While Perth-based Oilex is charging ahead with its unconventional gas project in India, the company says the farm-out process for its acreage in the Canning Basin has been well received.

The company, which is listed on the ASX and London’s AIM, pleased Australian investors last week when it announced it expected production at its Indian Cambay-73 joint venture project to begin in May.

The junior’s shares gained more than 10 per cent to 5 cents on the back of the news which highlighted commercial production from Cambay-73 was a key initial step to achieving its objective of becoming cash flow positive from the operations in the second half of 2015.

While the company remains focused on growing its production and reserves from its Indian operations, Oilex managing director Ron Miller told Oil and Gas Investor Australia that a farm-out process for its three south-west Canning Basin permits was gaining significant traction.

“We have organisations from the US and elsewhere that have been through the data room and are currently in the data room,” he said.

“We think the permits are well positioned because the only existing gas infrastructure the Canning Basin has runs across our permits.

“It is close to the Pilbara iron ore province and as you’ve seen with Fortescue Metals Group and others they are looking to lower their costs of production by changing their energy mix from diesel exclusively to diesel plus gas so we see gas as an opportunity if we happen to make a discovery there.”

The company picked up the three Canning Basin permits in 2013 after management recognised the similarities with its Cambay Basin acreage and noted the south west area had high quality infrastructure.

An extensive review on the permits also identified the Wallal Graben, a potentially overlooked, deep, undrilled half graben in the south-west Canning Basin.

It’s still early days for the permits with native title negotiations continuing. However Miller is hopeful of finalising those in the near-term. While he couldn’t put a timeframe on how long the farm-out process would take, Miller expects drilling on the permits to take place sometime in 2017.

The excitement surrounding the Canning Basin’s shale gas appeal took a hit last year when U.S. major ConocoPhillips and Chinese oil giant PetroChina pulled out of their shale-play joint venture with New Standard Energy, citing disappointing results.

Meanwhile, one time market darling Buru Energy which is the largest shareholder in the Basin has struggled to retain shareholder confidence in its Canning Basin story, with shares falling from highs of above $3 in 2012 to today’s price of 30.5 cents.

While the company confirmed the potential of the Ungani oil field back in 2011 when it announced the first significant oil discovery in the basin since the 1980s, the company continues to grapple with technical hurdles in the Basin while opposition from activists opposed to fracking persists.

Miller said Oilex was closely monitoring general activities in the Canning Basin but was confident it wouldn’t experience the same issues.

“We monitor all activities that are going on in areas of interest that we have and certainly we think we can manage our operations in a safe and sustainable manner,” he said.

Lauren Barrett can be reached at lbarrett@hartenergy.com