In return for its interest from operator Sumatera Persada Energi, the Perth-based company will refund certain past costs, along with paying to drill a new well in July and acquire 3D and 2D seismic programs.

Oilex said the block has an existing oil discovery that could be brought onto production quickly, depending on appraisal drilling and further exploration of a number of “highly prospective” structural trends.

Awarded in October 2005, the PSC work program commitment provides for the acquisition of 250km of 2D seismic and 50 square kilometres of 3D seismic, along with drilling of the Pendalian-3 well and an additional four exploration wells by November 2008.

To be spudded in July, the Pendalian-3 well will appraise an oil field discovered in the PSC in 1993.

Pendalian-1 was a cored slim hole that encountered a number of oil zones at depths ranging from 250-500m. Two of the zones flowed up to 530 barrels of oil per day from drill stem tests.

Independent technical work by Oilex suggests the field contains 12 million barrels best of in-place oil.

If the new well is deemed commercial, the West Kampar joint venture will acquire a 3D seismic survey over the Pendalian field and a number of satellite structures to accelerate development.

“Shallow, low cost wells and the proximity to infrastructure are attractive incentives for the rapid development of the field,” Oilex said.

“Early cash flow generated by Pendalian production will be applied to the exploration of highly prospective trends that have been recognised on the block.”

Meanwhile, the proposed 2D seismic survey would delineate additional drillable prospects on proven exploration plays in the West Kampar PSC area, particularly on the Daludalu structural trend in the northern part of the block.