Rockpool Acqui Regulatory News (ROC)

31 Oct 2007 07:02

Roc Oil Company Limited31 October 2007 ROC OIL COMPANY LIMITED (ABN 32 075 965 856) REPORT TO SHAREHOLDERS Activities for the Quarter Ended 30 September 2007 CEO COMMENTS • The Quarter provided record oil production at a time of record global oil prices; a happy coincidence. • In terms of US dollars, which is the Company's main currency of receipts and expenditures, quarterly sales revenues also set a new record. • The Quarter provided the Company with its sixth currently producing field, Blane, in the North Sea; a heavy oil discovery with its first well onshore Angola at Massambala -1, which is subject to further appraisal and large new exploration areas offshore Perth, Western Australia and in the Mozambique Channel offshore Madagascar. • Subsequent to Quarter end, Cevada-1 and Soja-1 wells, ROC's second and third exploration wells onshore Angola, both encountered hydrocarbon shows while drilling but in both cases they are judged to be non-commercial. See section 8.1 Post - Quarter Events. • As ROC heads towards the end of 2007 and into 2008, its aggressive drilling programme will continue onshore Angola while a new multi-well programme will start up in the Beibu Gulf, offshore China and subject to rig availability, possibly also in the northern offshore Perth Basin. KEY ACTIVITIES 1. CONSOLIDATED REVENUE & PRODUCTION 1.1 Oil Production hit a record level of 862,454 BBLS with total working interest oil and gas production of 881,209 BOE (9,578 BOEPD); up 13% compared to 782,322 BOE (8,597 BOEPD) in the previous quarter. 1.2 Total sales revenue of $60.8 million was essentially flat compared to $60.4 million in the previous quarter, despite the quarter-on-quarter increase in production. This reflected stronger US dollar oil prices, offset by an increase in underlift by 63,193 BBLS to 115,959 BBLS and a stronger Australian dollar. In fact, in terms of US dollars, which is largely the company's currency of expenditure, the 3Q 2007 quarterly sales revenue was also a record. 1.3 Sales volumes of 758,560 BBLS, down 1.1% compared to the previous quarter of 769,789, due to timing of cargo liftings. 1.4 The average realised oil price across all of ROC's production assets was $81.39/BBL (US$69.46/BBL), up 3% from 2Q 2007. 2. PRODUCTION ASSETS 2.1 Cliff Head Oil Field, WA-31-L, Offshore Western Australia (ROC:37.5% & Operator) Gross oil production averaged 8,790 BOPD (ROC: 3,295 BOPD), up 4% on theprevious quarter. In early September 2007, 16 months after production start-up,gross oil production from the field passed 4 MMBO without any Lost TimeInjuries. The annual maintenance and inspection shutdown at the ArrowsmithSeparation Plant was successfully completed in September, on schedule and onbudget. No major maintenance issues were identified during the inspection.Concurrent with the inspections, one well was subject to a chemical soak withpositive results and production following the start-up averaged in excess of11,000 BOPD for the balance of September 2007. 2.2 Zhao Dong C & D Oil Fields, Bohai Bay, Offshore China (ROC: 24.5% & Operator) Gross oil production averaged 17,320 BOPD (ROC: 4,244 BOPD) 8% lower than theprevious quarter. Field production has been constrained by down hole equipmentfailures and a degree of reservoir complexity. Subsequent to the end of theQuarter, successful drilling results and well optimisation work had seen thefield production increased to approximately 22,000 BOPD by mid October. ROCcontinued to build on its strong record of operational performance in the areaof Health, Safety and Environment and on 30 September 2007, Zhao Dong operationsachieved an important milestone: two years, representing more than 1.6 millionman-hours, without a Lost Time Injury. 2.3 Enoch Oil and Gas Field, North Sea (ROC: 12.0%) The Quarter marked the first full quarter of production for the Enoch Oil andGas Field. Gross production averaged 8,400 BOPD and 10 MMSCFD (ROC: 1,011 BOPDand 1.2 MMSCFD). The production data quoted is based on the Forties PipelineSystem reporting, and Enoch production volumes have not yet been finalised, andmay be subject to upward revision. 2.4 Blane Oil Field, North Sea (ROC: 12.5%) The Blane Oil Field, brought on-stream on 12 September 2007, averaged 15,000BOPD and 4 MMSCFD (ROC: 1,875 BOPD and 0.5 MMSCFD) for the balance of the month,in line with pre-production expectations. 2.5 Chinguetti Oil and Gas Field, PSC Area B, Offshore Mauritania (ROC: 3.25%) Gross oil production averaged 13,310 BOPD (ROC: 433 BOPD); down 15% on theprevious quarter's rate of 15,600 BOPD (ROC: 507 BOPD). Processing andinterpretation of the 4D seismic acquired in 1Q 2007 is assisting in definingthe Phase 2b forward work programme which will consist of infill wells. 