TIDMOEX
RNS Number : 2950O
Oilex Ltd
01 October 2019
For a printer friendly copy of this announcement, please click
on the link below to open a PDF version
http://www.rns-pdf.londonstockexchange.com/rns/2950O_1-2019-10-1.pdf
External Impact on the Petroleum Industry
This last year has seen both oil and regional gas prices holding
relatively firm globally, providing some buoyancy to the oil and
gas sector. In particular strong interest in the sector has is
evident from the UK investment community.
The Indian economy remains strong with the Modi government
returned to office in a general national election. The Prime
Minister India has led and initiative to reduce its dependence on
petroleum imports as energy security remains a major concern. The
country continues to experience strong positive economic
growth.
Figure 1: Bhandut Production Facility
Oilex Strategy
During 2018-2019, Oilex continued to focus on its core project,
Cambay, in India while also evaluating potentially value accretive
new business opportunities elsewhere, ranging from discovered
undeveloped resources with exploration upside to existing
discoveries and production. Post-the reporting period the Company
announced entries to both the Cooper-Eromanga Basins in Australia
and the East Irish Sea in the UK. Both these entries follow a
well-defined strategy focusing on proven super-basins with world
class source rocks, well defined fairways, undeveloped discoveries,
progressive regulators, open access to data, existing
infrastructure and demonstrable upside potential for junior
companies.
Introduction
Oilex's Cambay Project is located onshore in the state of
Gujarat in the heart of one of India's most prolific hydrocarbon
and leading industrialised provinces. The project is ideally
located near a major industrial corridor and approximately 20 km
from the existing national gas pipeline grid. It is well-positioned
to commercialise production in the fast-growing, demand-driven
domestic energy market.
The area has a long history of hydrocarbon production from a
number of vertically stacked reservoir sections. Oilex continues to
focus on a tight siltstone Eocene aged reservoir which has
potential for Multi-TCF gas resources within the license area of
the Cambay Production Sharing Contract (PSC). A secondary
conventional reservoir is present in the Oligocene section.
Development of the potential gas resources in the Cambay PSC has
been held up during the year because of a dispute with the second
partner in the project, Gujarat State Petroleum Corporation (GSPC).
In May of 2018, Oilex announced that it had issued an Event of
Default Notice (EOD) to GSPC for failure to pay US$3,054,832 of its
participating interest share of expenses. In July 2018, the Company
announced that it had issued a notice to require GSPC to withdraw
(EoW) from the PSC and to transfer its participating interest to
Oilex following the procedures defined by the Joint Operating
Agreement as GSPC had not remedied the EoD within the prescribed
allowed time. Oilex's action were driven by its desire to return to
a drilling programme in the PSC with a pilot test to drill and flow
test the identified gas resource.
In August 2018, in response to the EoD and EoW, GSPC served
notice of an exparte Order from the High Court of Gujarat directing
Oilex not to take any coercive steps against GSPC to transfer its
participating interest. A number of hearings in the High Court took
place until 5 November when Oilex announced the final decision of
the court which further delayed the implementation of the EoD and
EoW under the conditions that GSPC deposited a sum of approximately
US$1.1 million, a bank guarantee for approximately US$3 million
with the court, and commenced arbitration proceedings. On the 19
November, Oilex announced that GSPC had complied with the above
requirements.
In the period from December of 2018 and through the first half
of 2019, Oilex met with GSPC on many occasions seeking a commercial
settlement to forestall arbitration proceedings and as a pre-cursor
to restarting activities in the field. However, despite Oilex
submitting a number of proposals, no agreement could be reached. On
9 September 2019, Oilex announced that an agreement with GSPC had
been reached noting that the Indian government regulator DGH was
also a signatory to the agreement. Under this agreement, GSPC must
use its best endeavours to complete a sales of its 55% interest in
the Cambay PSC within 90 days, Oilex to lift the EoD and EoW, GSPC
is to discharge the SIAC arbitration proceedings, lift the stay
order and recover its funds lodged with the High Court. Both
parties are required to support the necessary actions to achieve
these outcomes.
Oilex has been in discussion with a number of Indian based
companies who have expressed interest in the Cambay PSC and its
potential.
