Cambay-76H Tight Reservoir Well Spuds in India

8 Jun 2011 07:00

8 June 2011

Cambay-76H "Tight" Reservoir well spuds in India

Cambay-76H Well Oilex Ltd advises that the Cambay-76H horizontal well was spudded at 00:00 hours (WST) on 8th June 2011.

The Cambay-76H "proof of concept" well will evaluate the production potential of the Y Zone interval of the extensive Eocene "tight" reservoirs in the onshore Cambay Production Sharing Contract ("PSC") in Gujarat State, India.

It is estimated that the well, which includes a 610 metre lateral section, will take approximately 35 days to drill and complete. An 8 stage fracture stimulation program of the Eocene "tight" reservoir Y Zone will then be conducted. After well clean-up, it is anticipated that a long term production test will be performed to determine flow rates, quality of hydrocarbons and commercial viability.

The results of the long term production test will also provide importantinformation for the ongoing Independent Reserves Certification commissioned bythe Company.Report date 8th June 2011 Status Drilling ahead surface hole Operations * Spudded well * Started drilling 17.5" hole. Objectives Cambay Eocene "tight" reservoir Y Zone Kick off point for Approximately 1,100 metres deviation Planned Total Depth (TD) Approximately 2,885 metres Days to TD: Approximately 35 days on a trouble free basis

All depths refer to measured depth below rig rotary table ("MD")

Independent Reserves Certification Substantial progress has been made on the Reserves Certification process with Netherland Sewell Associates Inc. ("NSAI"). NSAI has confirmed at least four distinct hydrocarbon bearing zones (X, Y, Z and sub Z) within the Eocene section.

Some additional laboratory analyses will be undertaken over the next two to four weeks to more accurately derive reservoir parameters especially in the lower Z and deeper potential reservoirs below the Z. Recently the Company has been able to access modern well data from areas close to the Cambay PSC which is being used to significantly enhance the evaluation.

NSAI has advised that in order to achieve the best possible classification for the Y Zone, it will be necessary to demonstrate that tight gas technology involving multi-stage fracture stimulation of horizontal wells can be effectively applied in India to achieve commercial flow rates. Accordingly, the reserves and resource certification report will be completed after results from the Cambay-76H production test.

Cambay Eocene Tight Reservoirs The Company's main area of focus is in India where it operates three onshore PSC's in Gujarat on behalf of Joint Ventures with Gujarat State Petroleum Corporation Ltd (GSPC). Cambay PSC is the largest of these covering an area of 161 km2 in the southern Cambay Basin and has an extensive database of 3D seismic and well data.

Significant progress has been made in unlocking the potential of the Cambay "tight" Eocene reservoirs that extend across the contract area, by applying leading-edge North American tight/shale gas industry expertise and technology. The Company now intends to further evaluate and exploit these reservoirs using horizontal drilling and fracture stimulation technology that has been developed and proven in North America.

The Cambay Field is located in the heart of Gujarat's industrial corridor. Gujarat has been described as the "growth engine of India" with GDP averaging over 10% and it is one of the country's most industrialised states. Gas demand in Gujarat is rising fast with demand outstripping the pace of domestic supply. Gujarat has an established and expanding gas pipeline network close to the Cambay Field contract area.

The participating interests in the Cambay PSC are:

Joint Venture Party Participating Interest Oilex Ltd (Operator) 30% Oilex NL Holdings (India) Limited 15% Gujarat State Petroleum Corporation Ltd 55%

For further information, please contact:

Oilex Ltd +61 (0)8 9485 3200 (Western Australia)Bruce McCarthy Managing Director oilex@oilex.com.au Ben Clube Finance Director oilex@oilex.com.au Ambrian Partners Limited (Nominated Adviser and AIM Broker) Richard Swindells +44 (0) 20 7634 4856 (UK) richard.swindells@ambrian.com Matthew Einhorn +44 (0) 20 7634 4860 (UK) matt.einhorn@ambrian.com Read Corporate Nicholas Read +61 (0)8 9388 1474 (Western Australia)nicholas@readcorporate.com.au Tavistock Communications +44 (0)207 920 3150 (UK)Paul Youens +44 (0)7843 260 623 (UK)pyouens@tavistock.co.uk Ed Portman +44 (0)7791 892 509 (UK)eportman@tavistock.co.uk

This document may include forward-looking statements. Forward-looking statements include, but are not necessarily limited to, statements concerning Oilex Ltd's planned exploration program and other statements that are not historic facts. When used in this document, the words such as "could", "plan", "estimate" "expect", "intend", "may", "potential", "should" and similar expressions are forward-looking statements. Although Oilex Ltd believes that its expectations reflected in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements."

FIGURE 1 SCHEMATIC CAMBAY-76H WELL PROFILE FIGURE 2 CAMBAY PSC LOCATION AND INFRASTRUCTURE MAP FIGURE 3 & 4 CAMBAY-76H RIG ON LOCATION & CAMBAY-76H WELL PATH

Please view full report on Oilex website www.oilex.com.au