28/04/2022 - Oilex Ltd.: Earnings Document

HIGHLIGHTS

MARCH QUARTERLY REPORT

2022

CAMBAY FIELD, ONSHORE GUJARAT, INDIA

• » The Company is focussing on re-establishing a field development program including a re-frac of the existing C-77H well to increase production and to develop a reliable fraccing methodology that can be applied to future wells.

• » During the Quarter, the Government of India Ministry of Petroleum and Natural Gas approved the transfer of assignment of the 55% Participating Interest ("PI") in the Cambay Field Production Sharing Contract ("PSC") held by Gujarat State Petroleum Corporation Ltd ("GSPC") to Oilex.

• » On 7 February 2022, the Company announced that the Government of India Ministry of Environment, Forest and Climate Change had officially confirmed the decision of their Expert Appraisal Committee to recommend the approval of Oilex's application for a new Environmental Clearance for the Cambay field.

»

Following the end of the Quarter, on 8 April 2022, production recommenced on the Company's Cambay gas field, together with gas sales.

UNITED KINGDOM CONTINENTAL SHELF CCS » The Company provided an update during the

Quarter on its proposed Medway Hub Carbon Capture and Storage ("CCS") project in the UK.

WEST KAMPAR, INDONESIA » Efforts continued towards the Company's objective to regain a participating interest in the West Kampar PSC in Indonesia.

1 | OILEX QUARTERLY REPORT 31 MARCH 2022

CORPORATE

• » This Report is for the period 1 January 2022 to 31 March 2022 (the "Quarter")

• » Cash resources at 31 March 2022 were A$2.29 million (£1.31 million)

• » A General Meeting of the Company was held on Thursday, 17 February 2022 with all resolutions passed via a poll.

• » On 27 January 2022, the Chief Financial Officer, Colin Judd, was appointed as an Executive Director of the Company.

• » During the Quarter, the Company issued 711,295,152 unquoted options ("Placement Options") and 54,839,185 unquoted options ("Fee Options") to Novum Securities. These were subsequently exercised.

• » A further 25,210,084 unquoted options ("Advisor Options") were issued, exercisable at £0.00238, on or before 31 May 2024. The options were approved, under Listing Rule 7.1, by OEX shareholders at the Company's Annual General Meeting on 26 November 2021.

CHIEF EXECUTIVE OFFICER'S REPORT TO SHAREHOLDERS FOR THE QUARTER

OVERVIEW

Following a strategy review in 2021, Oilex Ltd ("Oilex" or the "Company") is currently focused on developing its primary asset in the Cambay Basin, India, and applying to acquire mature gas producing assets and instigate 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.

During the Quarter the Company was focused on restarting gas production cycling between two existing production wells in its Cambay PSC, success of which was achieved and announced on 8 April 2022. The agreement to purchase GSPC's 55% PI in the Cambay PSC has enabled it to accelerate field development of the Cambay field's c.930 BCF 2C gas resources (100% gross). 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. Following the re-frac, the Company will 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)

During the Quarter, the Government of India Ministry of Petroleum and Natural Gas approved the transfer of assignment of the 55% PI in the Cambay Field PSC held by GSPC to Oilex (taking the Company's interest to 100%). The US$2.2 million bank guarantee, which was previously arranged in favour of GSPC during the September 2021 quarter, was called upon and received by GSPC on 30 March 2022 as consideration of the transfer of the 55% PI to Oilex. The Company received US$154k as a result of reconciling final sale accounts with GSPC's finance team in April 2022.

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.

Well programs for two new horizontal wells (C-78H and C-79H) have been developed and the Company has contracted the Bedrock/Manan consortium for well management services for the C-77H re-frac and 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.

Cambay Well 77H Re-Frac

The Company continued to prepare for the C-77H re-frac operation, evaluating tenders for all the required equipment and services during the Quarter. The global oil and gas services sector is facing an acute shortage of capacity following several years of reduced activity and India is suffering from these constraints. Specifically, there is a shortage of hydraulic fraccing pumping equipment as well as several other key services required for the C-77H re-frac. Oilex is in the process of finalising contracts with a current timeline of July 2022 for the re-frac operation. Following the re-frac, the C-77H well will need to be flowed to clean up the well bore and it will be 30-60 days before a stabilised gas flow level can be established to assess the level of success of the re-frac. Gas production will be processed on location and sold via the existing grid connection under a new gas sales agreement. Similarly, associated condensate production will be sold under a separate sales agreement.

The targeted new initial production rate from the two new re-frac zones is 2 mmsfd. A successful re-frac operation will enable the initiation of the full Cambay field development with two new horizontal and fracced wells planned for end of 2022 / Q1 2023, subject to funding. Oilex's project studies and experience from other stimulation projects result in an expectation of initial production rates of 4-5 mmscfd for new horizontal wells which will provide robust economics.

India is the third largest energy market in the world. Indian gas demand growth is outpacing domestic supply with circa 50% of gas requirements from liquefied natural gas ("LNG") imports. Robust gas prices are underpinned by the high marginal cost of LNG imports.

