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 (ASX: OEX, AIM: OEX) 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
oilex@oilex.com.au
Ben Clube, Finance Director
bclube@oillex.com.au
Read Corporate +61 (0)8 9388 1474 (Western
Australia)
Nicholas Read
nicholas@readcorporate.com.au
Conduit PR +44 (0)20 7429 6610 (UK)
Paul Youens +44 (0)7843 260 623 (UK)
paul@conduitpr.com
Jonathan Charles +44 (0)7791 892 509 (UK)
jonathan@conduitpr.com
RFC Corporate Finance Ltd +61 (0)8 9480 2506 (Western
Australia)
Stuart Laing
stuartl@rfc.com.au
About Oilex
Oilex Ltd is an AIM and ASX-listed (ASX and AIM: OEX) 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
END
OILEX LTD
