TIDMOEX
RNS Number : 2825N
Oilex Ltd
24 October 2016
OILEX LTD - SETEMBER 2016 qUARTERLY rEPORT
HIGHLIGHTS
CAMBAY FIELD, ONSHORE GUJARAT, INDIA
>> Oilex continues to focus its resources on unlocking the
multi-TCF in-place tight gas potential in its onshore Cambay
Block.
>> Planning continues for the drilling of the Cambay-78
vertical well with the dual objectives of developing the
un-depleted OS-II sand and to obtain core samples from the EP-IV
Zone reservoir for drilling and stimulation studies.
>> Agreement reached with GSPC for Oilex to drill Cambay-78 on a 'Sole Fund/Sole Reward' basis.
>> During the quarter, the Joint Venture partner released
US$183,800 against outstanding cash calls.
BHANDUT FIELD, ONSHORE GUJARAT, INDIA
>> Production at Bhandut-3 well averaged 232 mscfd, or 40
boepd (Oilex net 93 mscfd, or 16 boepd).
>> Following technical and economic assessment, Bhandut-3
has been shut-in from 6 October 2016 due to increased water
production.
>> During the quarter, the Joint Venture partner released
equivalent US$100,359 against of outstanding cash calls.
>> Application for three-year extension of Petroleum Mining Lease was approved.
>> CORPORATE
>> Implementation of additional material cost reduction
initiatives undertaken in order to preserve cash resources ahead of
the planned Cambay-78 vertical well and ongoing working capital
requirements.
>> These additional cost reduction programmes, being
undertaken in both Perth and India, will see a 30% reduction in
staff and significant reductions to the executive management and
director's remuneration.
>> The Company is proceeding with its insurance claim in
respect of potentially recovering part of the costs associated with
the Zeta litigation.
>> Cash balance at 30 September 2016 was $3.65 million.
operations review
OVERVIEW
The Company's primary objective is to maximize shareholder value
from its principal asset at Cambay, located onshore Gujarat State
in India.
At Cambay, the Company is in the final stages of planning a
vertical well Cambay-78 designed initially to obtain core samples
for potential well stimulation of the EP-IV Zone reservoir. The
core is required for future drilling, completions and stimulation
optimisation studies, and to support a possible Field Development
Program as part of a submission to seek an extension of the term of
the PSC. The well will also test the shallower OS-II Zone for
potential production and to provide the basis for a plan to secure
the PSC extension application. Drilling of the proposed well
remains subject to final cost estimates and obtaining the necessary
funding, however, it is anticipated that drilling operations will
occur in 1H 2017 with EP-IV stimulation to follow some months
later.
In order to advance the drilling, in October 2016 the Company
executed an agreement with its Joint Venture partner, Gujarat State
Petroleum Corporation Limited (GSPC) under which Oilex will drill,
test, complete, commission and, subject to successful operations,
commence commercial production from the proposed Cambay-78 well.
Oilex will be solely liable for all expenditure associated with
Cambay-78, and, subject to GSPC exercising its back in right, Oilex
will be entitled to sell 100% of production and receive 100% of
revenue from the well.
During the September 2016 quarter, the Company announced the
implementation of additional material cost reduction initiatives.
The initiatives reflect the Company's intention to direct cash
resources to the planned Cambay-78 vertical well and ongoing
working capital requirements. The cost reductions in G&A and
office costs, are being undertaken in both Perth and India.
In the previous quarter, Oilex has extracted itself from a
costly litigation with Zeta Resources Limited (Zeta). The
litigation costs are subject to an insurance claim by the Company
with an outcome anticipated during the December 2016 quarter.
HEALTH, SAFETY, SECURITY AND ENVIRONMENT
No lost time incidents recorded during the quarter.
