OILEX : Cambay-77H - Delivering the proof of concept objectives

                   Cambay-77H - Delivering the proof of concept objectives

• Efficient drilling operations demonstrating the repeatability of targeting the Y zone
• Y zone reservoir properties are laterally consistent, having variability within expectations 
• Successful completion of 8 fracture treatments
• Successfully demonstrated "Plug and Perf" completion technique in India
• First horizontal well in the Cambay Basin with multiple fracture treatments to achieve  flowback 
• Flowback data used to calibrate horizontal well model for the first time
• Future well designs may have wider frac spacing, leading to significant cost savings

Oilex Ltd (ASX: OEX, AIM: OEX) is pleased to announce significant progress in achieving the proof of concept objectives for Cambay-77H.  These objectives are critical to demonstrating the Cambay Field can be commercially developed using multi-stage fracture treatments (fracs) in horizontal wells.  Cambay-77H has a very short lateral section of 350m with 8 fracs that were successfully completed in 4 stages. 

The key objectives achieved include: 
• Efficient drilling operations that demonstrated repeatability by successfully  intersecting the Y zone at the predicted depth, while steering around other existing wells
• Well logs confirm the Y zone is hydrocarbon bearing
• Provides confidence that the Y zone reservoir properties are laterally consistent, and any variability is within expectation
• Successfully perforated, isolated and treated 8 fractures in 4 stages
• All fracs interpreted to extend ~ 60m into the reservoir from the well bore which is interpreted to be sufficient for commercial production in longer laterals
• "Plug and Perf" completion method is achievable and repeatable in India
• Flowback activities, including recovery of Operations water from this type of well can   be successfully executed in the Cambay Field

Other key outcomes that influence the future commercialisation of Cambay Field are:
• The hydrocarbon liquid to gas ratio (LGR) during flowback has been ~100 bbls of  liquids per MMscfd of gas.  This ratio is 250% higher than expected which if   sustained, leads to a much higher unit revenue stream in barrels of oil equivalent (Boe).
• Oil and gas recovery started on the first day of flowback and gas sales during   flowback operations in future wells is possible as the gas market is readily available. This leads to early cash flow and faster payback of well costs.
• Well modelling calibrated to flowback production over ~ 85 days indicates that frac  spacing in future wells with longer laterals can be increased.  Fewer fracs per unit length can lead to significant cost savings.
• Cambay-77H sustained production rate of 0.5 - 1.0MMscfd has been predicted using  the well model calibrated to flowback production and is up to 185% greater than  Cambay-73, which has a single frac in a vertical well.  Cambay-73 was flowing  0.35MMscfd when shut in during June 2012 and will be returned to production subsequent to the installation and commissioning of facilities.
• The recovery of Operations water is >79% and therefore at the high end of expectation and North American experience.  No formation water has been recovered to date which continues to confirm the thesis that no direct oil water contact (OWC) is accessible within the Y zone.
• As Cambay-77H is on "self-flow" with no artificial lift, a significant proportion of reservoir energy within the drainage area of the well has been used to recover large volumes of Operations water.  This means less reservoir energy is available to produce oil and gas during the flowback period.
• Future wells with longer laterals and wider fracture spacing will have larger drainage areas and access more reservoir energy.  Proportionately less energy should be needed to recover Operations water, resulting in higher gas and oil production rates.

Managing Director of Oilex, Ron Miller, said;
"Oilex's first mover strategy compares favourably to other successful companies that have been early entrants into newly identified tight/unconventional gas and oil plays. Delivering Cambay-77H with its proof of concept objectives is now almost complete. Upon completion of these objectives, Oilex will continue to focus on commercialising the Cambay Field and generating sustainable cash flow and profits for shareholders."

To view the entire announcement, please click on the link below:

Cambay 77H proof of concept