Beaufort Securities

This is off the Interactive Investor Site ;

Beaufort Securities


Oilex (OEX.L, 9.62p) - Hold

"Yesterday, Oilex provided an update on the flow-back operations at the Cambay-77H well. The well continued to produce crude oil and frac water, and ~55% of the water used to stimulate the well has been recovered so far. Most of the recovered light crude oil was transported to a nearby refinery for sale, while gas produced alongside was flared for safety purposes. These recoveries are likely to extend the time required to clean the well, before beginning any production testing. Additionally, analysis of the oil, gas and water samples would assist in determining the fluid properties. During the slow-back operations, the well had to be shut down for certain operational improvements. Oilex would inform about the stabilized flow rates through a production test to be conducted later.

Our view: The ongoing light crude oil recovery from flow-back operations is indicative of the Cambay-77H well’s potential. Oilex is rapidly progressing towards commencement of production testing at the well. Additionally, endorsement received from the Government of India authorities for the sale of gas from the Cambay field provides further upside to Oilex. However, unexpected shut-downs at the well have resulted in extending the flow-back operation timeline. In light of mixed signals, we prefer to wait and watch the performance of the company in the near term and hence, retain a Hold rating. "

As stated previously, I see the SP drifting until a more specific update is forthcoming.

GLTAH