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But, wait for it - there's more good oil: 09:18| Re: Re-rating...

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chillam

1,502 Posts.

22/07/14

23:46

Post #: 13699243

Originally posted by mandurah ↑

So much for the re-tracement. And in a way, justifiably so. Sitting at 11.12p as we speak or 20.2c giving
a MC of about 115m.

77H has pretty well gone according to script and it looks as though we may have an "oily" well that produces gas.
Cant remember the figures but I think in India the govt legislated price is going to be around the $10 mscfd. That's
a good price, a bit over $4 in the US. Not sure if the condensate is within govt control or we can sell it on the open
market. API 50 Light crude however, will fetch a premium.

Price action predicts a v good result for the final production test post clean up. After yesterdays ann {and witnessing
the pictures of the gas flare & the API 50 in a jar}, expectations, realistically, deserve to be on the high side. The light
oil flow according to Ron had already exceeded their expectations {with 60% of the frac fluids still to be recovered}

If I may be allowed to play devils' advocate a bit. Unrisked contigent resource NET to oilex is PREDICTED to be
37 mmbo and 222 bcfg. That would be a best case scenario, low & high not included here. I will go with the "best"
case as flow back thus far seems to have exceeded expectations already.

222bcfg @ $10 mmscf = $222m in revenue
37mmbo = 222bcfg again = + $222m in revenue.

Total Revenue = $444m. NPV is usually discounted by 10% so call it 400m. Present MC if 20c = 115m.

OR if you attach $10 per in barrel in ground oil, then a MC of 740m. $5 per barrel oil in place then 375m.

So, if 77H can deliver what looks to be a best or high case result then in my mind the MC should be around
that 375-400m mark. Call it 300m even. At 300MC SP = approx 50c. A lot of acreage and potentially a lot
of wells to be drilled but if the flow rate is up around the 6mmscfd mark and we get normal decline rates
then it may only take 18 months -2 years to retrieve the oil in place per reservoir. Decline rates and
EUR will be the determining factors here for profitability.

So, enough justification to buy in at 20c still as it could turn out to be a 2-3 bagger if the above eventuates.
This would appear more likely {imo based on the initial flow rates during clean up} to eventuate than a
low side evaluation. Higher side still remains possible as well.

GLTAH

Expand

But, wait for it - there's more good oil:

09:18 Re: Re-rating of reserves later Joatmon 2

1 From the Oilex website:"Moving forward beyond Cambay-77H, 5 additional wells are planned contingent upon a successful flow test of Cambay-77H. These will enhance production, cash flow and provide sufficient data to enable partial conversion of contingent resources to reserves."The indications are the additional wells would follow (after good results from Cambay 77H) as soon as the Rig, materials and services were contracted and available.I would expect Oilex has identified the locations and well designs, and will be preparing or even issueing tenders for the work right now - especially for the long lead items. joatmon

	09:18	Re: Re-rating of reserves later	Joatmon	2
1	From the Oilex website:"Moving forward beyond Cambay-77H, 5 additional wells are planned contingent upon a successful flow test of Cambay-77H. These will enhance production, cash flow and provide sufficient data to enable partial conversion of contingent resources to reserves."The indications are the additional wells would follow (after good results from Cambay 77H) as soon as the Rig, materials and services were contracted and available.I would expect Oilex has identified the locations and well designs, and will be preparing or even issueing tenders for the work right now - especially for the long lead items. joatmon

OEX Price at posting: 16.0¢ Sentiment: Buy Disclosure: Held

1 Upvote

0 Great analysis

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But, wait for it - there's more good oil: 09:18| Re: Re-rating...

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