Figure 2: Gas Pipeline Network to the Nation
Cambay Field, Onshore Gujarat, India
(Oilex - 45%, Operator)
Oilex is the Operator of the Cambay Field and holds a 45%
participating interest. The remaining 55% interest is held by Joint
Venture partner, Gujarat State Petroleum Corporation Limited
(GSPC).
Exploration and production in the region started in the late
1950s and early 1960s. Oilex's focus on the tight Eocene siltstone
reservoir is a step away from the conventional exploration and
production that has dominated the past history of activity in the
basin. This requires application of specific drilling and
stimulation technologies to test whether the reservoir will produce
at commercial rates.
Oilex has developed a work plan to drill 2 vertical wells to
test the EP-IV tight gas accumulation in a pilot programme
involving stimulation of the reservoir to determine flow rate
potential. A Field Development Plan (FDP) has been approved by the
government regulator. This was additionally submitted to the
Government as a requirement for the application to secure a 10 year
extension to the PSC beyond 2019.
The FDP encompasses a staged approach, initially focussing on
drilling of a small number of new wells to gather key information
on reservoir performance. It follows an in-depth review by Baker
Hughes GE aimed specifically to identify reasons for the limited
success of past drilling and stimulation, and to outline optimal
drilling and stimulation methodologies for future work programmes
to establish commercial gas production.
The evaluation provides a technical recommendation of the
optimal well and stimulation design required to achieve commercial
flow rates in the EP-IV reservoir. The results of the evaluation
confirm the potential for substantially increased flow rates with
the application of the appropriate stimulation technology
suite.
The Government of India was very prompt in providing approval to
both the FDP and the PSC extension application. The amended Cambay
contract, reflecting the new expiry date of September 2029, is now
pending finalisation by the Directorate General of
Hydrocarbons.
This initial pilot programme is, subject to securing the
necessary funding, and the intention is for a larger drilling
programme to follow, with the aim of aggregating sufficient
production volumes to connect to the high-pressure pipelines which
offer greater offtake stability and improved gas prices.
Any early production will utilise existing processing and
storage facilities upgraded as required to provide a low-cost path
to commercialisation. Further work on this work programme will
restart once the GPSC sales process is complete.
Figure 3: Cambay Field - recorded hydrocarbon flowrates from
EP-IV (Y Zone) reservoir
During the year, a small volume of gas was produced into the
local low pressure pipeline from the Eocene reservoir. During this
financial year, the C-77H well produced 25.22 mmscf and C-73
produced nil mmscf with total production from the block of 5,730
boe.
Cambay Contingent Resources
Resource volumes for the Eocene are unchanged since June 2016
and are summarised in the following table which shows Oilex net
working interest. The development plan submitted as part of the
application for extension of the PSC term addresses a sub-set of
these resources in a staged approach.
Unrisked Cambay Field Contingent Resource Estimates at June
2019
Net Gas Volume Net Condensate Volume
Bcf million bbl
------------------------ --------------------------
1C 2C 3C 1C 2C 3C
--------------------- ------- ------ ----- --------
X & Y Zones 215 417 728 12 27.4 54.6
----------------------- ------- ------- ------ ----- --------- --------
During the financial year, the Joint venture received US$560,438
gross from GSPC against outstanding cash calls for Cambay.
Bhandut Field, Onshore Gujarat, India
(Oilex - 40%, Operator)
Oilex N.L. Holdings (India) Limited is the Operator of the
Bhandut Field Production Sharing Contract (PSC) in the Cambay Basin
onshore Gujarat, India and holds a 40% participating interest. The
remaining 60% interest is held by Joint Venture partner Gujarat
State Petroleum Corporation Limited (GSPC).
The Bhandut Field was initially discovered and developed by ONGC
in 1976. The field is currently on care and maintenance, however,
with ongoing production and exploration potential, coupled with
existing production facilities.
In parallel with the Cambay PSC, a Field Development Plan in
support of the application for an extension of the PSC was
submitted in September 2017 and approved by the Government of India
in April 2018.
During 2019, GSPC ran a sales process for a number of its
projects in the Cambay Basin. This sales process included the
Bhandut PSC. The bid closing date was August 31 2019. Oilex is in
discussion with potential bidders and is planning to include its
participating interest and operatorship in the sale.
During the financial year, the Joint Venture received US$97,924
gross from GSPC against outstanding cash calls for Bhandut. At 30
June 2019, gross unpaid cash calls issued to GSPC totalled
US$79,980.
