UPDATE 1-Oilex says 10 oil prospects in Timor sea identified

* Expects drilling to start in Q3

* Says Timor sea block very attractive for oil exploration

* Shares up 4.35 pct on LSE (Adds details)

April 7 (Reuters) - Australia-based Oilex Ltd (OEX.AX) (OEX.L) said on Tuesday 10 prospects had been identified as potential drill targets in the joint petroleum development area between Timor-Leste and Australia, and its shares rose 4.35 percent in early trade.

Seismic work results in the company operated 103 block in the Timor sea confirm that this block has the potential to host very significant oil resources near to existing producing fields, the oil and gas explorer said.

Oilex said the prospect inventory has the potential to contain mean estimated prospective resources in excess of 100 million barrels of oil with six additional features offering resources potential of more than 50 million barrels.

The company expects a drilling unit to be available to start drilling in the contract area in the third quarter of 2009.

Oilex and Indian companies Gujarat State Petroleum Corp Ltd (GSPT.BO), Videocon Industries Ltd (VEDI.BO) and Bharat Petroleum Corp Ltd (BPCL.BO) each hold a 25 percent interest in the block.

Oilex shares were up 0.5 pence at 12 pence by 0821 GMT on the London Stock Exchange. (Reporting by Balachander Surianarayanan in Bangalore; Editing by Tresa Sherin)