Oilex

Oilex
List has OEX on the ASX
Official Listing Date 24 October, 2003
Web site http://www.oilex.com.au/
Undiluted market cap = 151,348,885 shares
Market cap Value of = $ 37,837,221.25 based on a .25c share price
Also trades under the following on the ASX
-
OEX only has unlisted options

3,000,000 $1.50 $4,500,000.00 31/12/2009
4,250,000 $0.80 $3,400,000.00 14/12/2009
4,500,000 $0.50 $2,250,000.00 31/03/2010
775,000 $0.50 $387,500.00 31/07/2009
500,000 $1.50 $750,000.00 31/10/2009
500,000 $1.75 $875,000.00 31/10/2009
500,000 $2.00 $1,000,000.00 31/10/2010
500,000 $1.40 $700,000.00 31/01/2010
450,000 $2.00 $900,000.00 31/01/2010
450,000 $2.50 $1,125,000.00 31/01/2011
2,500,000 $2.00 $5,000,000.00 31/03/2011
300,000 $1.75 $525,000.00 31/03/2010
300,000 $2.25 $675,000.00 31/03/2011
300,000 $2.75 $825,000.00 31/03/2012
500,000 $1.57 $785,000.00 30/09/2011
350,000 $1.60 $560,000.00 30/04/2010
350,000 $2.10 $735,000.00 30/04/2010
350,000 $2.70 $945,000.00 30/04/2011
3,900,000 $2.00 $7,800,000.00 1/7/2011
3,900,000 $2.50 $9,750,000.00 1/7/2011
900,000 $1.75 $1,575,000.00 30/06/2011
900,000 $2.25 $2,025,000.00 30/06/2011
900,000 $2.75 $2,475,000.00 30/06/2012
Total options= 31,375,000
Value= $50,062,500.00
Fully diluted market cap= 183,903,885 shares
Proceeds from a fully diluted market cap= $50,062,500.00
Based on a fully diluted market cap and proceeds from the dilution has cash backing of .35c per share AUD
Also listed on the London Stock Exchange's Code OEX

Current cash on hand
= $ 14,709,000.00 AUD

Debt Long and short term = $0.00

Quarterly admin expenses = An average of $ 1,012,500.00 AUD
Total production profits YTD = ???

Company Overview
Oilex is primarily focused on oil and gas exploration with projects in Australia, Oman, India and Indonesia.

Management overview
Please see http://www.oilex.com.au/index.cfm?objectid=51965D36-C09F-1F3C-C8D16CBCE28110A6

