22/11/2010 - 10:31

Apache and Oilex sign farm-in deal

22/11/2010 - 10:31

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West Perth-based Oilex has entered into a farm in agreement with Apache Northwest to allow Apache to take a 40 per cent stake in the WA-388-P gas permit in the North West Shelf.

Apache and Oilex sign farm-in deal

West Perth-based Oilex has entered into a farm in agreement with Apache Northwest to allow Apache to take a 40 per cent stake in the WA-388-P gas permit in the North West Shelf.

In a statement to the Australian Securities Exchange, Oilex said that Apache will obtain the stake by paying 100 per cent of the first exploration costs as well as 100 per cent of the well test costs.

Apache will replace Oilex as the permit operator.

Oilex interest in the permit will fall from 14 per cent to 8.4 per cent following the farm-in agreement.

Other joint venture partners will have their stake in the permit diluted as well.

Sasol Petroleum's interest will fall from 30 per cent to 18 per cent.

Videocon Industries, Gujarat State Petroleum Corporation, Bharat PetroResources, and Hindustan Petroleum's interest will fall from 14 per cent to 8.4 per cent.

The WA-388-P permit contains seven prospects ranging in potential size from 0.3 to 2.8 trillion cubic feet of prospective gas resource.

"The Company is pleased to have Apache farm into the WA-388-P permit given its extensive experience in the Intra Mungaroo channel play in its operated acreage immediately south of WA-388-P through its recent Julimar and Brunello discoveries," said Oilex managing director Bruce McCarthy.

"Apache also has provided the Joint Venture with a unique opportunity to access a ring to undertake early drilling," he said.

 

See statement from Oilex below:

Oilex Ltd ("Oilex" ASX: OEX, AIM: OEX) is pleased to announce that the WA-388-P Joint Venture has entered into a farm in agreement with Apache Northwest Pty Ltd ("Apache"). The WA-388-P permit is located north of the Pluto, Wheatstone, Gorgon & North West Shelf fields, offshore Western Australia.

The WA-388-P permit contains a portfolio of play types and seven prospects have been identified ranging in potential size from 0.3 to 2.8 trillion cubic feet (TCF) of prospective gas resource (recoverable best estimate, 100% basis). Seismic amplitude anomalies evident in the 3D seismic data are likely Direct Hydrocarbon Indicators, suggesting the presence of gas by analogy with nearby fields and discoveries.

Apache will obtain a 40% interest in the WA-388-P permit by paying:
100% of the first exploration well (up to an agreed cap); and
100% of the well test costs (up to an agreed cap) if the Joint Venture approves testing the well.

Apache will replace Oilex as the permit operator. Apache has contracted the Stena Clyde drilling rig to drill the first exploration well. The well will target a prospect in the Intra Mungaroo channel zone and is expected to spud in early 2011.

The farm in agreement is conditional on obtaining Government approvals and GSPC Board approval.
Commentary
Oilex's Managing Director, Dr Bruce McCarthy said, "The Company is pleased to have Apache farm into the WA-388-P permit given its extensive experience in the Intra Mungaroo channel play in its operated acreage immediately south of WA-338-P through its recent Julimar and Brunello discoveries. In addition to funding a well, Apache also has provided the Joint Venture with a unique opportunity to access a rig to undertake early drilling.

This farm in agreement will allow Oilex to retain exposure to the WA-388-P permit's high impact exploration potential, while also preserving cash for our work programme in India and the development of our core asset, the Cambay Low Permeability Eocene reservoirs in Gujarat."

Further information on Oilex can be found on the Company's website www.oilex.com.au including a background paper titled "Potential of the Cambay Field Low Permeability Reservoirs".

 

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