I’ve taken a speculative punt on Oilex LON:OEX who recently announced that they had completed a farm out of up to 15% of its interest in the Cambay Project PSC for up to $6m to Magna Energy Limited. Add this to an oversubscribed placing raising $3.4m, OEX are funded up for upcoming appraisal activities.
Oilex hold a 30% interest in the Cambay PSC contract area onshore Gujarat, India with 495bcf gas/83mmbbl oil 2C contingent resources (149 BCF of gas/25mmbbl oil net to OEX post the Magna Energy Limited farm out).
With a rig en route, Oilex is looking to drill a proof of concept appraisal well Cambay-77H in Q1 2014 and are targeting a successful production flow test in early 2014.
In addition to the near term share price catalyst onshore India, Oilex has also managed to secure two exploration permits in the Canning Basin, a very attractive Australian shale play, which the company will look for JV partners to exploit.
For me this is a fair high risk v high reward punt at this level in a cashed up O&G outfit. A successful production test will unlock the significant resource potential and enable full field development of the Cambay field.
DJ Carmichael - Speculative Buy
Explorers Note: Leveraged to Growing Energy DemandOilex Ltd (OEX) is a diversified oil and gas explorer focused on tight gas exploration in India (Cambay Basin) and unconventional exploration in Australia (Canning Basin). We believe OEX is at the early stage of a turnaround and offers investors near term exposure to an emerging tight gas play which could delineate a material resource in the lucrative energy market of India. Furthermore, OEX’s recent entry into the Canning Basin, Western Australia, which is considered one of the most promising emerging shale plays in the country, provides OEX with an attractive balance of near term production and blue-sky exploration diversified across two countries. We therefore believe OEX is an attractive Speculative Buy.
D J Carmichael, a paid for Analyst report:
