Not long ago, Oilex was purely an onshore Queensland explorer.
Today it holds offshore exploration interests in Australia, as well as others in India, Oman and East Timor, all in joint venture with major Indian companies.
Oilex’s remoulding was prompted by the sudden resignation of managing director David Archibald in early February 2005, after a much-hyped onshore Queensland field, Rookwood, failed to meet expectations.
Later that month, Oilex appointed McCarthy, a former Cairn Energy India president, as its new managing director.
McCarthy had a strong track record on the subcontinent, a good contacts book and a clear vision of how Oilex could grow by partnering with energy-hungry Indian majors.
Under McCarthy, Oilex started to build its international profile by entering into an agreement with Gujarat State Petroleum and Niko Resources, to acquire a 30% participating interest in the Cambay field in Gujarat, India.
It subsequently increased that interest to 45% and acquired 40% stakes in two other small Gujarat fields, Bhandut and Sabarmati.
That base and more with strong joint ventures with various major Indian companies on their first international ventures have given Oilex a strong portfolio of assets that will see intensive activity over the next three years.
According to McCarthy, the company’s portfolio strikes a good balance between field redevelopment projects and frontier exploration, giving a mix of risk and reward.
“Our main focus at the moment is certainly on India, primarily on the Cambay field redevelopment project and two other smaller fields called Bhandut and Sabarmati,”
The field redevelopment projects in India are intended to establish cash flow to help fund future exploration.
“Between them, we think there is significant potential to generate production revenues within the next six months,” he said.
All three of Oilex’s Indian fields are in the Cambay Basin, western India’s most-prolific onshore producing basin, and are close to an extensive pipeline network and the country’s main heavy industrial region.
Although the fields are old, they have produced relatively small volumes of hydrocarbons and continue to produce oil intermittently despite problems with sand and water incursion.
Oilex’s Bhandut field is near other fields that are producing gas and oil from reservoir intervals similar to those that have been intersected in the Bhandut well.
The well has produced more than 700,000 barrels of oil since 1993 and Oilex believes there is an excellent chance of improving the current production rate of about 40 barrels per day using modern technology and good 3D seismic.
A survey over Bhandut was completed in February and planning is underway for detailed seismic later this year over Sabarmati where oil has been produced intermittently at low rates since the field’s discovery in 1984.
Oilex plans to work over Sabarmati’s only well by installing a pump and is expecting a significant increase in the average daily production rate that will provide the basis for an extensive field development program.
The Cambay field is the largest of the company’s three Indian fields, with the contract area covering 160 square kilometres.
These projects have low geological risk; the question is whether engineering will be able to recover the oil.
But the flow rates achieved from the first test in the Cambay-72 well have been very encouraging.
“There are some good reservoirs in the Cambay Basin generally, which we are yet to test in Cambay field,” McCarthy said.
He said Oilex was planning to drill six to eight Cambay wells this year to test several objectives and this would help quantify the potential of the Cambay field’s reservoirs at different stratigraphic levels.
“We acquired a new, high quality, 3D seismic survey late last year that has given us tremendous insight into potential reservoir distribution at different levels in the field area,” he said.
“We’ve mapped 10 horizons and are integrating production test and wireline log data from old wells with those maps.
“We’re still in the relatively early stages of collecting good quality data but the results to date are very exciting.”
Before the acquisition of the 3D seismic survey, two wells were drilled on the western high area of the Cambay field.
The purpose of drilling early was to confirm the correlations to old wells drilled between 1957 and 1985, with different and variable vintages of log data.
The first of these wells was tested in February and a second test is anticipated in March.
“The results of the first test were encouraging,” McCarthy said.
“An over-pressured interval in one of the secondary targets flowed oil at rates up to 70bpd per day after fracture stimulation and we’re keen to test a shallower potential oil-bearing sandstone unit that appears to have better reservoir characteristics.”
According to McCarthy, while the Gujarat fields offer low risk appraisal, development and near-field opportunities, Oilex’s other assets are very much oriented to exploration.
With the Indian monsoon season now building, towards the end of this month Oilex will shut down its Gujarat drilling until October and shift its focus to Oman.
Block 56 in onshore southern Oman is on the eastern flank of the South Oman Salt Basin, one of the country’s major producing regions.
Last year, the block was awarded to a consortium headed by Oilex, which has a 25% interest as operator.
The company is confident of drilling wells later this year on two or three prospects in the block’s western portion that have been generated from reprocessed 2D and 3D seismic.
The four wells drilled to date on the block have all had oil shows, and in the western area, the density of the seismic coverage is good.
“We’re reprocessing the data right now and we will have probably seven to eight well locations, from which we will choose two or three to drill in the first phase,” McCarthy said.
Oilex will also acquire seismic on its block in then the Joint Petroleum Development Area between East Timor and Australia in preparation for drilling in second half of 2008.
In Australia, it has two high impact offshore blocks.
In the South Australian Otway Basin, the company is working towards drilling a well in the first quarter of next year, depending on the availability of a suitable drilling rig.
Offshore Western Australia, it won a block located north of the Goodwyn/North Rankin gas fields and to the northeast of the Jansz-Io gas discoveries in the Exmouth Sub-basin and the company expects that seismic acquisition will begin in 2008.
“We have steady flow of exploration work in all of our permits and if the Cambay field drilling is successful, we will enter into a much more intensive development program next year once we have all of the approvals in place,” McCarthy said.