CAMBAY FIELD, GUJARAT, INDIA
(Oilex: Operator and 45% interest)
Oilex continues to focus its resources on unlocking the
multi-TCF in-place tight gas potential in its onshore Cambay Block,
Gujarat State, India. In this regard, the Company is in the final
stages of planning a proposed vertical well Cambay-78 in the Cambay
PSC, located onshore Gujarat State India. The well has been
designed to achieve the following objectives:
-- To obtain core samples from the EP-IV Zone reservoir which
are needed to gather information on fluid saturations and optimal
future drilling, completions and stimulation technology;
-- Subject to core analysis results, undertake well stimulation
of the EP-IV Zone; and
-- To test the shallower OS-II Zone for production and to
prepare an OS-II Field Development Plan for submission to the
Government of India to meet the PSC extension requirements, which
are required two years prior to the end of the PSC term, in
September 2019.
The Company considers that the successful execution of Cambay-78
is required to progress towards the potential development of the
multi-TCF unconventional gas opportunity in the Cambay Field. The
drilling of Cambay-78 is also essential for the Company to prepare
and submit a Field Development Plan to the Government of India
(GoI) by September 2017 to obtain an extension to the PSC term.
The current PSC term expires on 23 September 2019. The Gol
formally approved its Policy for the Grant of Extension to
Production Sharing Contracts including the Cambay PSC in March
2016. The Company intends to lodge a request for grant of extension
to the Cambay PSC in accordance with this policy, which remains
untested.
Drilling of the proposed well remains subject to final cost
estimates and obtaining the necessary funding, however it is
anticipated that drilling operations will occur in 1H 2017 with
EP-IV stimulation to follow several months later.
Subsequent to the quarter, in October 2016, the Company executed
an agreement with its Joint Venture partner GSPC, under which Oilex
will drill, test, complete, commission and, subject to successful
operations, commence commercial production from the proposed
Cambay-78 well. Oilex will be solely liable for all expenditure
associated with Cambay-78, and, subject to GSPC exercising its back
in right, Oilex will be entitled to sell 100% of production and
receive 100% of revenue from Cambay-78. GSPC shall be entitled to
back in to Cambay-78 within 365 days from the commencement of
commercial production for a cost of 55% of any unrecovered
expenditure for the well, plus a small mark-up. Oilex has also
agreed to impose limits on recoverable expenditure for operating
costs should the well commence commercial production.
Except for the above, the agreement provides that all other
activities associated with Cambay-78 will be undertaken in
accordance with the Joint Operating Agreement (JOA) terms and
conditions with the parties undertaking to fast-track any required
consents and or approvals required under the JOA to effect
Cambay-78.
Production from Cambay for the quarter was approximately 29.6
mscfd plus 3.3 bpd liquids or 8.42 boepd (Oilex net 3.79 boepd)
with the bulk of production coming from the Cambay-73 EP-IV
reservoir. Cambay-73 was on production test from 2 July 2016 to 24
July 2016 in order to complete the six months testing period.
Cambay-73 along with Cambay-77H, is presently shut-in.
At the end of the quarter, total unpaid cash calls by GSPC were
approximately US$7.0 million. During the quarter Oilex received
US$183,800 from GSPC against outstanding cash calls for Cambay.
BHANDUT FIELD, GUJARAT, INDIA
(Oilex: Operator and 40% interest)
Production from the Bhandut Field in the September 2016 quarter
was from the Bhandut-3 well. Production averaged 233 mscfd or 40
boepd (Oilex net 93 mscfd or 16 boepd) during the quarter.
Oilex is Operator and holds 40% equity in the Bhandut Field,
with GSPC holding the remaining participating interest. Previous
drilling in the Bhandut Field intersected a number of hydrocarbon
zones, some of which have been produced and are now shut-in. The
Bhandut-3 well commenced production from a previously undeveloped
sandstone at a depth of 1,010 metres at virgin reservoir
pressure.
During the quarter, the GoI approved the extension of the
Bhandut Petroleum Mining Lease (PML) for a further three years to
22 September 2019. The extended Bhandut PML end date is consistent
with the remaining PSC term.
During the quarter, the well economics have not improved
reflecting increased water production. There are no other producing
wells from the Bhandut Field at this time. Following a review of
the ongoing technical and economic parameters at Bhandut-3, this
well has been shut-in after quarter end.