Cambay Production Re-start Update

On 7 February 2022, the Company announced that the Government of India Ministry of Environment, Forest and Climate Change has officially confirmed the decision of their Expert Appraisal Committee to recommend the approval of Oilex's application for a new Environmental Clearance for the Cambay field. The Gujarat Pollution Control Board ("GPCB") approved the re-commencement of production on the Cambay field on 8 April 2022, and production was restarted on the same day.

UNITED KINGDOM CONTINENTAL SHELF

Carbon Capture and Storage

During the Quarter the Company continued to progress its Medway Hub CCS project in the UK. The CCS project provides for the capture and transportation of CO2 emissions from coastal combined cycle gas turbines ("CCGT") power stations in liquid form by marine tanker to a floating injection, storage and offloading ("FISO") vessel from which the CO2 would be injected into the Esmond and Forbes depleted gas fields, which are situated in the UKCS, for permanent sequestration.

As previously announced, the Company has applied for a CCS license via the Oil and Gas Authority's nomination process to store CO2 in these two depleted gas fields. The Company is hoping to be granted the license in the coming months. A pre-FEED* study was completed by Axis Well Technology, which confirmed the technical viability of the project as well as providing scoping economics.

The CCS project is contemplated to be a merchant scheme whereby emitters would pay for the capture, transportation and storage of CO2 from CCGT power station emissions under long-term contract, instead of incurring the cost of carbon allowances.

The CCS project is subject to contracts with carbon emitters, regulatory approvals and funding. In addition, a full FEED* study will be required to further refine all of the technical aspects of the project and the project costings and economics in order to prepare for a final investment decision.

*FEED means Front End Engineering Design

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$550k has been drawn down to date on the US$800k loan facility provided by two of the joint venture partners to fund the settlement. 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 from the loan facility, and settlement payments made to ANPM to date included the following:

• • US$50k drawn down (US$25k from JX and US$25k from PPP) and paid to ANPM in August 2020;

• • US$250k drawn down from JX and paid to ANPM in December 2021; and

• • US$250k drawn down from JX and paid to ANPM in March 2022.

The movement in the settlement payable to ANPM during the Quarter was as follows:

The loan facility from JX and PPP is restricted for the purposes of the settlement of the Company's liability with ANPM. The portion borrowed from PPP was fully repaid in December 2021. The movement in the remaining loan payable to JX during the Quarter was as follows:

At the end of the Quarter, there is another US$250k available to be drawn from JX to fund the last instalment of the settlement payable, which is scheduled to be paid to ANPM in September 2022. The interest rate of the loan facility is 11% and the balance of the loan from JX is to be repaid in three instalments (in August 2022, February 2023 and August 2023), prior to the loan's maturity on 17 August 2023.

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 Appointment of Director

During the Quarter, the Company announced the appointment of Colin Judd as a Director, of Oilex Ltd, effective 27 January 2022. Colin was an existing executive of Oilex, having been appointed as the Company's Chief Financial Officer on 1 July 2021.

Issue of Shares and Securities

During the Quarter, 851,071,499 fully paid ordinary shares ("Tranche 3 Placement Shares") were issued on 12 January 2022 at £0.0014 (A$0.00259) per share. The Tranche 3 Placement Shares was the final instalment of the funding placement ("December Placement") which was announced during the previous quarter on 14 December 2021.

On 19 January 2022, a further 25,210,084 unquoted Advisor Options were issued, exercisable at £0.00238, on or before 31 May 2024. The options were approved, under Listing Rule 7.1, by OEX shareholders at the Company's Annual General Meeting on 26 November 2021.

In addition, following shareholder approval received at the 17 February 2022 General Meeting, the following securities were issued during the Quarter:

• • 711,295,152 unquoted Placement Options. The Placement Options are exercisable at £0.0028 (A$0.00518) per share on or before 31 December 2022. The Placement Options were issued to shareholders as a one free attaching unquoted option for every two December Placement shares subscribed for; and

• • 54,839,185 unquoted Fee Options, exercisable at £0.0014 (A$0.00259) on or before 31 December 2023 to Novum Securities as Lead Manager to the placement.

Exercise of Options

Novum subsequently exercised the 54,839,185 unquoted Fee Options into fully paid ordinary shares during the Quarter.

Payments Made to Related Parties and Their Associates

The attached Appendix 5B includes an amount of A$283k in items 6.1 and 6.2 (total) which constitutes payments to directors for salaries, director fees and superannuation.

General Meeting of Shareholders

The Company held a General Meeting of the Company on Thursday, 17 February 2022. All resolutions were passed on a poll.

FINANCIAL

During the Quarter, the Company released its Interim Report for the half-year ended 31 December 2021.

At 31 March 2022, Oilex retained cash resources of A$2.29 million (£1.31 million).

The Company also has a loan facility balance of US$250k, which is restricted for the purposes of the settlement of the Company's liability with ANPM. The interest rate of the loan facility is 11%. For further details of the loan refer to the "JPDA 06-103, TIMOR SEA" section above.

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