Oilex Ltd Annual Report - Chairmans Review (2948O)

TIDMOEX

RNS Number : 2948O

Oilex Ltd

01 October 2019

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Contents

Chairman's Review..................................................................................................................................................................... 2

Business Review........................................................................................................................................................................ 4

Permit Schedule........................................................................................................................................................................ 11

Directors' Report....................................................................................................................................................................... 13

Remuneration Report - Audited................................................................................................................................................. 22

Lead Auditor's Independence Declaration ................................................................................................................................ 30

Consolidated Statement of Profit or Loss and Other Comprehensive Income............................................................................. 31

Consolidated Statement of Financial Position............................................................................................................................. 32

Consolidated Statement of Changes in Equity............................................................................................................................ 33

Consolidated Statement of Cash Flows...................................................................................................................................... 34

Notes to the Consolidated Financial Statements......................................................................................................................... 35

Directors' Declaration................................................................................................................................................................ 73

Independent Audit Report......................................................................................................................................................... 74

Shareholder Information............................................................................................................................................................ 79

Definitions.................................................................................................................................................................................. 81

Corporate Information............................................................................................................................................................... 82

Dear Shareholder,

The 2018 financial year was a year of both challenges and delivery. The 2019 financial year has been similarly challenging. There are two words that best summarize this past financial year - resolve and resolution. For the better part of the financial year the Company has been locked in an effort to manage the continuing failure of our joint venture partner - Gujarat State Petroleum Corporation Limited (GSPC) - to meet its obligations under the Cambay Production Sharing Contract (Cambay PSC) in Gujarat State in India. This ongoing failure ultimately led the Company to declare GSPC to be in default under the Cambay Joint Operating Agreement (JOA) in May 2018.

The Company's resolve reflects the significant undeveloped multi TCF gas resource within the Cambay PSC- the Cambay Tight Gas Project - that requires further investment and appraisal work to ultimately demonstrate the project's commerciality. In terms of delivery, although the Ministry of Petroleum and Natural Gas approved a ten-year extension of the Cambay PSC in April 2018, during the past financial year, the Company has been firmly of the position that until such time as the disputes under the Cambay PSC with GSPC were resolved and the events of default were remedied in some form or fashion that no additional investment or any appraisal work could be undertaken. This continuing circumstance has been the ultimate test of the Company's conviction in the commercial potential of the Cambay Tight Gas Project and a test of the Company's resolve to (1) firstly, deliver a positive outcome for shareholders and (2) secondly, secure additional projects that the Company could build its future around based on its depth of technical and commercial experience built to deliver the Cambay Tight Gas Project. I can report that the resolve to deliver these outcomes for shareholders has delivered resolution on both fronts.

In the first instance, the Company believes it has now secured a pathway to the ultimate resolution of the long-running dispute with GSPC in the Cambay PSC which will allow the appraisal of the Cambay Tight Gas Project to progress. On 9 September 2019, the Company announced that it had entered into an agreement with GSPC and the Director General of Hydrocarbons pursuant to which GSPC would conduct a formal sale process to sell their interest in the Cambay PSC and thereby exit the joint venture allowing a new committed partner, once identified, to enter the project and for the project to thus proceed. Under this agreement, GSPC is committed to complete this sale process within 90-days of the agreement therefor allowing the Company to begin planning to commence work on the project in the coming calendar year.

Delivering this resolution enables the Company to get back to the tools and start not only the planning but the actual appraisal drilling, completion and stimulation program that the technical studies undertaken with Schlumberger, Baker Hughes GE and Oilfield Data Services Inc. outlined as the next stage of work programs to prove the commerciality of the Cambay Tight Gas Project.

With respect to securing additional growth projects that deliver value for shareholders, the Company has also delivered. After exhaustive consideration of many alternatives, the Company selected two very specific areas to focus on based on the Company's technical and commercial knowledge, expertise and experience that could deliver significant value recognition from the Company's existing shareholder-base and attract significant interest from existing and prospective new shareholders. These two focus areas are two recognized 'Super Basins' that are very much open for business to junior oil and gas companies with highly supportive regulators, have a wealth of existing, high quality open file data and present multiple low cost entry opportunities in terms of production, development and exploration positions - the Australian Cooper Basin and the UK Offshore Continental Shelf. The Company has delivered in both focus areas.

In the Cooper Basin, the Company has secured 100% working interest and operatorship of prime acreage positions in the proven Western Flank Oil Fairway and the Northern Oil and Wet Gas Fairway covering approximately 4,700 km2 (1.1 million acres) with significant existing 3D seismic coverage, a significant undeveloped tight discovery with 3C contingent resources of over 1 TCF and deep portfolio of appraisal and exploration leads and prospects. Similarly, in the UK Offshore, the Company has secured in the prolific East Irish Sea the exclusive rights to acquire participation of up to 50% participating interest in three undeveloped gas discoveries immediately adjacent to the North Morecombe Gas Production Platform and Gas Terminal and subsea gathering pipeline - two of which have been drill stem tested and flowed at 12.3 and 22 MMSCFD of low CO(2) raw gas. Both the positions in the Cooper Basin and the UK offshore Continental Shelf-East Irish Sea are important new platforms for the Company to deliver growth and value for shareholders that are both real and tangible.

Coming from the Company's resolve, there has been delivery of the expected resolution of the issues that have prevented the appraisal and with success the development of the Cambay Tight Gas Project and delivery of two new platforms for growth and delivery of value for shareholders. We expect that the coming year will see delivery of much activity in each of these areas that will yield significant results. It is our objective to align these three platforms for growth in such a way as the maximize their ability to deliver value across the Company's diverse shareholder base that will maximize the value recognized by shareholders.

Finally, on behalf of the Board, I wish to thank our staff, contractors, local communities, shareholders and stakeholders for their ongoing support.

Mr B Lingo

Chairman

30 September 2019

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October 01, 2019 03:20 ET (07:20 GMT)