Oilex Ltd (ASX: OEX, AIM: OEX) is pleased to announce the preliminary results of the flowback and production testing of Cambay-77H.  All proof-of-concept objectives have been achieved and the commercial development of Cambay Field using multi-stage frac technology is feasible.

Summary
• Cambay-77H was designed as a Proof-of-Concept well with a short 350m lateral
• Initial production over a 24 hour period of 2.03MMscfe/d, 55% hydrocarbon liquids
• An oil to gas ratio ("OGR") of ~100 bbls per MMscf of gas in the Cambay-77H area remains valid - some 250% higher than extrapolated from Cambay-73
• Increased OGR adds ~40% revenue per MMscf of produced gas using price assumptions of US$8.00/Mscf and US$70/bbl for gas and oil respectively
• Total production during flowback and testing - 62.3MMscfe
• Total operations water recovered - 23,732 bbls (88%) - no formation water has been identified during flowback and testing

Managing Director of Oilex, Ron Miller, said; 
"Oilex is very pleased with the results of Cambay-77H flowback and test.  With all the proof-of-concept objectives having been achieved, a significant milestone has been reached towards creating a profitable and sustainable business.  It is also a first step for India, towards improving its domestic petroleum supply by using multiple fracture treatments in horizontal wells that have transformed the energy equation in North America.  Oilex is proud of its first mover position, competitive advantage and achievement in initiating development of tight oil and gas using this technology in India." 

Results
The key field results from Cambay-77H flowback and production testing are encouraging.  The sustained initial 24 hour rate during flowback was 2.03MMscfe/d, comprising 55% light oil/condensate with concurrent operations water production of 1,867bbls/d.  Flowing wellhead pressure was 1,261 psig. Rates are presented in energy equivalents converted at 5,800 scf of gas per bbl of oil because the well was originally designed as a gas and condensate producer.

Total hydrocarbon production was 43MMscf of gas and 3,372bbls of light oil/condensate (sold to a local refinery), giving an energy equivalent figure of 62.3MMscfe.  The maximum liquid hydrocarbon to gas ratio was 349bbls/MMscf with an average of 77bbls/MMscf, likely governed by the well bore tubular size impacting the flow regime.

A total of 27,631bbls of operations water (frac water and coil tubing operations water) was used with 23,732bbls, or 88% recovered.  The maximum recovery rate was 3,101 bwpd and no formation water was identified during flowback and testing.

Use of data
Oilex has the first, and currently the only model to be successfully calibrated using actual production and compositional data from a multistage frac'd horizontal well in the Cambay Basin.

The flowback and production test data has been used to analyse the performance of Cambay-77H, refine the calibration of the production model used to assess Y zone deliverability, predict ongoing recovery of oil and gas from Cambay-77H, review preliminary well designs and generate forecast "type curves" for the next drilling campaign.

The results clearly indicate recovery of significant volumes of oil and gas can readily be achieved.  Importantly, Cambay-77H and the model confirm that the tight Eocene formation in the Cambay Field is amenable to this form of fracture treatment, leading to the conclusion that the Y zone can be commercially developed with this technology.

All proof-of-concept activities have been successfully completed and the objectives achieved.  A full data package for Cambay-77H is being compiled and combined with other Cambay Field production data for an independent reserves and resource assessment update.  This update may result in conversion of some current Contingent Resources to Reserves and the results will be disclosed to the market at that time.

Additional information is contained in the Explanatory Note appended to this announcement.