Oilex Projects overview
INDIA
CAMBAY FIELD, GUJARAT
(OILEX OPERATOR - 45%)
Highlights
• Oil production from Miocene Basal Sand (MBS) commenced during the quarter with two
wells brought on production.
• Two additional development wells are planned for second quarter 2009 with potential to add
800-1,000 bpd of oil production.
• Flow continued from Cambay-19Z and Cambay-73 EPIII/EPIV fracture stimulated zones
providing critical data to assist with planning for the potential development of gas resources
in these intervals.
• Planning for two additional MBS appraisal/production wells has advanced with drilling
currently scheduled for May 2009.
CAMBAY-74
Cambay-74 was drilled in October 2008 and was located to test the deeper Basal EP IV primary
objective which had tested oil in Cambay-19Z. Oil was confirmed in the Miocene secondary objective and the well was completed without drilling the deeper targets. It commenced production from the MBS
on 5 December 2008. For the period to end December the well had produced 7,453 bbls of oil. The well is currently is producing from the MBS at a rate of approximately 270 bopd with 0-5% water and a 640 psi FTHP. The gas/oil ratio (GOR) has remained relatively constant at ~430 scf/bbl. The oil is being
transported to a nearby refinery and sold along with the crude oil produced from Cambay-64. The well remains choked back and production rates have fluctuated due to issues associated with limited tank storage capacity at the refinery and constraints on transporting larger volumes of oil by road. Oilex is currently working with the refineries to acquire additional storage capacity to rectify the bottlenecks.
CAMBAY – 64
Cambay-64 is an old well that was re-entered to test the possibility of the presence of a by-passed oil zone at the level of the MBS. The test was successful and the well commenced production from the MBS on 17 October 2008. For the period to end December the well has produced 9,374 bbls of oil. The well is currently producing from the MBS in a choked back condition (choke size 12/64 to 16/64”) to preserve reservoir energy and due to delivery point constraints as described above. Constrained rates have varied from 30 – 90 bopd with a FTHP fluctuating between 450 – 800 psi and remedial work which
was anticipated in October is planned for early 2009 to improve the oil flow potential while additional tank storage capacity is acquired.
INDONESIA
WEST KAMPAR PSC, CENTRAL SUMATRA
(OILEX – 45 %)
Oilex is continuing to pursue the early development of the Pendalian field and the ongoing work
program to maximise the value of the West Kampar asset.
The Pendalian-3 phase 1 development plan or “Put on Production” (POP) proposal was completed and
submitted to the relevant authorities on 5 November 2008. The development plan which is a precursor
to full field development involves a single well completion from the Sihapas C5 (1155) Zone in the Pendalian -3 well. Analysis of well test data and analogous nearby fields predicts sustained rates from first year of over 600 bopd from this zone, with the potential for significant additional production from the shallower Sihapas D6 Zone. The POP development plan involves leased production facilities on site with the oil trucked approximately 50 km to the Kasikan Field which is connected by pipeline to the Central Sumatran Oil Gathering System. Planning also progressed for Pendalian-4 appraisal/development well scheduled for Q1/Q2 2009 which, if successful, is also planned to be brought on stream using the Pendalian-3 production infrastructure.
The planned 250 km 2D seismic survey in West Kampar block to delineate prospects for the planned 3 well exploration program in mid to late 2009 is now due to commence in Q2 2009 subject to confirmation of the availability of the seismic contractor. A number of attractive leads will be delineated by this survey. A 50km2 3D acquisition programmed over the Pendalian Field is scheduled to follow the 2D acquisition.
Subsequent to end of December 2008, Oilex Ltd announced on 8 January that its wholly owned
subsidiary Oilex (West Kampar) Limited has elected to terminate the agreement to acquire an additional 15% participating interest in the West Kampar Production Sharing Contract onshore Sumatra, Indonesia from PT Sumatera Persada Energi (SPE). Oilex retains a 45% Working Interest in the PSC. This is consistent with Oilex’s plans to adjust its interests in the West Kampar PSC as noted in the Operations Update accompanying the earlier announcement made on 22 December 2008.
Under the terms of this agreement, Oilex had the right to terminate the agreement if Government approval to the assignment had not been received by 7 January 2009. SPE is required to reimburse the funds advanced by Oilex to date under the terms of the agreement and Oilex holds security for such reimbursement.
The participating interests in the West Kampar PSC are currently:

