Treasure Chest | Feb 12 2014
By Greg Peel
Oilex ((OEX)) plans to spud the high impact Cambay-77H well between 22 February and 9 March. The aim of the Cambay-77H will be to provide proof of concept and commerciality of the Cambay project in the Indian state of Gujurat. Stockbroker DJ Carmichael believes the drilling of the Cambay-77H well will be a material catalyst for Oilex.
In a success case, Cambay-77H could materially re-rate the company by delivering near term production and converting some 30% of Oilex’s current 2C resources into reserves, the broker suggests. DJC’s estimated value upside on a commercial flow-rate for the well is in the order of 15 cents per share. (Last trade 9c).
Oilex has now received the balance of US$3.8m from India’s Magna Energy for the sale of a 10% participating interest in the Cambay Production Sharing Contract, and Magna has exercised its option over a further 5% to the value of US$2m. Oilex retains a 30% interest.
The additional US$2m will bring to US$9.2m Oilex’ cash balance. The current gross cost estimate for the Cambay-77H is US$12.8m, implying US$5.8m for Oilex’ share. Oilex has also secured a 7.5m pound equity financing facility with Darwin Strategic Ltd, the broker notes, providing contingency for potential cost overruns.
DJ Carmichael has a Speculative Buy (High Risk) rating on the stock.
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