Oilex Targets Positive Cashflow In 2009 Starting With Cambay Production Boost
Aussie explorer Oilex Ltd has been on the fund raising trail as it seeks to boost production from its Cambay field complex in India and other projects next year. The company, which launched initial production in October 2008, hopes to be cashflow positive during 2009, with an estimated annual net operating cash flow of up to US$20 million from the year-end.
But there is a long way to go before then. To get things rolling Oilex is raising up to US$10.1 million through a share issue. The additional funds will target improved production from the onshore Cambay project, as well as initial output from the West Kampar Pendalian development project onshore Indonesia.
The company hopes to reach a total of 2,000 barrels of oil per day net by the end of next year. “The primary objective of the company is to become cash flow positive in 2009,” Oilex said in a December 22 statement.
This is a popular theme at the moment as explorers seek to transform their upstream potential into actual production, to gain some insulation against the tougher economic and financial conditions predicted in the months ahead.
This is very much in the minds of the Oilex board with plans to adjust the group portfolio and to reduce overheads significantly during the first quarter of 2009.
It has already farmed down its stake in Australia’s WA388P block from 20 per cent to 14 per cent in November; the same is on the cards for some of its acreage in the Joint Petroleum Development Area (JPDA) between Timor-Leste and Australia.
The main focus of the 2009 work programme will be developing and producing more oil from projects in the Cambay field complex in India. The Cambay MBS oil project was the first into production here but the intention in the coming months is to gradually expand the operation.
The onshore Cambay complex of projects carry low estimated operating and capital costs which the company considers robust even in a lower oil price environment.
Going forward, the intention is to unlock this relatively cheap onshore production from India to help progress bigger impact, longer term offshore potential elsewhere.
Oilex also hopes to generate some early production from the Pendalian field development in Indonesia, which would provide welcome additional cashflow to balance the books.
Further exploration and appraisal work during 2009 is expected to take place elsewhere with lots more drilling to come in Oman where Oilex has lined up a three well commitment on a Transocean rig which is scheduled to commence during the third quarter. Early drilling here has already highlighted significant potential.
These are challenging times for most oil companies and the next few months will be critical for Oilex as it seeks not only to bump up its production but also to limit cash burn. If things go well then the group could be in good shape this time next year.