WALLAL GRABEN, WESTERN AUSTRALIA (CANNING BASIN)
(Oilex: Operator and 100% interest)
The Wallal Graben asset is located adjacent to the Pilbara, a
global resource centre for iron ore and LNG in Western
Australia.
The Wallal Graben blocks are frontier exploration blocks that
represent a potential low cost entry to an underexplored area.
Oilex continues to investigate low cost exploration de-risking
tools and approaches that address the geological uncertainties in
this basin and potentially provide an alternative lower cost work
programme.
Final award of the blocks requires signing of Heritage
Agreements with the Nyangumarta and Njamal People and is linked to
a request to the Department of Mines and Petroleum (DMP) that all
three blocks be awarded simultaneously. Consultations on the
Heritage Agreements are nearly complete following which the DMP
will make an offer to grant a Petroleum Exploration Permit for each
of the three blocks to Oilex for its acceptance.
Oilex continues to review opportunities to attract participants
to share the funding requirements for this project.
JPDA 06-103, TIMOR SEA
(Oilex: Operator and 10% interest)
Oilex as operator, and on behalf of the JPDA 06-103 Joint
Venture participants, continues to seek a resolution to the dispute
with Autoridade Nacional do Petroleo e Minerais (ANPM) in relation
to matters associated with the termination of JPDA 06-103 PSC. In
July 2015, the ANPM rejected the Joint Venture request to terminate
the PSC by mutual agreement in good standing and without penalty
and sought to impose a penalty of approximately US$17 million upon
the Joint Venture. The Joint Venture carried out significantly more
exploration than required during the PSC term and believes the
excess was not properly credited in accordance with the PSC.
The Joint Venture continues its discussions with the ANPM and
remains hopeful an amicable settlement will be reached. If the
parties are unable to reach an amicable settlement, any party may
refer the matter to arbitration. If this occurs, the obligations
and liabilities of the Joint Venture participants under the PSC are
joint and several, with parent company guarantees provided by all
Joint Venture participants. Oilex has a 10% participating interest
in the Joint Venture.
WEST KAMPAR PSC, CENTRAL SUMATRA, INDONESIA
(Oilex: 45% interest and further 22.5% secured(1) )
A Court approved Scheme of Arrangement has been implemented over
the Operator, however, Oilex continues to pursue enforcement of the
Arbitration Award and a commercial settlement.
CORPORATE
At the end of the quarter Oilex retained cash resources of $3.65
million.
Cost Reduction Initiatives
During the quarter, the Company announced the implementation of
additional material cost reduction initiatives. The initiatives
reflect the proposed activity level for 2017 and the requirement to
direct cash resources to the planned Cambay-78 vertical well. The
cost reductions, which are being undertaken in both Perth and
India, include:
-- 30% overall reduction in the number of personnel;
-- 14% average reduction in salaries and wages for existing personnel;
-- review of commercial operations at Cambay and Bhandut Fields;
-- careful management of planned drilling and project costs; and
-- deferral of all non-essential expenditure.
The additional salary reductions are being led by Oilex
Executive Management and its Non-Executive Directors. These
additional changes are effective from 1 October 2016.
Litigation Insurance Claim
During the June 2016 quarter Oilex reached an agreement with
Zeta that ended the legal proceedings between the parties. The
Company continues to engage with its insurers with a view to
potentially recovering part of the litigation costs. The final
insurance claim is subject to ongoing assessment by the Company's
insurers and the quantum of the recovery is uncertain.
Capital Structure as
at 30 September 2016
Ordinary Shares 1,180,426,999
Unlisted Options 17,250,000
Qualified Petroleum Reserves and Resources Evaluator
Statement
Pursuant to the requirements of Chapter 5 of the ASX Listing
Rules, the information in this report relating to petroleum
reserves and resources is based on and fairly represents
information and supporting documentation prepared by or under the
supervision of Mr Jonathan Salomon, Managing Director employed by
Oilex Ltd. Mr Salomon has over 30 years' experience in petroleum
geology and is a member of the Society of Petroleum Engineers and
AAPG. Mr Salomon meets the requirements of a qualified petroleum
reserve and resource evaluator under Chapter 5 of the ASX Listing
Rules and consents to the inclusion of this information in this
report in the form and context in which it appears. Mr Salomon also
meets the requirements of a qualified person under the AIM Note for
Mining, Oil and Gas Companies and consents to the inclusion of this
information in this report in the form and context in which it
appears.