OMAN
BLOCK 56, SOUTH OMAN
(OILEX OPERATOR – 25%)
The second phase drilling program in Block 56, Oman comprising four wells has been completed
successfully with encouraging results from 3 wells including the Al Jumd-1 well for which a testing program is being planned and the Umq-1 well in the central part of the block which had oil and gas shows over more than 500 metres of section. After the December quarter end, the Abraj 204 rig was released from the Umq-1 well location, the final well in the second phase of drilling on Block 56, on 11 January.
The well results have confirmed the oil potential of the Eastern Flank Salt Basin in Block 56 and
extended the prospective area into the extensive Central Terrace area where no previous drilling had been carried out. The program included the drilling of the Sarha-2 appraisal/exploration well and the Lathab-1, Al Jumd-1 and Umq-1 exploration wells. The well results are summarised below in sequence of drilling.
Sarha-2 Appraisal Well
• Sarha -2 appraisal well spudded on 5 September 2008 and confirmed the presence of the
oil column in the Al Khlata reservoir interval that was intersected in the Sarha-1 discovery
well located approximately 600 metres to the south east of Sarha-2.
• The well was drilled on a horizontal trajectory into the primary reservoir objective and
intersected up to 275 metres gross interval of oil bearing sands, of which approximately 200
metres is calculated to be productive net pay. The horizontal section was re-drilled due to
downhole problems that precluded the running of the completion tubing.
• The well initially produced 150-200 barrels of oil per day (bopd) on pump test following
installation of screens to prevent sand production. The oil is heavier than that tested at
Sarha-1 and flow rates declined during the test.
• Currently reviewing technical data to determine optimum flow potential and future development strategy prior to long term production test. The well is suspended as a potential production well.
Lathab-1 Exploration Well
• Lathab-1 spudded on 9 November and was located on an independent structural prospect to
the north of Sarha Field on the eastern flank of the main salt basin.
• Oil shows were encountered through the Al Khlata, Haima and Huqf Formation reservoir
intervals and thin oil pay was calculated from wireline logs. Pay interval considered to be
insufficient to warrant testing and the well was abandoned.
Al Jumd-1 Exploration Well
• Al Jumd-1 was the northern most location to be drilled and the well spudded on 1 December
2008. The well discovered oil in the Al Khlata over the interval 1163 – 1328 metres with no
oil-water contact identified, interpreting 27 metres of net pay from wireline logs.
• The structure is in the northwest area of Block 56 and is geologically similar to the Sarha oil
field.
• The well was suspended pending a testing program which is currently being planned and is
scheduled for March 2009.
Block 56 Oman showing well locations
Umq-1 Exploration Well
• The well spudded on 22 December 2008 and the rig was released on 11 January 2009. Oil
shows and associated high gas readings were intersected in the Huqf primary objective over
a gross interval of over 500 metres from 1,316 metres (Top Huqf Formation) to 1,840 metres
(total depth of the well).
• No significant porous reservoir intervals were penetrated in the Huqf section drilled.
Operational difficulties including significant mud losses prevented the further deepening of
the well to intersect sandstone intervals predicted beneath the Huqf carbonate.
• This result significantly enhances the large untested potential of the Central Terrace area
which was identified as one of the main exploration objectives by the Joint Venture when it
applied for Block 56.
Oilex is currently reviewing technical and commercial options for follow up appraisal, testing and
possible development for this project for consideration by the Joint Venture in view of the lower oil price environment.

Conclusion

I am not a share holder of this company and I have spent the last few days crawling through reports to get my head around it.
I will start with the India project at Cambay.
Cambay started producing last quarter and has produced a total of 16,860 bbls, sounds good right, well…………..
If I was a share holder I would be pissed to say the least. Oilex picked up this project back in March 2006 how management couldn’t see that there was going to be infrastructure issues and take the appropriate to steps alleviate the problems during the development stage has got be stumped. I have no issue at taken shots at management in this company since they pay themselves so handsomely over a million dollars a quarter and on a wicket like that I would expect that they would have the foresight to deal with infrastructure before it becomes an issue. What appears to of happened is that there is not enough storage for the oil they are producing on sight or at the nearby refinery and also there is large volume transport constraints i.e. the roads are crap. Once they finished follow testing how in the hell did they not foresee this and take the steps to increase onsite storage??????????
They have said that some oil was sold but have not indicated in the December quarterly how much or the cash they made from the sale so my guess is that its bugger all.
This is the wrong market to be making these silly kinds of mistakes, god knows that the poor old OEX share holder has already been punished enough from highs of $1.80 in November 07 to closing at .20c today.

I could keep going over the other projects but the story remains the same, Oman seems like a pipe dream and Indonesia well that’s anyone guess what’s happen there as it seems not to progressed at all and even if it did there is a 85% tax rate so bugger all cash to be made.

The company has also seen a cash burn of around $60 million since December 07 and found themselves needing to do some cap rising in the last quarter for $10m at .23c a share and now have $14m on hand. But I can’t help but feel that they will be back to the share holders sooner rather than later with their hat out looking for more cash since according to their last 5B they are looking at a spend of $5million this current quarter on exploration and development plus the 1 million admin.

Hartleys have been talking these guys up since they were $1.80 and as given them raving reviews all the way down to .20c (should be no surprises there). But not for me I like results, real bankable results and companies that live within their means. A cash burn of 15m a quarter in the current market when you have no income is just a joke. The one thing you can say about the current market is that the pretenders are get found out and punished for it.

But in saying all that if they are for real and can pony up with the goods then the Cambay project alone is a cracker with an estimated 48m recoverable barrels. They need to put some stuff on hold and focus on one project and start getting a return coming back in the door instead of the massive cash burn they currently have. So keep half an eye on them but for me they are at the bottom end of my watch list and I don’t hold out a lot of hope.
My money is on, ONGC, Indians largely government-owned oil company picking them up very cheaply.