LONDON (ShareCast) - (Sharecast News) - Oilex announced on Friday that the government of India has approved the Cambay PSC work programme and budget for the 2021-2022 Indian financial year.
The AIM-traded firm said GSPC, as the current holder of the 55% participating interest, has also approved the work programme and budget.

It said its implementation remained subject to financing being secured, including two key items being an appraisal and development drilling programme, and the restart of low-rate production at the currently shut-in Cambay production facility.

On 6 April, Oilex announced the details of its intention to acquire GPSC's 55% participating interest for $2.2m, and additionally that it had received the approval of the state government of Gujarat.

Following completion of the transaction, which remained subject to the finalisation of a binding sales and purchase agreement with GSPC and the government of India's approval for the transfer of the interest, Oilex would hold a 100% participating interest in the Cambay PSC.

On 21 April, Oilex announced that the funding required to complete the acquisition had been arranged via a conditional equity capital raising with existing sophisticated shareholders, and clients of Novum Securities, of £2.4m.

In early 2019, Oilex said the low-rate production cycle between two wells producing from the EP-IV reservoir was shut-in due to approval for only care and maintenance activities by its joint venture partner and the regulator.

The last reported production levels were in its December 2018 quarterly report, where production averaged 0.107 million standard cubic feet per day, with 3.36 barrels of condensate per day and 0.57 barrels of oil per day.

Given the elapsed time since the shut-in, some initial improved performance was expected on re-starting production, which would be quantified after operations restart.

While the production rate was low, it would add useful income to the company and provide data on the main gas bearing reservoir, which was the target of the proposed development programme.

"This approval from the Indian government is another positive step in re-establishing the Cambay PSC work programme, which is directed at establishing gas production from the substantial resource base in the EP-IV reservoir," said managing director Joe Salomon.

"As previously reported, Oilex has undertaken detailed studies which have outlined the most effective drilling, stimulation and flow testing programs to develop the discovered gas accumulation, and importantly which identified no impediments to potentially building a significant production base from the known EP-IV gas resource."

At 0953 BST, shares in Oilex were up 8.93% at 0.31p.

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