Oilex begins talks with Zeta in effort to avoid Australian legal battle

AIM-listed Oilex has begun discussions with shareholder Zeta Resources to find a commercial resolution to a legal dispute that will otherwise head to the Australian federal courts in coming weeks.

Earlier in the year Oilex raised AUD30m in financing for a shale oil project in Gujarat, India, after it became the first company to successfully use North American drilling and completion technology that could access tight oil and gas in the subcontinent.

An AUD9.4m deferred settlement of the capital raising came from 10% shareholder Zeta, which later alleged that Oilex had "failed to disclose material information to it prior to its initial investment and has contravened statutory provisions relating to misleading or deceptive conduct and continuous disclosure and rights issue disclosure requirements".

Oilex, which last month responded to concerns raised by investors by launching a review of its board structure and the strategy and financing of its core Cambay asset, has said it considered the accusations to be without merit.

On Wednesday the dual-listed company said the two parties were "presently engaged in discussions to explore options for a commercial resolution of the dispute, the subject of the legal proceedings".

The parties have further agreed, with the approval of the court, that other than filing and serving the defence and cross claim, the two companies will not to take further steps in the legal proceedings until 1 March next year.

Shares in Oilex were up 7% to 0.67p at 0955 GMT on Wednesday.