FOR: OILEXCO INCORPORATED TSX, LSE SYMBOL: OIL October 6, 2008 Oilexco Provides Operations Update CALGARY, ALBERTA--(Marketwire - Oct. 6, 2008) - Oilexco Incorporated ("Oilexco" or "the
Company")
(TSX:OIL) (LSE:OIL) provides the following operations update.
Debt Facility On July 4, 2008, the Company announced that it had signed an engagement letter with respect to
refinancing Oilexco's current debt obligations and increasing Oilexco's total debt
availability from
US$700 million to US$1 billion. The credit facility was to be underwritten by a syndicate of
key
relationship banks, subject to standard internal credit approvals and due diligence. Since the
July
4th announcement was made the Company has worked closely with its banks to progress this
facility, and
has received extremely positive feedback on the Company's financial position and its viability
as a
credit partner for the potential syndicate. However, due to the unprecedented liquidity and
volatility
issues facing the credit markets, the process to financial close is taking a little longer
than
anticipated. Therefore, given that Oilexco is fully funded for the remainder of its 2008
capital
programme and has strong cashflow because of its current production base, the Company feels it
is
prudent to actively monitor, and where necessary, review the refinancing process in
conjunction with
its banking and other advisors, and evaluate alternative financing options available to it in
the
current market. A further update will be provided in due course.
Development and Production Guidance In addition to evaluating the refinancing option, Oilexco is also reviewing the timing of some
of its
development programs. The principal cause of the review is not related to financing, but other
issues
including the installation of the Sevan Voyager FPSO vessel for the Shelley Field and some
weather
induced delays. The timing for the first well from the Shelley field to begin production has
been
pushed back to December 2008 as a result of delays to the Sevan Voyager, which is now
scheduled to be
floated to location in mid-November 2008, depending on weather conditions. As a result, the
Company is
revising its near-terms production expectations, and expects to reach a level of 35,000 bopd
either by
the end of 2008 or within Q1 2009.
Oilexco continues to make good progress on other key operational activities. The program to
drill
additional production wells during Q4 2008 and into Q1 2009 at both the Nicol and Caledonia
fields has
commenced. The first oil tie-ins to these wells are also subject to weather conditions. Oilexco also
successfully completed its production optimization work on the Balmoral FPV, and is working
through
minor technical issues at the Brenda manifold with positive results.
Fourth Quarter Drilling The Sedco 712 rig is currently conducting development drilling on the Shelley field, after
which it
will move to the Nicol field to drill a second production well. After Nicol, the Sedco 712
will return
to Shelley to conduct final completion activities in preparation for first oil. The Ocean
Guardian is
conducting appraisal drilling immediately east of the Huntington discovery in Block 22/14a in
the
Paleocene zone, after which it will then conduct appraisal drilling in the Kildare Block.
About the Company Oilexco is an oil and gas exploration and production company active in the United Kingdom. Oilexco's
producing properties, exploration and development activities are located in the UK Central
North Sea,
specifically in the Outer Moray Firth and Central Graben areas. Oilexco operates in the United
Kingdom
through its wholly owned subsidiary, Oilexco North Sea, a company registered under the laws of
England
and Wales. Oilexco shares are listed for trading on the London Stock Exchange (LSE) and the
Toronto
Stock Exchange (TSX) under the symbol "OIL".
Forward Looking Statements This disclosure contains certain forward-looking statements that involve substantial known and
unknown
risks and uncertainties, certain of which are beyond Oilexco's control, including: the impact
of
general economic conditions in the areas in which Oilexco operates, civil unrest, industry
conditions,
changes in laws and regulations including the adoption of new environmental laws and
regulations and
changes in how they are interpreted and enforced, increased competition, the lack of
availability of
qualified personnel or management, fluctuations in commodity prices, foreign exchange or
interest
rates, stock market volatility and obtaining required approvals of regulatory authorities. In
addition
there are risks and uncertainties associated with oil and gas operations, therefore Oilexco's
actual
results, performance or achievement could differ materially from those expressed in, or
implied by,
these forward-looking statements will transpire or occur, or if any of them do so, what
benefits,
including the amounts of proceeds, which Oilexco will derive therefrom. All statements
included in
this press release that address activities, events or developments that Oilexco expects,
believes or
anticipates will or may occur in the future are forward-looking statements. These statements
include
future production rates, completion and production timetables and costs to complete wells, and
production facilities. These statements are based on assumptions made by Oilexco based on its
experience perception of historical trends, current conditions, expected future developments
and other
factors it believes are appropriate in the circumstances. -30- FOR FURTHER INFORMATION PLEASE CONTACT: Oilexco Incorporated
Arthur S. Millholland
President
(403) 262-5441 OR Oilexco Incorporated
Brian L. Ward
Chief Financial Officer
(403) 262-5441 OR Oilexco Incorporated
Rob Elgie
Manager Investor Relations
(403) 262-5441
Website: www.oilexco.com OR Pelham PR
James Henderson
Managing Director
44 (20) 7743 6673 OR Pelham PR
Alisdair Haythornthwaite
Director
44 (20) 7743 6676 INDUSTRY: Energy and Utilities-Oil and Gas
SUBJECT: OEX -0-
OILEXCO INCORPORATED
|