Rockpool Acqui Regulatory News (ROC)

26 Aug 2008 07:00



25 August 2008 

ROC OIL COMPANY LIMITED ("ROC")

STOCK EXCHANGE RELEASE

2008 HALF YEAR REPORT AND RESULTS

ROC today releases its half year financial report and Appendix 4D for the period ended 30 June 2008. Copies of the report and Appendix 4D are available on ROC's website at  http://www.rocoil.com.au/Public/Investor_Centre/Reports.aspx. The key highlights for 1H08 are:

FINANCIALS

Record half yearly trading profit of US$101.1 million; up 178% from US$36.4 million in 1H07. Net loss after income tax of US$120.7 million (1H07: loss US$7.1 million) after exploration expensed of US$65.3 million and a derivative loss of US$142.4 million (before tax), partially offset by a benefit of US$15.9 million (before tax) relating to the reversal of a prior year asset impairment. Normalised net loss after tax of US$13.3 million (1H07: loss of US$11.2 million) after excluding significant items relating to the unrealised derivative loss of $119.3 million (after tax) and the benefit of the asset impairment reversal of US$11.9 million (after tax). Amortisation expense of US$50.6 million (1H07: US$35.3 million); US$27.31/BOE (1H07 US$22.45/BOE). Gross debt at 30 June 2008 was US$133.4 million (31 December 2007: US$133.3 million), with cash of US$24.4 million (31 December 2007: US$41.4 million).

OPERATIONS

CORPORATE ACTIVITY

Subsequent to 30 June 2008, the AEL Scheme documentation was released to the ASX on 30 July 2008, the AZA Takeover Offer Bidder's Statement was released to the ASX on 31 July 2008 and a Supplementary Bidder's Statement was released on 7 August 2008 and was despatched to AZA shareholders on 13 August 2008. The AEL Scheme will be considered by AEL shareholders at a shareholders' meeting to be held on 3 September 2008 and if approved by Shareholders will be subject to the consideration of the Court on 5 September 2008. 

Commenting on the 1H08 financial results, ROC's Acting Chief Executive Officer, Bruce Clement, stated:

"The death of ROC's founder and CEO, Dr John Doran, on 27 June was a major loss to both ROC and to the Australian oil industry as a whole. I want to acknowledge the enormous contribution that John made in establishing and building the Company to where it is today. He will be greatly missed by all within the ROC family.

ROC's operational and financial results for the Half Year have been somewhat overshadowed by the decline in the Company's share price since the announcement of the proposed Anzon takeover on 16 June. ROC's Board and Management are committed to the takeover which, if successful, has the potential to transform the Company by creating a major mid cap Australian upstream oil and gas company with a strong asset base, 2P Reserves of 47 MMBOE and substantial financial capacity. If successful, ROC will more than double its 2P Reserves and increase its forecast production in 2010 to over 20,000 BOEPD. The takeover will immediately increase operating cash flow for the Company by up to 50% and expose ROC to significant upside reserves potential from the development of the Basker Manta Gummy Project in Bass Strait over the next 18 months.

What is difficult to understand is the market reaction to the transaction, which has seen ROC's share price fall to $1.11, placing ROC's enterprise value to cash flow multiple at close to 2.5, despite ROC's expectation to maintain production in 2009 and 2010 at approximately 10,000 BOEPD and the current market for crude oil prices over the next few years. 

Despite the headline loss after tax of US$120.7 million, ROC's operating cash flow has been strong. On the back of meeting its operational goal of producing 10,000 BOEPD during the Period, the Company has delivered cash flow from operations of US$86.1 million, up 81% on the same period last year. The loss after tax, generated from a trading profit of US$101.1 million, was impacted by two significant items: an exploration expense of US$65.3 million and an unrealised derivative loss of US$119.3 million resulting from the increase in forward prices for crude oil from 31 December 2007 to 30 June 2008. The continuing impact of the volatility of oil prices on ROC's financial results is highlighted by the fact that since the end of the Period, the reduction in oil prices to 22 August 2008, would have seen the unrealised derivative loss reduced by approximately US$53 million.

Operationally, the Company's performance has continued strongly across its development and production assets. The development project in the Zhao Dong Block in Bohai Bay, offshore China, has progressed well and remains on schedule to deliver first oil from the C4 Oil Field in Q4 2008, while development drilling on the C&D Fields at Zhao Dong has seen gross production from the fields returned to 20,000 BOPD during June. The ROC operated Cliff Head Oil Field and the two non-operated North Sea fields, Blane and Enoch, all continue to produce at the upper end of expectation."

Bruce Clement

Acting Chief Executive Officer

For further information please contact:

Mr Bruce Clement

Acting Chief Executive Officer

Tel: +61 2 8356 2000

Mr Matthew Gerber

Manager, Investor Relations & External Affairs

Tel: +61 2 8356 2000

Fax: +61 2 9380 2066

Email: mgerber@rocoil.com.au

Or visit ROC's website: www.rocoil.com.au

Dr Kevin Hird

General Manager - Business Development

Tel: +44 (0)20 7495 5707/+61 (0)2 8356 2000

Mob: +44 (0)7751 3671 49/+61 (0)417 261 727

Email: khird@rocoil.com.au

Michael Shaw

Oriel Securities Limited (Nominated Adviser)

Tel: +44 (0)20 7710 7600

Bobby Morse

Buchanan Communications

Tel: + 44 (0)20 7466 5000

Fax: + 44 (0)20 7466 5001

E-Mail: bobbym@buchanan.uk.com

Mob: +44 (0)7802 875 227

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