News blog

Oilex Ltd

  • BY: Andrew Hore |
  • POSTED: 11/11/2015 |

Zeta Resources has refused to pay for A$4.24m of convertible loan notes in India-focused oil and gas company Oilex Ltd because it says that it was not made aware of all material information. 

The share price has more than halved to 0.68p on the back of this announcement. It has already fallen by more than three-quarters in the past five months.

Payment for the 20 year, zero coupon convertibles was due by 11 November. The conversion price is A$0.0418 (2p) a share and Zeta is expected to subscribe for 124 million shares at that price by 12 November. That share price was looking high even before the latest fall. In fact, Zeta helped Oilex out with the underwriting of the rights issue at the same price because the market price had fallen below that level in August and the original underwriter terminated its agreement. Zeta already owns 10.3% of Oilex and the subscription would have taken the stake to 19.6% before any loan note conversion.

Oilex is talking to lawyers about the situation.

The Cambay workover programme continues with positive news from the completion of Cambay-19z. However, if the additional cash does not come in then this could affect the funding of the workover programme and other exploration activity in the Cambay field.

The investment had been expected to help Oilex generate revenues of A$10.3m and a profit after tax of A$2.9m in the year to June 2016. There was A$16m in the bank at the end of September 2015 with more than A$9m expected from Zeta.

Oilex still appears on track to produce 200 barrels of oil per day by the end of December which should generate enough cash to cover cash costs.  A more significant increase in production could come from drilling the Cambay-78H and 80H wells.

Magna Energy and Standard Life own 10.2% and 8.6% of Oilex respectively.

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