3. DEVELOPMENT ASSETS 3.1 Zhao Dong C & D Oil Fields, Bohai Bay, Offshore China (ROC: 24.5% & Operator) Detailed design work is progressing well for the planned expansion of theexisting platform and production facilities and all major contracts have beenplaced. During the Quarter, five designated oil producing wells were drilled,designed to probe various different parts of the fields spread over more thanfive square kilometres. Overall, the results were mixed: three wells provideddisappointing results, while two yielded results that were considerably abovethe high end of pre-drill expectations. 3.2 Zhao Dong C4 Oil Field, Bohai Bay, Offshore China (ROC: 11.575% unitised & Operator) Project execution for the C4 field development is progressing with thefabrication of the piling templates for the C4 pipeline terminal and conductorpod now completed. 4. EXPLORATION AND APPRAISAL ASSETS 4.1 North Perth Basin, Offshore Western Australia (ROC: 20% - 37.5% & Operator) Following a successful exploration drilling programme during the previousquarter, a review of prospects and leads in the vicinity of the Dunsborough andFrankland discoveries in WA-286-P was initiated and was continuing atquarter-end. 4.2 WA-351-P, Carnarvon Basin, Offshore Western Australia (ROC: 20%) Technical work undertaken during the Quarter has highlighted a number of largeprospective features and planning is underway for a 3D seismic survey expectedto take place in 2008. 4.3 Block 22/12, Beibu Gulf, Offshore China (ROC: 40% & Operator - Subject to Government participation in developments for up to 51%) Further progress has been made on the FEED studies and Overall DevelopmentProgramme for the Wei 6-12 South and Wei 6-12 oil fields. Final preparationswere also underway for a planned four well exploration/appraisal programmestarting in December 2007 with targets in the vicinity of the Wei 6-12 and Wei6-12 South discoveries. 4.4 Cabinda South Block, Onshore Angola (ROC: 60% Working Interest & 75% Contributing Interest & Operator) The first exploration well in the Cabinda South Block, Massambala-1, discovereda shallow, heavy oil accumulation and feasibility studies are being undertakenwith reference to techniques used in countries which currently produce similarquality oil. Subject to the results of these ongoing studies, it is planned thata horizontal appraisal well will be drilled to further define the accumulation,the provisional resource of which is estimated to be in the order of 170 millionbarrels of oil in-place. The 2007 202 sq km 3D seismic acquisition programme was successfully completedahead of schedule, on budget and without any Lost Time Injuries. The completionof the 2007 seismic programme marks the end of ROC's block-wide seismicacquisition which spanned 2005 to 2007 and represented 135,000 man days on theground in Cabinda with only one minor Lost Time Injury in July 2005. The exploration wells, Cevada-1 and Soja-1 commenced drilling in the Quarter, (see section 8.1 Post - Quarter Events). 4.5 Offshore Mauritania (ROC: 2 - 5%) During the Quarter exploration activity was largely focused on interpreting theTiof high resolution 3D seismic survey. One or more exploration wells may bedrilled in 2008 dependent on re-evaluation of the prospect inventory and rigavailability. 4.6 Blocks H15 & H16 Equatorial Guinea (ROC: 18.75% & Technical Manager) The Republic of Equatorial Guinea has granted a one year extension (untilFebruary 2009) to the current exploration period. Pioneer Natural Resources(Equatorial Guinea) Limited and the other joint venturers, including ROC,continue to be subject to arbitration proceedings which are expected to concludeduring 2008. 4.7 Block Belo Profond, Offshore Madagascar (ROC: 75% & Operator) The PSC was formally approved effective 30 July 2007. Review and purchase ofseismic and well data has been completed. Planning is continuing for a seismicsurvey and a geological review is also progressing. 5. NEW VENTURES On 4 September 2007, ROC announced that it had signed a Farmin Agreement withLempika Pty Limited, Emphazise Pty Limited and Westralian Petroleum Limited withregard to WA-381-P and WA-382-P in the Vlaming Sub-Basin, offshore Perth. As aresult, subject to government approval, ROC has acquired an initial 20% operatedinterest in the two permits by agreeing to fund $2 million pre-seismicexploration activity. As part of this Farmin Agreement, ROC has been granted twofurther options whereby by funding further work programmes ROC's interest wouldincrease to a maximum of 80%. 