Oilex (AIM:OEX ) has released an audited FY20 report highlighting its continued progress across India, Indonesia, Australia and the UK, after the group navigated itself through the ongoing COVID-19 pandemic which in turn sparked a reduction in global oil and gas prices.
Despite witnessing several project delays and project re-assessments as the industry received further downward pressure, Oilex told investors that this unusual, unprecedented period has also produced positive occurrences with new projects becoming available.
The group, which views the FY20 period as one of ‘consolidation’, said opportunities arose as corporations searched for funding solutions for their projects while governments sought to stimulate industry activity in response to declining domestic oil and gas production.
Oilex said management’s focus has been to capitalise on held projects, determining the best value realisation for each one, continue to advance existing projects in its portfolio, resolve long running problematic historical issues, and reduce its cost base in India and Australia.
Exploration costs throughout the period have increased to $1,008,719m (FY19: $0.49m) reflecting the increased activity in seeking and evaluating new business opportunities. As a result, pre-tax loss for the pre-revenue explorer increased to $5.84m (FY19: $3.1m).
The net assets of the consolidated entity totalled $3.7m as at 30 June 2019 (FY19: $6.73m) while cash and cash equivalentS held by the Group decreased to $0.17m (FY19: 0.35m).
In FY20, Oilex continued to focus on its core project, the Cambay field in India, onshore Gujarat while evaluating potentially value accretive new business opportunities elsewhere.
Development of the potential gas resources in the Cambay PSC has been held up for some years as the result of a dispute with Gujarat State Petroleum Corporation Limited (GSPC), Oilex’s joint venture partner which holds the remaining 55% interest in the project.
Despite a significant delay as a result of the pandemic, GSPC’s continues to finalise the sale of its Cambay interest and Oilex continues to work towards this end result with the group in ongoing discussion with several companies who have expressed interest in the licence.
The company also successfully acquired a new package of highly prospective acreage in the Cooper-Eromanga Basins in Australia and established a foot-hold in the East Irish Sea in the UK, with its activities following ‘a well-defined strategy focusing on proven super-basins.’
Recently, however, shares in Oilex jumped last month after the group told investors that it had disposed of its interests in the Cooper-Eromanga Basins to Armour Energy (ASX:AJQ).
In the UK, Oilex struck a single licence containing two high potential exploration targets adjacent to several existing producing fields in the ‘highly productive’ East Irish Sea basin.
Meanwhile, the company continues to engage with the regulator with a view to restoring its interest in West Kampar, adjacent to the most prolific oil producing basin in Indonesia.
Oilex said its strategic efforts to regain a participating interest in the West Kampar PSC in Indonesia continue with recent discussions with the Indonesian government task force charged with implementing the management of upstream oil and gas business activities.
Shares in Oilex have traded within a tight range of 0.06p and 0.07p over the past two weeks to open at 0.065p this morning following the announcement.
Oilex’s strategy is to use its extensive technical and commercial expertise to explore, appraise and develop petroleum resources in prolific basins.
Strategic Focus
The group exclusively focuses on selected ‘Super Basins’ which have the potential to present multiple low-cost entry opportunities to Oilex.
Proven Success in Australia
Its new business development efforts bore fruit through the establishment of the focus on “super-basin areas” in Australia’s Cooper-Eromanga Basins and the UK’s Continental Shelf.
Future Growth Projects
Oilex said to investors that it ‘continues to review business opportunities in high potential areas’ through its contact base and its belief that good projects with good management can be funded.
Despite the ‘very challenging climate’, Oilex said it remains focused on returning value to shareholders with the short to medium focus of restoring value to the share price through sound management practices.
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