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ANNUAL REPORT 2021 |
O I L E X LT D |
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O I L E X LT D |
ANNUAL REPORT 2021 |
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Contents
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Chairman's Review |
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Business Review |
04 |
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Permit Schedule |
09 |
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Directors' Report |
10 |
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Remuneration Report - Audited |
18 |
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Auditor's Independence Declaration |
28 |
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Consolidated Statement of Profit or Loss and Other |
30 |
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Comprehensive Income |
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Consolidated Statement of Financial Position |
31 |
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Consolidated Statement of Changes in Equity |
32 |
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Consolidated Statement of Cash Flows |
33 |
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Notes to the Consolidated Financial Statements |
34 |
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Directors' Declaration |
76 |
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Independent Auditor's Report |
77 |
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Additional Shareholder Information |
82 |
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Definitions |
84 |
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Corporate Information |
86 |
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ANNUAL REPORT 2021 |
O I L E X LT D |
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Chairman's Review
Dear Shareholder,
The recovery of the oil price from a low of around $20 in April 2020 to a current price of over $70 and a bullish demand outlook reflects the ongoing recovery of a global economy dramatically affected by both the COVID-19 pandemic and the changing energy environment driven by the need to attain net-zero carbon emissions. Your company has adopted a strategy focused on gas, the cleanest hydrocarbon, rather than oil and aimed particularly at gas production, gas storage and sequestration of carbon dioxide. All three have commonalities in that they involve sub-surface reservoirs and engineering processes well understood and developed within the hydrocarbon industry and well within the capabilities of the Oilex team, which has been further strengthened by senior management appointments this year.
Our revised strategy, announced in June this year, will focus on making long-awaited progress in our existing Cambay asset in India and further developing an asset base in the UK. Both project areas will focus on gas production.
The joint venture impasse in the Cambay project is finally being resolved through the Company's purchase of GSPC's 55% equity in the project. The transfer of the equity to Oilex only requires the final approval of the Government of India, which is expected within the coming months. This resolution has occurred because of the dedication of the Oilex staff through challenging times.
Following an unsuccessful request to the UK Oil and Gas Authority to extend the initial term of the P2446 exploration licence, the Company has decided to relinquish the licence. The extension was requested due to COVID-19 related delays in completing the initial phase work programme. The remaining technical uncertainties and the Company's new strategy to focus on mature gas field acquisitions and carbon capture and storage (CCS) opportunities were the main drivers behind the Company's decision.
Oilex is now poised to enter a new phase of growth involving the search for and addition of attractive new projects. To that end, the Oilex Board has made significant changes to the management team through the addition of Roland Wessel and Colin Judd who have worked together over many years and overseen the growth and success of a number of projects and companies. This is a very positive event for the Company and the new team is now leading the revised strategy. The initial elements of the execution of the strategy include a restart of field activities in the Cambay PSC, and a focus on mature gas field acquisitions and CCS opportunities in the UK. The Company is committed to achieving carbon-neutral gas production in the UK via the implementation of CCS projects, which will be leveraged by the management team's experience and expertise with respect to gas storage in depleted reservoirs.
At the same time, the historic projects inside of the Company have been largely rationalised with the Indian Bhandut project and the Australian asset base sold, the JPDA dispute resolved, and Indonesian efforts making progress.
Throughout this process, we have enjoyed continued support from our major shareholders who have provided the funding for the GSPC acquisition and maintain a strong interest in the Company's activities.
We seek your continued support in our efforts given the resolution of the major historic challenges and the appointment of a new team to lead the Company through its next development phase. On behalf of the Board, I wish to thank you, our staff, contractors, local communities, shareholders, and stakeholders for your ongoing support.
Mr J Salomon
Executive Chairman
22 September 2021
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O I L E X LT D |
ANNUAL REPORT 2021 |
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Business Review
External Impact on the Petroleum Industry
A number of factors have challenged our industry over the last year as the world deals with the continued effects of the COVID-19 crisis which has produced a marked shift in working styles and technology used for communications, the move towards net zero carbon and increased activism related to global climate change. These factors, along with low commodity prices for oil and gas in the first half of the financial year, have produced investment caution in our industry while the need for gas as a transition fuel into the future remains very robust. India has been particularly impacted by sequential waves of the COVID-19 pandemic, affecting progress on the Cambay project.
While the cost base of both our Australian and Indian operations continued to see reductions through the reporting period, the Company remained committed to resolving the long-standing impasse of the Cambay PSC and has continued with work on its other projects.
Oilex Strategy
During 2020-2021, Oilex's focus shifted further towards gas, considered by many to be the transition fuel for decades to come. In particular, we have focussed on our core gas project in India and on gas in the UK. Our exposure to oil has been reduced through the sale of our Cooper-Eromanga projects in Australia. Our prime interest continues to lie within proven super-basins which contain world-class source rocks, well-defined fairways, undeveloped discoveries, progressive regulators, open access to data, existing infrastructure, and demonstrable upside potential for junior companies. In addition, the Company is focussing on areas where we believe gas has an important role to play in the energy mix of the surrounding region, and also where carbon sequestration can be added to our project base given the commonalities of gas production, gas storage and carbon storage.
To address this strategy, the Company has recently seen major additions to the executive team which strengthen the Company's operational capabilities in drilling and production projects, along with providing the credentials to access new opportunities, particularly in the UK. The immediate new opportunity focus will be on projects which provide near-term cash flow to the Company.
This revised strategy will see an increased focus on UK activities with an emphasis on carbon-neutral gas production in conjunction with CCS. The Company believes that natural gas will continue to provide an important part of the UK's energy mix for the foreseeable future and will seek to invest in UKCS gas production. Oilex believes it can make a positive contribution to the UK's energy supply and CO2 reduction goals.
Cambay Field, Onshore Gujarat, India
Oilex - 100% (subject to final Government of India approval)
Oilex is the Operator of the Cambay Field and as a result of the recent acquisition of GSPC's 55% participating interest, the Company will hold 100% equity in the project once the Government of India approves the transfer of interest. The buy-out of GSPC has been a focus for some time, facilitated by agreements reached with GSPC in early April 2021 and a capital raising exercise later in the same month, which resulted in an injection of A$4.3 million from sophisticated shareholders into Oilex. The purchase price of GSPC's share of equity was US$2.2 million.
The Cambay PSC has been explored since the late 1950s and saw one of the first exploration successes in India's history. Hydrocarbon production was established from several conventional vertically stacked reservoir sections over the succeeding decades. Oilex entered the project in 2006 and drilled a number of successful early wells establishing production, however, the focus then turned to a potentially large gas resource in the Eocene-aged tight siltstone, which was known to contain and flow gas on test, starting with some of the earliest exploration wells in the region. The potential exists for a TCF-scale gas resource within the licence area and the purchase of GSPC's share of equity now provides the pathway for a pilot project to be undertaken to confirm both flow rate potential and resource size.
The PSC area is located onshore in the state of Gujarat in the heart of one of India's most prolific hydrocarbon provinces. It is ideally located within a major industrial corridor and approximately 20 km from the existing national gas trunk pipeline grid. India's large energy market is currently dependent on gas imports. The Cambay PSC is well-positioned to displace imported gas with indigenous gas supplies.
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Disclaimer
Oilex Ltd. published this content on 26 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 October 2021 07:31:12 UTC.
