Oilex Ltd Chairman's Address to Shareholders (8896P)
November 23 2016 - 2:00AM
UK Regulatory
TIDMOEX
RNS Number : 8896P
Oilex Ltd
23 November 2016
ASX Announcement
23 November 2016
ASX: OEX
AIM: OEX
Chairman's Address to Shareholders
Dear Shareholder
As you know, the 2016 financial year has been an extremely
challenging year for Oilex and its shareholders, resulting in a
loss before income tax of $36 million, primarily affected by
non-cash impairment of exploration and development assets of $21.6
million, and reduced recovery of costs from Joint Ventures and
costs associated with the Zeta Resources Limited litigation.
Against a back drop of a fifteen-year low in oil prices, the
Company has had to divert much of its attention from the core
business of developing value from its assets to addressing
significant joint venture issues in India, costly litigation
associated with its last capital raising, and resetting the
technical direction at Cambay, in association with lower than
expected production rates at its most recent wells and delays
associated with joint venture funding contribution to ongoing
project activities.
Despite these hurdles, the Company continues to be confident in,
and committed to unlocking, the multi TCF in-place tight gas
potential in its onshore Cambay Block, Gujarat State in India. To
this end, a new vertical well is planned which is essential to
determining the optimal formula to underpin any long term
commercial development of the substantial undeveloped gas
opportunity at Cambay. The next phase of the work programme is
designed to address the identified technical and operational risks
and is aimed at regaining the momentum behind the Company's core
unconventional gas project at Cambay. Planning and preparation
continues for the drilling of the Cambay-78 vertical well scheduled
for the first half of next year, with the dual objective of
developing the un-depleted OS-II sand and to obtain core samples
from the EP-IV Zone reservoir for drilling and stimulation studies,
in addition agreement has been reached with our JV Partner GSPC for
Oilex to drill Cambay-78 on a sole fund/sole reward basis.
The growth in energy demand in India underpins a strong business
case for the Joint Venture partners to the Cambay PSC. India is
home to 18% of the world's population yet uses only 6% of the
world's primary energy. This is despite its energy consumption
having almost doubled since 2000. Domestic gas production continues
to decline with the growing imbalance being filled by the rapid
expansion of LNG imports.
Oilex believes that India has large undeveloped unconventional
potential. Limited exploitation, to date, provides a significant
opportunity for the discovery and commercial development of these
hydrocarbon resources. Oilex has ten years' operating experience in
India with a strong local team. Under the revamped leadership team,
the Company is focussed on leveraging this opportunity for the
benefit of our stakeholders and partners.
Reflecting the changes in the industry environment and the
project status, your Board has made the necessary changes to
reposition Oilex for a strong future. Besides significantly
reducing expenditures, the Company has also restructured its board
and senior executive management team during the year.
The Company is actively engaged in resolving issues associated
with the Cambay joint venture funding requirements and the ongoing
funding and ownership structure, which has necessitated that as
Operator the Company has absorbed certain costs to maintain the
viability of this joint venture, while developing an ongoing
strategy to resolve these issues. While planning for the C-78 well
is underway, the Company continues to actively evaluate alternative
approaches and cost structures to advance the project.
Oilex is also reviewing opportunities in addition to
rationalising its exposure to existing projects.
On behalf of the Board I wish to record our appreciation for the
support of our executive management and staff, Joint Venture
partners, contractors, local communities, shareholders and
stakeholders during a difficult year and look forward to unlocking
the key to the sustainable commercialisation of the unconventional
hydrocarbon resources within the Cambay project. In particular, we
are appreciative of the support of our major shareholders who have
elected to be generally supportive of the resolutions tabled at
this AGM.
We look forward to improving our performance and a better year
ahead.
Best Regards
Max Cozijn
Chairman
For further information, please contact:
Investor Nominated Media Enquires Media Enquiries
Enquiries Adviser (UK) (Aus)
Oilex Ltd Strand Hanson Vigo Communications Citadel-MAGNUS
Joe Salomon Limited Public Relations Michael Weir
Managing Nominated Patrick d'Ancona/Chris Email:
Director Adviser McMahon mweir@citadelmagnus.com
Email: oilex@oilex.com.au Rory Murphy/Ritchie Email: Tel: +618
Tel: +61 Balmer patrick.dancona@vigocomms.c 6160 4900
8 9485 3200 Email: om Australia
Australia oilex@strandhanson.co.uk chris.mcmahon@vigocomms.com
Tel: +44 20 Tel: +44 20
7409 3494 7830 9700
UK
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