28/01/2022 - Oilex Ltd.: Earnings Document

HIGHLIGHTS

only	CAMBAY FIELD, ONSHORE GUJARAT, INDIA
	» The Company is focussing on re-establishing a
		field program including a re-frac of the existing
		C-77H well to increase production and to
		develop a reliable fraccing methodology that can
use		be applied to future wells.
» Government of India approval for the transfer of
	the 55% interest in Cambay which the Company
		purchased from GSPC is expected in the near
		future, following which Oilex will hold a 100%
		participating interest in Cambay.
	» During the Quarter the Company announced the
personal		execution of a well management contract with a
	consortium comprising Manan Oilfield Services
	and Bedrock Drilling.
	» On 14 December 2021 the Company announced
		that it had arranged the funding required for the
		re-fraccing of the Cambay 77H well in India by
		way of an equity capital raising of £2.0 million
		(A$3.7 million) before costs.
	» On 15 December 2021 the Company announced
		that following a final court order, the previously
		imposed production cessation on the Cambay
		field had been removed.
	UNITED KINGDOM CONTINENTAL SHELF CCS
	»	The application via the OGA's nomination
		process for Carbon Capture and Storage ("CCS")
		on two UKCS depleted gas fields, Esmond and
For		Forbes, is currently ongoing.
WEST KAMPAR, INDONESIA
	»	Efforts continue towards the Company's
		objective to regain a participating interest in the
		West Kampar PSC in Indonesia.

DECEMBER 2021 QUARTERLY

REPORT

CORPORATE

• This Report is for the period 1 October 2021 to 31 December 2021 (the "Quarter")
• Cash resources at 31 December 2021 were A$1.43 million (£0.75 million), and if netted with Tranche 3 of the Placement funds, which were received post the Quarter end, the Company would have A$3.46 million (£1.82 million) of available cash.
• The Annual General Meeting ("AGM") of the

Company	was	held	on	Friday,
26 November 2021.	All	resolutions	were
passed via a poll.

• On 22 December 2021 the Company advised that the unmarketable parcel sale facility (the
  "Sale Facility") for shareholders on the ASX register who held less than A$500 worth of fully paid ordinary shares ("Shares") in the
  Company ("Unmarketable Parcel") was finalised.
• On 14 December 2021 the Company announced that it had arranged the funding required for the re-fraccing of the Cambay 77H well in India via an equity capital raising of £2.0 million (A$3.7 million), before costs. Approximately £0.80 million (A$1.48 million) before costs were settled prior to the end of the quarter via the issue of 571,518,807 Shares. The remaining funds and share settlement occurred in January 2022 by the issue of Tranche 3, on 12 January 2022.

For personal use only

OPERATIONS

REVIEW

CHIEF EXECUTIVE OFFICER'S REPORT TO SHAREHOLDERS FOR THE QUARTER

OVERVIEW

Following a strategy review, Oilex Ltd ("Oilex" or the "Company") is currently focused on developing its current primary asset in the Cambay Basin, India, and applying to acquire mature gas producing assets and instigate Carbon Capture and Storage ("CCS") projects in the UK. The focus of the Company will be centred on gas production and CCS with a view to becoming a carbon-neutral gas producer.

The Company aims to restart gas production cycling between two existing production wells in its Cambay PSC in the near future. The agreement to purchase the Gujarat State Petroleum Company's 55% participating interest in the Cambay Production Sharing Contract has enabled it to accelerate field development of the Cambay field's c.930 BCF gas resources. Oilex plans to re-frac the existing C-77H well to demonstrate a reliable fraccing methodology for two new wells planned for calendar H2 2022 and calendar H1 2023, subject to securing the necessary funding. The Company will also seek to identify a new joint venture partner for the Cambay PSC in order to mitigate the funding requirement.

HEALTH, SAFETY, SECURITY AND ENVIRONMENT

All work was undertaken safely, without environmental incident and in accordance with COVID-19 related protocols during the Quarter.

CAMBAY FIELD, GUJARAT, INDIA

(Oilex: Operator and 100% interest pending Government of India ratification)

Oilex currently holds a 45% PI in the Cambay Field, which will increase to 100% PI upon the Government of India's ratification of the GSPC acquisition. The bank guarantee of US$2.2 million (in favour of GSPC) to secure the acquisition was arranged during the previous quarter.

The Cambay field development is centred on the successful exploitation of the gas resources held in the Eocene EP-IV reservoir which extends across the field and has been penetrated by over 30 wells. The EP-IV reservoir comprises low permeability ("tight") siltstones and requires frac stimulation to provide economic gas production rates.

