Ferret's Stock to Watch: OILEX NL 07:38, Tuesday, 30 November 2004
AN OIL EXPLORER SUCCESSFUL IN SURAT AND EUROMANGA BASINS
OVERVIEW *********
Oilex is still a great punters' stock as Ferret described the company only about month ago when the shares stood at 79c.
They were $1.20 cents yesterday.
Shares of the company have risen on all occasions as expected after drilling a number of successful wells.
Ferret remarked in the recent review you just have to be lucky and have the right broker.
What about the group who listened to the advice of the man from Hartleys who dropped his clients into the stock at 18.5c in June.
At the time he summarised Oilex NL as follows:
It is an oil and gas exploration company focused on drilling high impact oil prospects in the Cooper/Eromanga and Surat Basins in Queensland.
The Oilex multi-well program scheduled for the remainder of 2004 will provide many opportunities for success over the next six months.
The company has a tight capital structure that will provide significant leverage to any drilling successes; therefore, we rate Oilex NL as a speculative buy.
You can say that again.
Yesterday Oilex popped up with another oil report saying the the Rookwood East-1 well encountered oil shows over a 15-metre interval from 1389 metres to 1404 metres.
The Boxvale Sandstone was intercepted over the interval 1389 metres to 1400 metres.
Flourescence was observed in the basement Timbury Hills Formation down to 1404 metres.
Total depth of the well is 1450 metres.
Rookwood East-1 has been cased for completion as a producing well.
Oilex interprets the result of Rookwood East-1 to be "very encouraging" in terms of the potential size of the Rookwood Oilfield.
The ATP 608P Joint Venture will now proceed with the drilling of Rookwood West-1.
The first loadout of oil from the Rookwood Oilfield of 400 bbls took place on Friday afternoon pursuant to an offtake agreement with IOR Ltd.
Production is currently into temporary storage tanks.
Construction of larger storage facilities is under way.
Current oil production is estimated to be at 200 BOPD.
It is expected that an increase to the optimal production rate for the Rookwood South-1 well will be achieved over the next few weeks.
Interests in ATP 608P are Oilex NL 59.06pc, Victoria Petroleum 29.69pc and private interests 11.25pc in the Rookwood Block; and Oilex 66.75pc, Victoria 24pc and private 9.25pc in the Remainder Block.
SHARE PRICE MOVEMENTS ********************** Yesterday the shares shot up 28c to $1.20. Rolling high for the year of $1.25 was also posted yesterday. Low for the same period was 13c.
A company presentation in September produced the following details on progress at that point.
DST 1 flowed at a rate equivalent to 352 BOPD from a 2 metre sand at the top of the Boxvale Sandstone.
This discovery established a new trend along the Boxvale pinchout edge on the western flank of the Surat Basin.
Stratton-1 drilled by Hartogen in 1984 at the northern end of ATP 608P is very similar to Rookwood-1 drilled by Hartogen in 1987.
Stratton-1 had 8 metres of oil shows in the Basal Evergreen Sandstone but flowed water over an interval that included Triassic sands below.
There are 20 leads and prospects between the Rookwood oilfield and Stratton-1 over a distance of 25 km.
The Boxvale pinchout play extends for a further 60 km to the south of the Rookwood oilfield.
The Rookwood discovery has parallels with the Hovea discovery by Arc Energy, which brought in a new North Perth Basin oil fairway.
Analysis of the Rookwood South DST results suggests a potential production rate on pump of up to 447 BOPD if the well completion causes no reservoir damage and the stimulated negative skin is retained.
Oilex is a very efficient operator.
It has drilled four wells as an operator and participated in a fifth well in first year of operation.
The company paid less than $100,000 in salaries in the first year.
Current staff is managing director and a secretary
The company explains why EPP 27 is highly prospective.
The abundance of amplitude anomalies indicates prolific hydrocarbon generation
* High prospect density from the closely spaced rotated fault blocks
* Multiple stacked reservoirs in each fault block
* Sniffer survey in 1980 found gas in equilibrium with oil Also:
* Woodside reprocessing showed a number of gas chimneys extending to the sea floor. Hydrocarbons are still migrating
* There is a high chance of oil columns amongst the gas columns
* Some gas fields will have high condensate yields EPP 27 hosts a large number of small to moderate-sized oil pools in moderate water depths
* Gas effects on seismic are a pathfinder to prospects that have trapped hydrocarbons
* Stacked sands in a fault block provide multiple opportunities to intersect an oil column
* The gas value in the permit is substantial
Capital raising announced to the ASX on September 24, 2004 was a placement of up to $8 million.
Hartleys Limited was Lead Broker to the placement while capital raised was used to fund the EPP 27 drilling program and Surat Basin drilling program.
The current market capitalisation is well supported by the Rookwood discovery and the ontrend potential in ATP 608P
EPP 27 provides potential for large oil discoveries.
BACKGROUND **********
Oilex NL listed on the Australian Stock Exchange in October 2003 after successfully raising about $2.8 million.
Oilex is an oil and gas exploration company with projects located exclusively within Queensland.
The company is focused on conventional oil and gas targets located within the Cooper/Eromanga and Surat Basins.
Oilex has five potential targets to test with several wells planned for the remainder of 2004 including the Connolly-1 and Rookwood South-1 wells.
The company has moved quickly since listing.
Due to the tight capital structure Oilex is highly leveraged to any drilling success.
It principal assets are Eromanga Basin - Connolly-1 (ATP 545P – OEX 45.5pc).
The Connolly Prospect is located about 200km northeast of the Inland Oilfield.
Oilex has recently entered into a farm-in agreement with Roma Petroleum under which OEX can earn up to 55 per cent of ATP 545P.
The conditions of the farm-in are that Oilex will contribute 100 per cent of the cost of the Connolly-1 well (less A$100,000 to be contributed by Roma Petroleum upon Connolly-1 reaching basement).
DISCLAIMER: The view expressed in (Stocks to Watch: RWE News Service) are for information only. RWE is not in the business of providing financial advice. Nothing in this material is to be construed as financial advice. RWE ABN Pty Ltd and Ralph Wragg give no warranty, guarantee or other representation as to the accuracy, completeness of the material. RWE ABN Pty Ltd and Ralph Wragg disclaim any liability for any loss or damage suffered in connection with the material.
