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Oilex gets gov't endorsement for gas sales from Cambay-77H well

Last updated: 17:54 19 Jan 2015 AEDT, First published: 18:54 19 Jan 2015 AEDT

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India-focused Oilex (LON:OEX) has received government endorsement for the sale of gas to the local market from its Cambay-77H well.

The well is the first horizontal fracked one to be successfully production-tested in India and the joint venture will now establish appropriate production facilities and initially connect Cambay-77H to a low pressure pipeline grid.

Users are currently paying a premium to Brent and WTI crude on an energy equivalent basis, the firm noted.

A pleased Oilex managing director Ron Miller said: "The contracted price remains commercial-in-confidence, and revenue from Cambay-77H will significantly move the India assets towards our 2015 goal of cash flow positive operations.

"Gas demand remains strong in India and prices firm, which helps cushion the recent fall in oil prices.

"Oilex looks forward to the next drilling campaign and having sufficient gas deliverability to consider delivery of pipeline quality gas to the high pressure grid located approximately 7 km from the field."

Today's endorsement follows those last year, when it was announced the firm was authorised to sell gas from Cambay-73 and Bhandut-3.

"Oilex is now working towards putting three wells in two separate fields into production, during H1 2015," the firm said.

"Oilex will recommence gas production in the Cambay Field for the first time since the early 1990's.

"Production from these wells will be a substantial step towards cash positive operations in India for the company as a result of the strong gas demand and associated robust gas price structure."

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