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Significant Reserves Identified at Cambay Field India

SIGNIFICANT RESERVES IDENTIFIED AT CAMBAY FIELD, INDIA Summary Cambay Field Reserves and Contingent Resources significantly upgraded Successful completion of detailed technical studies to unlock potential of tight reservoirs using leadingedge North American shale gas industry technology Studies indicate a very good correlation between the Cambay Eocene reservoirs and the Eagle Ford and Haynesville tight/shale plays in the USA Drilling and production tests through the first half of 2011 Oilex Ltd (Oilex, OEX, AIM OEX) an oil gas exploration and production company listed on AIM and ASX, is pleased to announce a significant upgrade to its Reserves and Contingent Resources for the Cambay Field low permeability (tight) Eocene reservoirs in Gujarat, India. This follows a nine month program of extensive technical studies on the Cambay Field tight reservoirs using proprietary low permeability reservoir technologies derived from similar tight/shale gas projects in North America. The following summary of Reserves (net recoverable to Oilexs 45% interest, unaudited) is provided P90 248 billion cubic feet (BCF) of gas and 11 million barrels (MMbbls) of condensate P50 384 BCF of gas and 17 MMbbls of condensate P10 591 BCF of gas and 27 MMbbls of condensate In its evaluation of the reserves and resources the Company was advised by two North American companies NuTech Energy Alliance (NuTech) a leader in advanced petrophysical, geological and fracture stimulation solutions for tight and shale gas reservoirs, and Morning Star LLC (Morning Star), a worldwide petroleum consulting group with expertise in reserve certification of tight reservoir projects. The studies indicate a very good correlation between the Cambay Eocene reservoirs and the Eagle Ford and Haynesville reservoirs, two of the most prolific tight/shale gas plays in North America. The Cambay Eocene reservoirs that have been analysed display relatively good porosity for "tight reservoirs and with a gross thickness of 200 to 500 metres these zones are substantially thicker than most North American tight/shale reservoirs. The studies have modelled Estimated Ultimate Recoveries (EURs) of between 6 and 11 BCF gas with associated condensate per well. Forward Plan Oilex expects to submit data in October 2010 for independent reserves certification in early 2011. Oilex will, subject to Joint Venture and Indian Government approval, further evaluate the tight reservoir potential with drilling and production testing using modern, multistage fracture stimulation technology. These operations are expected to continue through the first half of 2011 as equipment and materials become available. Commentary Oilexs Managing Director, Dr Bruce McCarthy (exCairn Energy), who has been based in India to lead the tight reservoir project, said, The Company has renewed its focus on India and has made significant progress in unlocking the potential of the Cambay tight Eocene reservoirs that extend over the 40,000 acre contract area. Key to this success has been applying leadingedge North American tight/shale gas industry expertise and proven technology to the extensive database on the Cambay Eocene reservoirs which includes modern 3D seismic, wire line logs from 36 wells, drilling data, production and well test data and cores. Two years ago Oilex conducted well tests on the Eocene section that flowed hydrocarbons to surface from conventional vertical wells, a very encouraging result for tight reservoirs. Oilex now intends to apply horizontal drilling and multistage fracture stimulation technology to improve on the flow rates and confirm commerciality of the Eocene tight reservoirs. Reserve and Resource Estimates The following tables summarise the net (Oilex 45%) reserves and contingent resources for the Cambay Field tight Eocene reservoirs at 6 September 2010. These estimates have been prepared in accordance with generally accepted engineering and evaluation principles set forth by the Society of Petroleum Engineers (SPE) PRMS guidelines and are classified as Reserves Justified for Development and Contingent Resources Development Pending. The probabilistic unaudited estimates have been prepared by Oilex with advice from NuTech and Morning Star. It is the Companys view that the P90, P50 and P10 estimates prepared correspond to proved, proved plus probable, and proved plus probable plus possible reserves respectively under the ASX Listing Rules. The estimates have not been endorsed by the Government of India or the Directorate General of Hydrocarbons, India. Oilex will commission an independent reserves certification after completion of further technical studies, well designs and well locations, in October,2010. Oilex (45%) operates the Cambay Field Production Sharing Contract on behalf of its Joint Venture with Gujarat State Petroleum Corporation Ltd (55%, GSPC). GSPC is Indias most active State Governmentowned oil and gas company. It is a large vertically integrated energy company with assets across India and overseas. Further information can be found on the Companys website www.oilex.com.au including a background paper titled Potential of the Cambay Field Low Permeability Reservoirs. For further information, please contact Oilex Ltd 61 (0)8 9485 3200 (Western Australia) Bruce McCarthy Managing Director oilexoilex.com.au Ben Clube, Finance Director bclubeoillex.com.au Read Corporate Nicholas Read nicholasreadcorporate.com.au 61 (0)8 9388 1474 (Western Australia) Conduit PR 44 (0)20 7429 6610 (UK) Paul Youens paulconduitpr.com 44 (0)7843 260 623 (UK) Jonathan Charles jonathanconduitpr.com 44 (0)7791 892 509 (UK) RFC Corporate Finance Ltd Stuart Laing stuartlrfc.com.au 61 (0)8 9480 2506 (Western Australia) About Oilex Oilex Ltd is an AIM and ASXlisted (ASX and AIM OEX) oil gas exploration and production company based in Perth, Australia. The Companys main area of focus is in India where it operates three onshore production sharing contracts in Gujarat on behalf of Joint Ventures with Gujarat State Petroleum Corporation Ltd (GSPC). Of these, the Cambay Field licence has considerable oil and gas resources and Oilex intends to further evaluate and exploit these through proven North American shale gas technology, including horizontal drilling and fracture stimulation. Oilexs, Managing Director, Bruce McCarthy (exCairn Energy) is currently based in Gujarat to manage this project and the Companys other Indian interests. In addition to the Cambay Field, Oilex has interests including the exploration permits WA388P, NorthWest Shelf, offshore Australia that has large gas potential and JPDA 06103 in the Timor Sea. About Gujarat and the Indian Gas Market The Cambay Field is located in the heart of Gujarats industrial corridor. Gujarat is the "growth engine of India" one of the fastest growing and most industrialised states in India. During the period 20022007, average GDP growth rate in Gujarat was 10.4% per annum and average industrial growth rate was 12.3%. Gujarat is Indias largest producer of petroleum products and chemicals (respectively 58% and 53% of the national total) with the worlds third largest petroleum refinery located at Jamnagar. Gujarat has major industries in textiles, plastics, food processing salt and soda ash production. Its ports are a major gateway for Indias international trade and it has two LNG terminals located in the Gulf of Cambay. (source GIDB international road show presentation). Gas demand in India is rising fast with increasing gas fired power generation capacity. Total gas consumption in India is expected to grow from 1.7 TCF per annum in 2009 to more than 3.1 TCF per annum in 2014 with forecast gas use in power generation is expected to grow from 0.8 TCF per annum to around 1.4 TCF per annum over the same period. Gas imports are forecast to increase to around 1.6 TCF pre annum by 2019, largely in the form of LNG, as demand outstrips the pace of domestic supply. (source Business Monitor International India Oil and Gas Report Q2 2010)