Oilex Continues Substantial Progress Towards Becoming Cash Flow Positive by the End of 2009
Oilex Limited is an Australian-based oil and gas production and exploration company that is committed to developing assets which have the ability to provide an exceptional return on investment. Its main focus is on the prospective hydrocarbon basins of India, Indonesia, Australia and countries of Southeast and South Asia.
The Company’s main priority for the short term is to aggressively pursue the development and appraisal of fields in India and Indonesia, with the ultimate aim of establishing a steady positive cash flow in 2009. The Company anticipates that this goal will be reached largely as a result of its success in India and also from its Indonesian project that is waiting for government approval.
Dr. Bruce McCarthy, Managing Director of Oilex informed the Australian Investor, “The Cambay Field work program in India, the next phase of which has just started with the spud of the Cambay-75 appraisal/development well, is the most significant development that will help us to achieve our aim of producing up to 2,000 barrels of oil a day by the end of 2009.”
“The Cambay-75 well is in close proximity to existing production wells which are producing oil from the shallow Miocene MBS reservoir, first brought onstream in November 2008,” Dr. McCarthy told the Australian Investor, “If successfully tested, the well will be brought into production immediately and significantly contribute to our progress towards achieving a production rate of 2,000 barrels day with a healthy revenue stream. Furthermore, if this well is successful the Joint Venture will plan for other wells on the structure.”
Going forward, Oilex’s key priorities are to advance its Cambay Field MBS oil production and to appraise other oil and gas bearing zones that have been proven from the earlier drilling, to bring them into the development phase as cash flow permits.
“Our ultimate aim for the year is to be cash flow positive, which will allow us to fund further development,” Dr. McCarthy explained to the Australian Investor,
“In the meantime, we continue to progress the development of the Pendalian Field in the West Kampar block in Indonesian through ongoing discussions with the Government and Joint Venture.”
On the exploration side, Oilex identified ten prospects as potential drilling targets from a portfolio of over 20 prospects and leads in its operated block JPDA 06-103 in the Timor Sea. Final prospect selection for the first two wells is under way.
“We are very pleased with the number of prospects that we have identified in JPDA 06-103 for our first phase of drilling, which is due to start in the third quarter of this year,” Dr. McCarthy explained to the Australian Investor. “These prospects have the potential to contain 50 to over 100 million barrels mean estimated prospective oil resources (undiscovered recoverable oil resources) and 4 of these high graded prospects are located in relatively shallow water.”
“Assuming that we have two wells drilled during the third quarter, with at least one being successful we will then be looking at appraisal and likely commercial development. We believe the possibility of reaching this stage is favourable, particularly considering the history of the area, in which most discoveries have led to commercial development.”
“We are also in the process of farming out some of our interests due to the challenging economic environment,” Dr. McCarthy noted to the Australian Investor, “We planned to reduce some of our financial exposure in this permit and we are very pleased with the response we have received from companies large and small, both domestic and international.”
It is anticipated that these farm-out arrangements will be finalised by end of May 2009.
According to Dr. McCarthy, Oilex has a number of key elements that are the foundation of its future growth and development and he emphasizes the people and the assets.
“We have a strategically structured portfolio that includes both low-risk development and production opportunities, as well as higher-risk exploration opportunities with potentially higher rewards,” Dr. McCarthy informed the Australian Investor, “This provides us with a healthy diversification of risk.”
The Company also has a strong technical capability and management team that reflects extensive operating experience in India and Southeast Asia.
“We have a highly competent group of technical people working with us,” Dr. McCarthy told the Australian Investor, “They have implemented an active exploration program despite the challenging market conditions, while striving to get production and cash flow up and increase our drilling efforts so that we can maximize the potential rewards for our shareholders.”
Dr. McCarthy concluded, “We are convinced that Oilex has a strong future. Our priority is to get production up in India and to resolve any issues with the Indonesian government to also advance that project into production. We believe our exploration competence, technical capabilities and our focus on becoming cash flow positive by the end of the year will strengthen our position for 2009 and 2010 and ensure that we have the best chance to survive these difficult times with a high degree of success.”
Article written by http://australianinvestor.com.au
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