Oilex (ASX:OEX, LON:OEX) has received endorsement from the Indian authorities for the sale of gas from the Cambay field.
The endorsement from the relevant government of India authorities relates specifically to the Cambay-73 well, and is a critical milestone for increasing production from the field and supplying gas to the local market, Oilex said.
Returning Cambay-73 to production will also facilitate the collection of key data to further assess the reservoir deliverability of the same reservoir intersected by the Cambay-77H well.
Now that endorsement of the gas sales agreement has been received, the Cambay joint venture will proceed to establish the appropriate production facilities for Cambay-73 and initially connect the production to a low pressure pipeline grid servicing the local area.
The associated condensate will be stripped out and sold into the established markets that currently receive the Cambay crude oil. Having an endorsed contract removes part of the contingency in the assessment of recoverable quantities of gas as reserves, Oilex explained.
“As soon as the gas composition from Cambay-77H is confirmed to be similar to Cambay-73, Oilex will be in a strong position to add to our production from Cambay Field. Importantly, Cambay-73 and Cambay-77H will also provide significant deliverability data for the Y zone which can be used in upgrading a portion of the independently certified contingent resources into reserves,” said Ron Miller, managing director of Oilex.
“This reassessment will enable Oilex to consider delivery of pipeline quality gas to the high pressure grid located approximately 7 km from this region the field," Miller added.
The contracted price is being kept confidential for commercial reasons, and was determined by a competitive bidding process.
In a separate announcement, Oilex revealed it has drawn down £1.17mln (A$2.13mln) in funds from its equity financing facility with Darwin Strategic; this will result in the issue of 18.6mln shares to Darwin at 6.3p per share.
