Issue of Event of Default Notice – Cambay PSC
Oilex Ltd (the Company) advises that it has today issued an Event of Default Notice (EoD Notice) to GSPC regarding the Cambay PSC (Cambay) in the amount of equivalent US$3,054,832. The EoD Notice, issued pursuant to the Joint Operating Agreement (JOA), is a consequence of GSPC’s ongoing failure to pay its participating interest share of the expenses of the Cambay PSC.
In accordance with the JOA, GSPC can remedy its default by settling the outstanding amounts. If this does not occur within 60 days, the Company may issue a notice whereby GSPC shall be immediately deemed to have transferred all its participating interest in the PSC to the non-defaulting parties, ie. Oilex.
An increase in Oilex’s participating interest in Cambay from 45% to 100% would greatly assist the Company in strategic farm-in discussions with third parties. The Company has received several informal expressions of interest from parties to participate in the ongoing work programme and looks forward to updating the market when appropriate.
Oilex remains committed to unlocking the significant resource potential at Cambay by achieving commercial gas flow rates in the EP-IV formation. The development of new oil and gas fields such as Cambay is essential to meeting the Government of India’s policy to reduce reliance on imports. To ensure that the joint venture has met and continues to meet the obligations and expectations of the national government and its industry regulator, Oilex has borne the full cost of many activities including the recent work to prepare a Field Development Plan and securing government approval of the proposal for a 10-year extension to the PSC.
While the Company is confident in its position, should GSPC fail to comply with the EoD Notice and a legal or regulatory challenge occurs, it may be necessary for Oilex to consider other remedial strategies.