At current prices Oilex (ASX:OEX, LON:OEX) presents more than...

At current prices Oilex (ASX:OEX, LON:OEX) presents more than 100% upside for investors, according to City broker Westhouse Securities.

Westhouse analyst Mark Henderson has today begun covering the India focussed gas play with a ‘buy’ recommendation and a 7.4p price target (current price 3.5p).

The analyst says that following the ‘proof of concept’ success at the Cambay field he now expects Oilex will soon start to deliver substantial volume and cashflow growth over the next five to six years.

Henderson predicts Oilex can grow gross production from a standing start to nearly 60,000 barrels oil equivalent during that timeframe.

“Oilex is on the cusp of delivering exceptional production growth from its Cambay basin assets in Gujarat State, as it applies the learnings gained in the development of tight gas formations in North America to its assets in India,” he said in a note.

The analyst also highlights the favourable economics within India’s under-supplied and heavily industrial Gujarat state.

He describes Gujarat as “one of the most industrialised regions in India” and as such he points out that there are many gas-hungry power generation companies and industrial customers nearby.

A recent reserves report revealed the Cambay project had some 43.5mln barrels of oil equivalent reserves, as well as about 177mln barrels of oil equivalent contingent resources.

Henderson says Oilex can progressively deliver value to investors by de-risking and commercialising these resources.

“In order to deliver the significant potential upside in shareholder value, Oilex management must repeat the success of the Cambay-77H well across the Cambay field,” he added.