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The recovery of the oil price from a low of around $20 in April 2020 to a current price of over $70 and a bullish demand outlook reflects the ongoing recovery of a global economy dramatically affected by both the COVID-19 pandemic and the changing energy environment driven by the need to attain net-zero carbon emissions. Your company has adopted a strategy focused on gas, the cleanest hydrocarbon, rather than oil and aimed particularly at gas production, gas storage and sequestration of carbon dioxide. All three have commonalities in that they involve sub-surface reservoirs and engineering processes well understood and developed within the hydrocarbon industry and well within the capabilities of the Oilex team, which has been further strengthened by senior management appointments this year.
Our revised strategy, announced in June this year, will focus on making long-awaited progress in our existing Cambay asset in India and further developing an asset base in the UK. Both project areas will focus on gas production.
The joint venture impasse in the Cambay project is finally being resolved through the Company’s purchase of GSPC’s 55% equity in the project. The transfer of the equity to Oilex only requires the final approval of the Government of India, which is expected within the coming months. This resolution has occurred because of the dedication of the Oilex staff through challenging times.
Following an unsuccessful request to the UK Oil and Gas Authority to extend the initial term of the P2446 exploration licence, the Company has decided to relinquish the licence. The extension was requested due to COVID-19 related delays in completing the initial phase work programme. The remaining technical uncertainties and the Company’s new strategy to focus on mature gas field acquisitions and carbon capture and storage (CCS) opportunities were the main drivers behind the Company’s decision.
Oilex is now poised to enter a new phase of growth involving the search for and addition of attractive new projects. To that end, the Oilex Board has made significant changes to the management team through the addition of Roland Wessel and Colin Judd who have worked together over many years and overseen the growth and success of a number of projects and companies. This is a very positive event for the Company and the new team is now leading the revised strategy. The initial elements of the execution of the strategy include a restart of field activities in the Cambay PSC, and a focus on mature gas field acquisitions and CCS opportunities in the UK. The Company is committed to achieving carbon-neutral gas production in the UK via the implementation of CCS projects, which will be leveraged by the management team’s experience and expertise with respect to gas storage in depleted reservoirs.
At the same time, the historic projects inside of the Company have been largely rationalised with the Indian Bhandut project and the Australian asset base sold, the JPDA dispute resolved, and Indonesian efforts making progress.
Throughout this process, we have enjoyed continued support from our major shareholders who have provided the funding for the GSPC acquisition and maintain a strong interest in the Company’s activities.
We seek your continued support in our efforts given the resolution of the major historic challenges and the appointment of a new team to lead the Company through its next development phase. On behalf of the Board, I wish to thank you, our staff, contractors, local communities, shareholders, and stakeholders for your ongoing support.
Mr J Salomon
22 September 2021
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