Figure 4: Bhandut Production Facility
JPDA 06-103, Timor Sea
(Oilex - 10%, Operator)
On 22 October 2018, the Autoridade Nacional de Petoleo e
Minerais (ANPM) issued arbitration proceedings against the Joint
Venture to recover the claim it imposed upon the Joint Venture
following the ANPM's termination of the PSC. Oilex has a 10%
participating interest and is acting as the Operator of the Joint
Venture in the arbitration proceedings. In August 2019, the Company
announced that it had submitted the Respondent's First Memorial to
the International Chamber of Commerce in Singapore. Furthermore,
following a substantive legal and independent expert review, the
joint venture has also lodged a US$23.3 million counterclaim
against the ANPM as damages from the wrongful termination. The
arbitration hearing is scheduled to commence in February 2020. Each
Joint Venture party remains jointly and severally liable and has
provided parent company guarantees. A notice of default has been
issued against both Videocon JPDA 06-103 Limited and GSPC (JPDA)
Limited for their failure to pay the joint venture cash calls.
West Kampar PSC, Central Sumatra, Indonesia
The Company was advised by the Indonesian Government regulator,
SKK Migas,that the West Kampar PSC had been terminated following
SPE's failure to meet its obligations under the PSC. The Company
continues to engage with the regulator with a view to returning its
interest in West Kampar.
Financial
Treasury policy
The funding requirements of the Group are reviewed on a regular
basis by the Group's Chief Financial Officer and reported to the
Board to ensure the Group is able to meet its financial obligations
as and when they fall due. Internal cash flow models are used to
review and to test investment decisions. Until sufficient operating
cash flows are generated from its operations, the Group remains
reliant on equity or debt funding, as well as assets divestiture or
farmouts to fund its expenditure commitments.
Formal control over the Group's activities is maintained through
a budget and cash flow monitoring process with annual budgets
considered in detail and monitored monthly by the Board and forming
the basis of the Company's financial management strategy.
Cash flows are tested under various scenarios to ensure that
expenditure commitments are able to be met under all reasonably
likely scenarios. Expenditures are also carefully monitored against
budget. The Company continues to actively develop funding options
in order that it can meet its expenditure commitments and its'
planned future discretionary expenditure. During the year several
capital raisings were completed to provide for working capital for
the company.
A number of debt and equity capital raisings were undertaken
during the year to provide working capital for the Company's
activities:
-- In the September 2018 quarter, the Company arranged an equity
capital raise resulting in the placement of 278,237,748 new
ordinary shares at an issue price of GBP0.0019 (A$0.0034) for gross
proceeds of GBP0.53m (A$0.96m);
-- In the December 2018 quarter the Company arranged an equity
capital raise resulting in the placement of 180,555,555 new
ordinary shares at an issue price of GBP0.0036 (A$0.0063) for gross
proceeds of GBP0.65 m (A$1.2m)
-- In July 2018, the Company entered into loan agreements with
existing investors raising $330,000 before costs with a one-year
term, 5% interest rate and 91,666,666 attached unlisted options
with an exercise price of $0.0036 and an expiry date of 26 July
2019. In July 2019, the Group entered into an amendment agreement
to vary the terms of its loan funding facility of $330,000 entered
into on 26 July 2018. Pursuant to the amendment, the loan repayment
date has been extended from 26 July 2019 to 1 October 2019.
-- In September 2018 the Company entered into another binding
loan agreement with existing investors to secure funding of
$315,000 at 5% interest rate with a term to 31 October 2019 plus
76,417,758 options over ordinary shares exercisable at $0.004121.
In November 2018, 15,772,871 options were exercised by the investor
with the proceeds of the related equity issue being used to repay
the related loans balance of $65,000.
Corporate
The Company has dual listing on the ASX and on the Alternative
Investment Market (AIM) of the London Stock Exchange with
approximately 80% of the Company's shares held on the Company's UK
register.
During the year 100,190,999 broker options were exercised at
WAEP GBP0.004.
As at 30 June 2019 the Company had:
-- Available cash resources of $357,970;
-- Borrowings at a carrying amount of $563,955 (face value:
$580,000). (Reference should also be made to Note 27 - Subsequent
Events for further information); and
-- Issued capital of 2,587,318,001 fully paid ordinary shares
and unlisted options of 161,220,442.
