field is feasible.

The test results and data from Cambay-77H have been incorporated into a comprehensive model and the initial modelling results demonstrate strong well economics – as announced on 12 December 2014.

These well economics continue to be encouraging despite the sharp drop in oil prices since that date, according to Oilex.

Oilex is now working towards putting three wells in two separate fields into production, during the first half of 2015.

Oilex will recommence gas production in the Cambay Field for the first time since the early 1990’s.

Production from these wells will be a substantial step towards cash positive operations in India for the company as a result of the strong gas demand and associated robust gas price structure.

The outlook for the Indian economy remains positive as the cost of imported energy reduces, stimulating further growth.

“Gas demand remains strong in India and prices firm which helps cushion the recent fall in oil prices,” added Miller. “Oilex looks forward to the next drilling campaign and having sufficient gas deliverability to consider delivery of pipeline quality gas to the high pressure grid located approximately seven kilometres from the field.”

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