Whereas two horizontal wells (C-76H in 2011 and C-77H in 2014) were successfully and efficiently drilled to total depth in the EP-IV reservoir, the fraccing and completion of the wells were disappointing. In advance of drilling two new horizontal wells, the Company has decided to re-frac the existing C-77H well to not only increase production but to also develop a reliable fraccing methodology that can be applied to future wells. C-77H had initial production levels of up to 1.0 mmscfd. The Company believes that a successful re-frac stimulation could potentially increase production levels by 3 to 5 times.

The development of well programs for two new horizontal wells (C-78H and C-79H) is at an advanced stage and the Company has issued a Request for Quotation for well management services for the execution of the two new wells which is planned, subject to securing the necessary funding, for calendar H2 2022 and calendar H1 2023. Funding requirements may be mitigated by a successful farm out on the Cambay PSC.

For personal use only

Cambay Well 77H Re-Frac Funding Secured

On 14 December 2022 the Company announced the arrangement of funding required for the re-fraccing of

the Cambay 77H well in India, the continued development of the Company's plans to undertake a drilling and testing appraisal program on the Cambay field, and the Company's working capital base.

Oilex appointed Manan Oilfield Services and Bedrock Drilling to plan the Cambay 77H well re-frac (and to assist in the new well program commencing in calendar H2 2022). The re-frac program has been finalised and quotations for services and equipment will be requested in January 2022 in anticipation of the re-frac operation commencing during calendar Q1 2022. The objective of the re-frac is to prove up a fraccing methodology that will underpin the Cambay field development plan with optimised economics.

The Company arranged an equity capital raising, with existing sophisticated and institutional shareholders, and clients of Novum Securities Limited, of £2.0 million (A$3.7 million) before expenses, via the issue of 1,422,590,303 new fully paid ordinary shares ("Placement Shares") at £0.0014 (A$0.00259) per Share (the "Placement"). The Placement was completed in three tranches, the issue of Shares occurring on 17 December 2021, 24 December 2021 and 12 January 2022. For further details of the Placement, including the offer of unquoted options under the Placement and fees from participating brokers, refer to "Placement -

Issue of Securities" under the "CORPORATE AND FINANCIAL" header.

Funds raised from the Placement are intended to be applied to the re-fraccing of the Cambay 77H well, the

continued development of the Company's plans to undertake a drilling and testing appraisal program on the Cambay field, and the Company's working capital base.

Cambay Production Re-start Update

On 15 December 2021 the Company announced that, following a final court order, the previously imposed production cessation on the Cambay field had been removed and the Company plans to resume gas production in the near future following the receipt of environmental clearances,. The two currently active wells, C-73 and C-77H will be placed back on cyclic production and the gas will be processed and exported through the existing production facilities and pipelines.

UNITED KINGDOM CONTINENTAL SHELF

Carbon Capture and Storage

During the Quarter, the Company continued its search for mature gas assets that may be suitable for CCS projects in the future.

The Company has already made an application for a CO2 storage licence on the Esmond and Forbes depleted gas fields in the southern sector of the North Sea via the OGA nomination process. The Esmond field in isolation has the potential to store greater than 50 million metric tons of CO2.

The Company believes that natural gas will form a vital component of the energy mix for the foreseeable future, however, it also recognises the adverse impact of ongoing CO2 emissions. The Company has significant gas storage credentials and is seeking to exploit that expertise to implement CCS projects, initially in the UK, where there is a mature carbon allowance structure.

To this end, the Company is developing a CCS scheme whereby the CO2 emissions from three large CCGT power stations would be extracted, compressed and liquified and transported to the Esmond and Forbes fields for permanent storage. The Company has engaged Axis Well Technology to undertake a pre-FEED study that will be finalised in January 2022.

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JPDA 06-103, TIMOR SEA

(Oilex: PSC Terminated 15 July 2015 - Operator and 10% interest)

In August 2020, on behalf of its Joint Venture Participants, Oilex announced a Deed of Settlement and Release (the "Deed") with the Autoridade Nacional Do Petroleo E Minerais ("ANPM").

Under the terms of the Deed, Oilex committed to a settlement of US$800k payable up to the financial year 2024. A total of US$300k has been drawn down to date on the US$800k loan facility provided by two of the joint venture partners to fund the settlement, leaving an undrawn balance of US$500k on the loan facility. The joint venture partners providing the loan facility were Japan Energy E&P JPDA Pty Ltd ("JX") and Pan Pacific Petroleum (JPDA 06 103) Pty Ltd ("PPP"). The draw downs (and settlement payments) to date included a US$250k draw down (and settlement payment) which occurred in December 2021.