Executive and Board Changes
In September 2019, after year end the Board was very pleased to
announce the appointment of Mr Peter Schwarz as an Independent
Non-Executive Director.
A former director of BG Exploration and Production Limited and
CEO of independent exploration company Virgo Energy Ltd, Mr Schwarz
is a certified petroleum geologist and business development
professional with over 35 years' experience in the oil and gas
industry. Mr Schwarz has previously held various senior management
roles with Amerada Hess, BG, and Marubeni and is currently a
director of Finite Energy Limited, an oil and gas consultancy
business he founded over 10 years ago, specializing in strategy and
business development advice in the UK and Europe. Mr Schwarz holds
a B.Sc. in Geology and a M.Sc. in Petroleum Geology from the
University of London.
Risk Management
The full Board undertakes the function of the Audit and Risk
Committee and is responsible for the Group's internal financial
control system and the Company's risk management framework.
Management of business risk, particularly exploration, development
and operational risk is essential for success in the oil and gas
business. The Group manages risk through a formal risk
identification and risk management system.
Health, Safety, Security and Environment
Policy
Oilex is committed to protecting the health and safety of
everybody who plays a part in our operations or lives in the
communities where we operate. Wherever we operate, we will conduct
our business with respect and care for both the local and global,
natural and social environment and systematically manage risks to
drive sustainable business growth. We will strive to eliminate all
injuries, occupational illness, unsafe practises and incidents of
environmental harm from our activities. The safety and health of
our workforce and our environment stewardship are just as important
to our success as operational and financial performance and the
reputation of the Company.
Oilex respects the diversity of cultures and customs that it
encounters and endeavours to incorporate business practices that
accommodate such diversity and that have a beneficial impact
through our working involvement with local communities. We strive
to make our facilities safer and better places in which to work and
our attention to detail and focus on safety, environmental, health
and security issues will help to ensure high standards of
performance. We are committed to a process of continuous
improvement in all we do and to the adoption of international
industry standards and codes wherever practicable. Through
implementation of these principles, Oilex seeks to earn the
public's trust and to be recognised as a responsible corporate
citizen.
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 33 years' experience in petroleum
geology and is a member of the American Association of Petroleum
Geologists, and the Society of Petroleum Engineers. 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.
PERMIT SCHEDULE - 30 JUNE 2019
ASSET LOCATION ENTITY EQUITY OPERATOR
%
------------------ -------------------- -------- -------------------
Cambay Field Gujarat, India Oilex Ltd 30.0 Oilex Ltd
PSC (1)
------------------ -------------------
Oilex N.L.
Holdings (India)
Limited 15.0
-------------------------------------------------------- -------- -------------------
Bhandut Field Gujarat, India Oilex N.L. 40.0 Oilex N.L.
PSC Holdings (India) Holdings (India)
Limited Limited
------------------ -------------------- -------- -------------------
JPDA 06-103 Joint Petroleum Oilex (JPDA 10.0 Oilex (JPDA
PSC (2) Development 06-103) Ltd 06-103) Ltd
Area
Timor Leste
and Australia
------------------ -------------------- -------- -------------------
(1) On 29 July 2018, the Company issued a notice to exercise its
option to require GSPC to completely withdraw its 55% Participating
Interest in the Cambay PSC following GSPC's failure to completely
remedy the Event of Default issued on 29 May 2019. On 5 November
2018 the High Court of Gujarat issued a judgement to further delay
the implementation of the EOD subject to certain conditions being
fulfilled by GSPC. GSPC subsequently met the conditions and invoked
the JOA dispute resolutions in the Singapore International
Arbitration Centre. Discussions between the parties have resulted
in a settlement agreement co-signed by the Directorate General of
Hydrocarbons. The EoD has now been lifted and GSPC is commencing a
sale process to dispose of its 55% interest in the Cambay PSC.
(2) PSC terminated 15 July 2015.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCMBBFTMBIMMRL
(END) Dow Jones Newswires
October 01, 2019 03:21 ET (07:21 GMT)
Synergia Energy (LSE:SYN)
Historical Stock Chart
From Apr 2024 to May 2024
Synergia Energy (LSE:SYN)
Historical Stock Chart
From May 2023 to May 2024