CORPORATE DETAILS
Board of Directors
Max Cozijn Non-Executive Chairman
Brad Lingo Independent Non-Executive
Director
Joe Salomon Managing Director
Company Secretary
Mark Bolton CFO & Company Secretary
Stock Exchange
Listing
Australian Securities Code: OEX
Exchange
AIM London Stock Code: OEX
Exchange
Share Registry
Australia United Kingdom
Link Market Services Limited Computershare Investor
Central Park Services PLC
Level 4 The Pavilions
152 St. Georges Terrace Bridgwater Road
Perth, WA 6000 Australia Bristol BS13 8AE United
Telephone: 1300 554 474 Kingdom
Website: Telephone: +44 (0) 870
http://investorcentre.linkmarketservices.com.au 703 6149
Facsimile: +44 (0) 870
703 6116
Website:
www.computershare.com
PERMIT SCHEDULE
PERMIT SCHEDULE - 30 SEPTEMBER 2016
ASSET LOCATION ENTITY EQUITY OPERATOR
%
------------------ -------------- -------- -------------
Cambay Field Gujarat, Oilex Ltd 30.0 Oilex Ltd
PSC India
------------------ -------------
Oilex NL
Holdings
(India)
Limited 15.0
------------------------------------------------- -------- -------------
Bhandut Gujarat, Oilex NL 40.0 Oilex NL
Field PSC India Holdings Holdings
(India) (India)
Limited Limited
------------------ -------------- -------- -------------
West Kampar Sumatra, Oilex (West 67.5 PT Sumatera
PSC Indonesia Kampar) (3) Persada
Limited Energi
------------------ -------------- -------- -------------
JPDA 06-103 Joint Petroleum Oilex (JPDA 10.0 Oilex (JPDA
PSC Development 06-103) 06-103)
Area Ltd Ltd
Timor Leste
and Australia
------------------ -------------- -------- -------------
STP-EPA-0131 Western Admiral 100.0 Admiral
Australia Oil Pty Oil Pty
Ltd (2) Ltd (2)
------------------ -------------- -------- -------------
STP-EPA-0106 Western Admiral 100.0 Admiral
Australia Oil and (3) Oil and
Gas (106) Gas (106)
Pty Ltd Pty Ltd
(2) (2)
------------------ -------------- -------- -------------
STP-EPA-0107 Western Admiral 100.0 Admiral
Australia Oil and (3) Oil and
Gas (107) Gas (107)
Pty Ltd Pty Ltd
(2) (2)
------------------ -------------- -------- -------------
(1) Oilex (West Kampar) Limited is entitled to have assigned an
additional 22.5% to its holding through the exercise of its rights
under a Power of Attorney granted by PT Sumatera Persada Energi
(SPE) following the failure of SPE to repay funds due. The
assignment request has been provided to BPMigas (now SKKMigas) but
has not yet been approved or rejected. If Oilex is paid the funds
due it will not be entitled to also pursue this assignment.
(2) Ultimate parent entity is Oilex Ltd.
(3) Current status is a Preferred Applicant
LIST OF ABBREVIATIONS AND DEFINITIONS
Barrel/bbl Standard unit of measurement for all
oil and condensate production. One barrel
is equal to 159 litres or 35 imperial
gallons.
