Oilex (ASX:OEX, LON:OEX) revealed the economics of its Cambay Field in India were ‘robust’ even at today’s depressed prices for hydrocarbons.
The premium market for gas in India supports the potential of the wells, while better than expected oil recoveries provides a further kicker.
Oilex modelled three scenarios – two wells of a 700 metre lateral length with nine fracks; one producing just gas, the other oil and gas. It also assessed the potential of a 1,400 metre lateral well with 18 fracks.
Wells one and two were assumed to recover 531,000 and 680,000 barrels of oil equivalent respectively over a ten-year period, providing payback on the initial investment of 48 and 22 months.
The 1,400 metre lateral well would repay the initial investment in just a year. The net present value of a barrel of oil under the different scenarios ranges from US$1 to US$20.
The calculations were made assuming an oil and gas prices of US$70 a barrel and US$8 per thousand cubic feet.
Managing director Ron Miller told investors: "The robust indicative economics of the Cambay Field remain, despite the sharp decline in oil prices.
“The fall in the oil price does impact the total revenue generated by the Cambay field, but this is more than offset by the 250% increase in the oil gas ratio.
“The premium gas market in India also means that the Cambay Field is economic even when we exclude oil revenues from our modelling."