At the beginning of the Quarter, the loan facility had a credit of US$160k, which was used to partially offset the liability incurred from the US$250k draw down made in December 2021. In addition, a further US$18k was paid in December into the loan facility to fully repay the portion of the loan owing to PPP. After interest charges, the balance of the loan facility at quarter end was US$72k.

The interest rate of the loan facility is 11% and the balance of the loan, plus interest, is to be repaid to JX in four instalments (in February 2022, August 2022, February 2023 and August 2023), prior to the loan's maturity on 17 August 2023.

For further details of the loan refer to the "FINANCIAL" section below.

WEST KAMPAR PSC, CENTRAL SUMATRA, INDONESIA

During the Quarter, the Company continued with its objective to regain a participating interest in the West Kampar PSC in Indonesia.

CORPORATE AND FINANCIAL

Placement - Issue of Securities

Further to Oilex Ltd's announcement on 14 December 2021, confirming that it had arranged the funding required for the re-fraccing of the Cambay 77H well in India via an equity capital raising of £2.0 million (A$3.7 million) before costs, the Company announced during the Quarter it had settled approximately £0.80 million (A$1.48 million) before costs, via the issue of 349,512,978 Placement Shares on 17 December 2021 ("Tranche 1 Shares") and 222,005,826 Placement Shares on 24 December 2021 ("Tranche 2 Shares"). The remaining £1.19 million (A$2.20 million) funds were settled after Quarter end, via the issue of 851,071,499 Placement Shares on 12 January 2022 ("Tranche 3 Shares").

In addition, subscribers to the Placement were offered one free attaching unquoted option for every two Placement Shares subscribed for, which will result in the issue of an aggregate of 711,295,152 unquoted options ("Placement Options"). The Placement Options are exercisable at £0.0028 (A$0.00518) per share on or before 31 December 2022. The issue of the Placement Options is subject to shareholder approval, at a general meeting of Oilex shareholders to be held on 17 February 2022.

In addition to the standard commissions payable on the capital raising to participating brokers, a portion of the capital raising fees is to be paid by way of issue of 65,874,899 unquoted options, exercisable at £0.0014 (A$0.00259) on or before 31 December 2023 (the "Fee Options"). The issue of the Fee Options is also subject to shareholder approval.

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OPERATIONS

REVIEW

Issue of Shares to Non-Executive Directors

During the Quarter the Company issued 1,930,860 new ordinary shares as consideration in lieu of Non- Executive Director fees as follows:

	Shares Issued
Mr P Haywood	551,676
Mr P Schwarz	1,379,184
	1,930,860

The new ordinary shares were issued at a price of A$0.005 per ordinary share, and represent the final issue of shares to Directors under the shareholder approval which was obtained on 16 December 2020.

Summary of Capital Raising

The capital raising that has occurred during the Quarter (as mentioned above) can be summed up as follows:

Fully Paid Ordinary Shares ("Shares")	Date of Issue	Number
On issue at 1 October		5,688,430,356
Issue of share capital
Shares issued for non-cash (for Non-Executive Directors'
fees) (1)	9 November 2021	1,930,860
Shares issued under Placement (Tranche 1) (2)	17 December 2021	349,512,978
Shares issued under Placement (Tranche 2) (2)	24 December 2021	222,005,826
Balance at 31 December 2021		6,261,880,020
(1)	See "Issue of Shares to Non-Executive Directors" above.
(2)	On "Placement - Issue of Securities" above.

Payments Made to Related Parties and Their Associates

The attached Appendix 5B includes an amount of A$266k in items 6.1 and 6.2 (total) which constitutes payments to directors and other related parties for salaries, director fees and superannuation.

2021 Annual General Meeting of Shareholders

In accordance with ASX Listing Rule 3.13.1, the Company held its Annual General Meeting ("AGM") of the Company on Friday, 26 November 2021. All resolutions were passed on a poll.

Unmarketable Parcel Sale Facility for ASX Shareholders

Oilex Ltd announced on 7 September 2021 that it had established an opt-out unmarketable parcel sale facility ("Sale Facility") for shareholders who held less than $500 worth of fully paid ordinary shares in the Company ("Unmarketable Parcel"). The Sale Facility was only available to shareholders who held their shares on ASX, and not Depository Interest holders.

As a result of the Sale Facility the number of Unmarketable Parcels on the ASX register was reduced from 1,872 to 352. A total of 36,284,687 shares were disposed on market at an average price of approximately A$0.0039 per share and the disposal proceeds were returned to shareholders by way of cash at the end of December 2021, for shareholders who provided their bank details for direct transfer.