------------- ------------------------------------------------
MMBO Million standard barrels of oil or condensate
------------- ------------------------------------------------
SCFD Standard cubic feet (of gas) per day
------------- ------------------------------------------------
MSCFD Thousand standard cubic feet (of gas)
per day
------------- ------------------------------------------------
MMSCFD Million standard cubic feet (of gas)
per day
------------- ------------------------------------------------
BBO Billion standard barrels of oil or condensate
------------- ------------------------------------------------
BCF Billion Cubic Feet of gas at standard
temperature and pressure conditions
------------- ------------------------------------------------
TCF Trillion Cubic Feet of gas at standard
temperature and pressure conditions
------------- ------------------------------------------------
Discovered Is that quantity of petroleum that is
in place estimated, as of a given date, to be
volume contained in known accumulations prior
to production
------------- ------------------------------------------------
Undiscovered Is that quantity of petroleum estimated,
in place as of a given date, to be contained
volume within accumulations yet to be discovered
------------- ------------------------------------------------
PSC Production Sharing Contract
------------- ------------------------------------------------
Prospective Those quantities of petroleum which
Resources are estimated, as of a given date, to
be potentially recoverable from undiscovered
accumulations.
------------- ------------------------------------------------
Contingent Those quantities of petroleum estimated,
Resources as of a given date, to be potentially
recoverable from known accumulations
by application of development projects,
but which are not currently considered
to be commercially recoverable due to
one or more contingencies.
Contingent Resources may include, for
example, projects for which there are
currently no viable markets, or where
commercial recovery is dependent on
technology under development, or where
evaluation of the accumulation is insufficient
to clearly assess commerciality. Contingent
Resources are further categorized in
accordance with the level of certainty
associated with the estimates and may
be sub-classified based on project maturity
and/or characterised by their economic
status.
------------- ------------------------------------------------
Reserves Reserves are those quantities of petroleum
anticipated to be commercially recoverable
by application of development projects
to known accumulations from a given
date forward under defined conditions.
Proved Reserves are those quantities
of petroleum, which by analysis of geoscience
and engineering data, can be estimated
with reasonable certainty to be commercially
recoverable, from a given date forward,
from known reservoirs and under defined
economic conditions, operating methods
and government regulations.
Probable Reserves are those additional
Reserves which analysis of geoscience
and engineering data indicate are less
likely to be recovered than Proved Reserves
but more certain to be recovered than
Possible Reserves.
Possible Reserves are those additional
reserves which analysis of geoscience
and engineering data indicate are less
likely to be recoverable than Probable
Reserves.
Reserves are designated as 1P (Proved),
2P (Proved plus Probable) and 3P (Proved
plus Probable plus Possible).
Probabilistic methods
P90 refers to the quantity for which
it is estimated there is at least a
90% probability the actual quantity
recovered will equal or exceed. P50
refers to the quantity for which it
is estimated there is at least a 50%
probability the actual quantity recovered
will equal or exceed. P10 refers to
the quantity for which it is estimated
there is at least a 10% probability
the actual quantity recovered will equal
or exceed.
------------- ------------------------------------------------
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97,
01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
-------------------------------------------
OILEX LTD
ABN Quarter ended ("current
quarter")
--------------- ------------------------
50 078 652 632 30 September 2016
------------------------
Consolidated statement Current quarter Year to date
of cash flows $A'000 (3 months)
$A'000
1. Cash flows from operating
activities
1.1 Receipts from customers 71 71
1.2 Payments for
(a) exploration & evaluation (285) (285)
(b) development (16) (16)
(c) production (181) (181)
(d) staff costs (354) (354)
(e) administration
and corporate costs (371) (371)
1.3 Dividends received
(see note 3) - -
1.4 Interest received 1 1
1.5 Interest and other
costs of finance paid - -
1.6 Income taxes paid - -
1.7 Research and development
refunds - -
Other (provide details
if material)
1.8 Litigation legal fees (253) (253)
---- ---------------------------------- ---------------- -------------
Net cash from / (used
1.9 in) operating activities (1,388) (1,388)
---- ---------------------------------- ---------------- -------------
Consolidated statement Current quarter Year to date
