The proof of concept well on the Cambay tight gas field is expected to be productive and revenue generating.
AIM quoted Oilex (ASX:OEX, LON:OEX), the well’s operator, saw shares nudge higher Friday as it revealed the Cambay 77-H well programme is now almost complete and it has achieved many proof of concept objectives
Progress may have been a little slower than some investors had anticipated.
But it seems India focused Oilex is steadily de-risking the Cambay field in the country’s Gujarat region.
It is understood that Oilex intends to drill more wells in the future which will further refine drilling, fracking and completion processes.
More discernible analysis will follow an extended well test, due to start in few weeks, but based on findings thus far Oilex expects rates between 500,000 and 1mln cubic feet of gas per day.
Managing director Ron Miller says Oilex’s achievements can be compared favourably to other successful companies, in other parts of the world, which have been early entrants into new tight or unconventional gas and oil plays.
“Delivering Cambay-77H with its proof of concept objectives is now almost complete,” he said in a statement.
“Upon completion of these objectives, Oilex will continue to focus on commercialising the Cambay Field and generating sustainable cash flow and profits for shareholders."
Objectives completed to date show that the 77-H drilling operations could be repeatable though analysis suggests future wells could use fewer fracks and those fracks could be spaced out more.
In Cambay 77-H the fracks are interpreted to extend some 60 metres into the reservoir, which is deemed to be sufficient for commercial production in wells with longer laterals.
Oilex also told investors the 77-H proved that a ‘plug and perf’ completion methodology is achievable and repeatable, and that flow-back activities can be executed successfully.
About 79% of ‘operations water’ has now been recovered and Oilex no formation water has been observed, and this confirms its geological thesis.
It added that 100 barrels of hydrocarbon liquids have been produced for every 1mln cubic feet of gas. This result is about 250% prior expectations and if sustained it will boost the revenues from the well.
Oil and gas recovery started on the first day of flow-back and the hydrocarbons can be sold, the company highlights that early cash flows and faster well payback is possible as a result.
