Rockpool Acqui Regulatory News (ROC)

31 Jul 2006 07:02

Roc Oil Company Limited31 July 2006 ROC OIL COMPANY LIMITED (ABN 32 075 965 856) REPORT TO SHAREHOLDERS Activities for the Quarter Ended 30 June 2006 CEO COMMENTS It was a big Quarter for ROC. The Company agreed to a US$260 million acquisitionof producing reserves, with upside, offshore China and commenced production fromthe ROC-operated Cliff Head Oil Field, offshore Western Australia. During the Quarter, ROC production, which had been close to zero in February2006, went from 1,700 BOPD to 4,300 BOPD and by Quarter-end was set to rise tomore than 12,000 BOPD during 3Q 2006. A potentially significant ROC-operated oil discovery offshore China and thestart-up of development drilling at the Blane Oil Field in the North Sea, wereother Quarter highlights. Lowlights included rising development costs aubiquitous blight on the local and global industry; and the underperformance ofthe Chinguetti Oil Field, offshore Mauritania. Perhaps, the main thing for shareholders to take from ROC's activities duringthe Quarter is that the Company's strategy is working well. Diversification ofits development and production portfolio, a consistent exploration effort and asteadfast focus on international operations are about to catapult ROC into adifferent league. HIGHLIGHTSPRODUCTION & SALES • Total production of 250,107 BBLS (2,748 BOPD), up 249% on the previous Quarter. • Total sales revenue of $16.752 million, up 226% on the previous Quarter. • Production from the Cliff Head Oil Field (ROC: 37.5% and Operator) commenced 1 May, less than 14 months after project sanction. Production from three of six scheduled production wells averaged 3,704 BOPD for the Quarter. At Quarter-end production was 8,500 BOPD from three wells. • Production from the Chinguetti Oil Field (ROC: 3.25%) averaged approximately 41,600 BOPD for the Quarter which was at the low end of expectations following reservoir and facility problems. At Quarter-end production was about 34,000 BOPD. DEVELOPMENT • Cliff Head Development Project achieved a number of milestones including the completion of most of the development drilling activities and the commissioning work at the Arrowsmith Stabilisation Plant. Due to delays related to drilling and completion of wells, and increased construction and commissioning costs the overall budget increased by approximately 15% from the previously reported $285 million to $327 million (ROC net: $123 million). • Development drilling commenced at the Blane Oil Field in the North Sea (ROC: 12.5%) and was continuing at Quarter-end. First oil production is scheduled for 2Q 2007. Current development cost estimate is £206 million/ $515 million (ROC net: $64 million) 25% above the previously stated budget of £165 million/$413 million, largely due to general increase in industry costs and the impact of pipelay delay. • Development activities at the Enoch Oil and Gas Field, in the North Sea (ROC: 12.0%) continued through the Quarter. First oil production is now expected to commence 1Q 2007 compared with the previously reported 4Q 2006. Current development cost estimate is £93 million/$233 million (ROC net: $28 million), up 24% on the previously stated budget of £75 million/$188 million, primarily due to a general increase in industry costs and to an extended project execution timeframe, both resulting from the current high demand for offshore contracting resources. EXPLORATION/APPRAISAL • In Block 22/12, Beibu Gulf, offshore China, the Wei 6-12S-1 exploration well is regarded as a potentially significant discovery after drilling approximately 90 metres of net hydrocarbon pay, mainly oil. Testing of three separate zones resulted in a total collective stabilised flow rate of 5,750 BOPD. An appraisal sidetrack Wei 6-12S-1a commenced drilling on 13 June. CORPORATE • On 26 June, ROC agreed to acquire a 24.5% operated interest in the Zhao Dong Block ("Block"), Bohai Bay, offshore China for US$260 million. At Quarter-end, the Block, which has upside potential, was producing about 30,000 BOPD from two fields (ROC designated interest: 7,300 BOPD). Gross proved and probable remaining reserves for the field approximate to 61 MMBO (ROC designated interest: 15 MMBO). FINANCIAL • At Quarter-end ROC had approximately $45.3 million in cash and a $35 million debt relating to a deposit for the Zhao Dong acquisition. • During the Quarter, ROC acquired an additional 380,000 BBLS put options at a Brent oil price of US$67/BBL and crude oil prices swaps for 1,200,000 BBLS at a weighted average Brent oil price of US$71.43/BBL covering the one year period to 30 June 2007. POST QUARTER EVENTS • Development drilling operations at Cliff Head were completed on 16 July with four of the six wells producing an average of 12,500 BOPD. In addition, the field achieved a significant milestone when cumulative oil production exceeded half a million barrels. • Appraisal of the Wei 6-12S-1 continued with the first sidetrack well, Wei 6-12S-1a, reaching a Total Depth of 2,530 mBRT. Initial analysis indicated that the five cores cut display similar reservoir quality to the discovery well. A second sidetrack well, Wei 6-12S-1b, commenced drilling on 13 July. The well was designed to intersect all the reservoir intervals seen in the upper part of the original discovery well downdip from that well. On 31 July, the second sidetrack well had reached a revised Total Depth of 2,950 mBRT and logging was underway. Preliminary appraisal results appear to range from as expected to somewhat encouraging. • Moodah-1 exploration well in TP/15, Perth Basin, offshore Western Australia reached a Total depth of 1,450 mBRT without encountering significant hydrocarbons. • ROC entered into further Brent crude oil price swaps for 1,017,000 BBLS for the period 1 July 2007 to 30 June 2008 at a weighted average price US$73.62/BBL. As a result of this and previously announced hedging programmes for the period July 2006 to 30 June 2008, ROC has hedged via swaps approximately 32% of its forecast company-wide 2P production for that period including Zhao Dong. • Government authorities in China extended the term of the Production Sharing Contract for Block 22/12, Beibu Gulf, offshore China for a further two years. For a complete copy of this report, please see ROC's website:http://www.rocoil.com.au/Public/Announcement/2006/Report_for_Quarter_Ended_30_June_2006.aspx FURTHER INFORMATION For further information please contact ROC's Chief Executive Officer, Dr John Doran on:Phone: (02) 8356 2000Facsimile: (02) 9380 2066Email: jdoran@rocoil.com.au Web Site: www.rocoil.com.auAddress: Level 14, 1 Market Street, Sydney, NSW 2000, Australia. Dr Kevin HirdGeneral Manager Business DevelopmentTel: +44 (0)207 586 7935Fax: +44 (0)207 722 3919Email: khird@rocoil.com.au Nick LambertBell Pottinger Corporate & FinancialTel: +44 (0)207 861 3232 This information is provided by RNS The company news service from the London Stock Exchange