of cash flows $A'000 (3 months)
$A'000
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant
and equipment - -
(b) tenements (see - -
item 10)
(c) investments - -
(d) other non-current - -
assets
2.2 Proceeds from the disposal
of:
(a) property, plant
and equipment - -
(b) tenements (see - -
item 10)
(c) investments - -
(d) other non-current - -
assets
2.3 Cash flows from loans - -
to other entities
2.4 Dividends received - -
(see note 3)
2.5 Other (provide details - -
if material)
----- --------------------------- ---------------- -------------
2.6 Net cash from / (used
in) investing activities
----- --------------------------- ---------------- -------------
3. Cash flows from financing
activities
3.1 Proceeds from issues
of shares - -
3.2 Proceeds from issue - -
of convertible notes
3.3 Proceeds from exercise - -
of share options
3.4 Transaction costs related - -
to issues of shares,
convertible notes or
options
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
3.9 Other (provide details - -
if material)
----- --------------------------- ---------------- -------------
3.10 Net cash from / (used - -
in) financing activities
----- --------------------------- ---------------- -------------
Consolidated statement Current quarter Year to date
of cash flows $A'000 (3 months)
$A'000
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 5,158 5,158
Net cash from / (used
in) operating activities
4.2 (item 1.9 above) (1,388) (1,388)
4.3 Net cash from / (used
in) investing activities
(item 2.6 above) - -
4.4 Net cash from / (used
in) financing activities
(item 3.10 above) - -
Effect of movement
in exchange rates on
4.5 cash held (117) (117)
---- ------------------------------ ---------------- -------------
Cash and cash equivalents
4.6 at end of period 3,653 3,653
---- ------------------------------ ---------------- -------------
5. Reconciliation of cash
and cash equivalents
at the end of the quarter
(as shown in the consolidated
statement of cash flows) Previous
to the related items Current quarter quarter
in the accounts $A'000 $A'000
5.1 Bank balances 3,653 5,158
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---- ------------------------------- ---------------- ----------------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 3,653 5,158
---- ------------------------------- ---------------- ----------------
Payments to directors of the entity Current quarter
6. and their associates $A'000
----------------
Aggregate amount of payments to
these parties included in item
6.1 1.2 121
----------------
6.2 Aggregate amount of cash flow
from loans to these parties included
in item 2.3 -
----------------
6.3 Include below any explanation necessary
to understand the transactions included
in items 6.1 and 6.2
---- -------------------------------------------------------------------
Payments to related entities of Current quarter
7. the entity and their associates $A'000
7.1 Aggregate amount of payments to
these parties included in item
1.2 -
----------------
7.2 Aggregate amount of cash flow
from loans to these parties included
in item 2.3 -
----------------
7.3 Include below any explanation necessary
to understand the transactions included
in items 7.1 and 7.2
---- --------------------------------------------------------
8. Financing facilities Total facility Amount drawn
available amount at at quarter
Add notes as necessary quarter end end
for an understanding $A'000 $A'000
of the position
8.1 Loan facilities - -
--------------- -------------
8.2 Credit standby arrangements - -
--------------- -------------
8.3 Other (please specify) - -
--------------- -------------
8.4 Include below a description of each facility
above, including the lender, interest rate
and whether it is secured or unsecured.
If any additional facilities have been entered
into or are proposed to be entered into
after quarter end, include details of those
facilities as well.
---- ------------------------------------------------------------
9. Estimated cash outflows $A'000
for next quarter
9.1 Exploration and evaluation 180
9.2 Development -
9.3 Production 100
9.4 Staff costs 230
Administration and corporate
9.5 costs 400
Other (provide details if
material)
9.6 Redundancy Payments 300
---- ------------------------------ -------
9.7 Total estimated cash outflows 1,210
---- ------------------------------ -------
10. Changes in
tenements
(items 2.1(b) Tenement Interest Interest
and 2.2(b) reference at beginning at end
above) and location Nature of interest of quarter of quarter
10.1 Interests Refer to Permit
in mining Schedule in
tenements Quarterly Report
and petroleum
tenements
lapsed, relinquished
or reduced
----- ---------------------- -------------- ------------------- -------------- ------------
10.2 Interests Refer to Permit
in mining Schedule in
tenements Quarterly Report
and petroleum
tenements
acquired
or increased
----- ---------------------- -------------- ------------------- -------------- ------------
Compliance Statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Mark Bolton
CFO & Company Secretary
24 October 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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