6. CORPORATE During the Quarter two new directors joined ROC's board. Mr Bruce Clement, theCompany's Chief Operating Officer, was appointed as an Executive Director on 1July 2007 and Dr Doug Schwebel was appointed as a Non-Executive Director of theCompany on 1 September 2007. On 29 August 2007, Ms Leanne Nolan, ROC's Senior Lawyer, was appointed asAssistant Company Secretary. During the Quarter, the refinancing of ROC's US$137.5 million Bridge LoanFacility was successfully completed with a new four year US$200 million debtfacility to support future growth opportunities and provide a general workingcapital facility for the Company. The WA-325-P and WA-327-P Joint Venturers gave the Western Australian Governmentformal notification of the surrender of these permits effective 23 July 2007. 7. FINANCIAL At Quarter-end ROC had approximately $28.8 million in cash and debt of $177.0million. 7.1 Production+----------------------+----------+----------+-----------+-----------+| | 3Q 2007 | 2Q 2007 | YTD | % Change || | | | | (3Q07 to || | | | | 2Q07) |+----------------------+----------+----------+-----------+-----------+|Oil Production (BBLS) | | | | |+----------------------+----------+----------+-----------+-----------+|Cliff Head | 303,130| 289,233| 857,721| 5|+----------------------+----------+----------+-----------+-----------+|Zhao Dong C&D Fields | 390,455| 418,497| 1,271,866| (7)|+----------------------+----------+----------+-----------+-----------+|Chinguetti | 39,803| 45,599| 139,025| (13)|+----------------------+----------+----------+-----------+-----------+|Blane | 35,717| -| 35,717| N/A|+----------------------+----------+----------+-----------+-----------+|Enoch* | 93,002| 22,389| 115,391| 315|+----------------------+----------+----------+-----------+-----------+|Other | 347| 500| 1,496| (31)|+----------------------+----------+----------+-----------+-----------+|Total Oil Production | 862,454| 776,218| 2,421,216| 11|+----------------------+----------+----------+-----------+-----------+| | | | | ||Gas Production (MSCF) | | | | |+----------------------+----------+----------+-----------+-----------+|Blane | 10,381| -| 10,381| N/A|+----------------------+----------+----------+-----------+-----------+|Enoch | 102,149| 36,625| 138,774| 179|+----------------------+----------+----------+-----------+-----------+|Total Gas (MSCF) | 112,530| 36,625| 149,155| 207|+----------------------+----------+----------+-----------+-----------+|Total BOE | 881,209| 782,322| 2,446,075| 13|+----------------------+----------+----------+-----------+-----------+|BOEPD | 9,578| 8,597| 8,960| 11|+----------------------+----------+----------+-----------+-----------+ Note: Production quoted is ROC's working interest share of total production.ROC's net entitlement production for the period was 821,753 (2Q 2007: 749,213;YTD: 2,320,286) after taking out governments' share of profit oil. * The production data for Enoch is based on the Forties Pipeline Systemproduction, which has not yet been finalized and may be subject to upwardsrevision. 2Q production for Enoch has been retrospectively decreased by 7,221BBLS (0.3% of ROC's total year to date production) as a result of metering andallocation adjustments post-start-up. 7.2 Sales+------------------+------------------+------------------+---------------------+| | 3Q 2007 | 2Q 2007 | YTD |+------------------+---------+--------+---------+--------+-----------+---------+|Oil Sales (BBLS) | BBLS | $'000 | BBLS | $'000 | BBLS | $'000 |+------------------+---------+--------+---------+--------+-----------+---------+|Cliff Head | 302,181 | 26,356 | 296,192 | 24,322 | 857,890 | 69,802 |+------------------+---------+--------+---------+--------+-----------+---------+|Zhao Dong C&D | 299,951 | 21,543 | 406,224 | 31,222 | 1,020,417 | 72,487 ||Fields | | | | | | |+------------------+---------+--------+---------+--------+-----------+---------+|Chinguetti | 32,394 | 2,835 | 60,769 | 4,731 | 93,163 | 7,566 |+------------------+---------+--------+---------+--------+-----------+---------+|Enoch | 104,932 | 9,459 | - | - | 104,932 | 9,459 |+------------------+---------+--------+---------+--------+-----------+---------+|Other | 347 | 21 | 500 | 43 | 1,496 | 111 |+------------------+---------+--------+---------+--------+-----------+---------+|Total Oil Sales | 739,805 | 60,214 | 763,685 | 60,317 | 2,077,898 | 159,425 |+------------------+---------+--------+---------+--------+-----------+---------+|Gas Sales (MSCF) | | | | | | |+------------------+---------+--------+---------+--------+-----------+---------+|Blane | 10,381 | 13 | - | - | 10,381 | 13 |+------------------+---------+--------+---------+--------+-----------+---------+|Enoch | 102,149 | 566 | 36,625 | 126 | 138,774 | 692 |+------------------+---------+--------+---------+--------+-----------+---------+|Total Gas Sales | 112,530 | 579 | 36,625 | 126 | 149,155 | 705 ||(MSCF) | | | | | | |+------------------+---------+--------+---------+--------+-----------+---------+|Total Sales (BOE) | 758,560 | 60,793 | 769,789 | 60,443 | 2,102,757 | 160,130 |+------------------+---------+--------+---------+--------+-----------+---------+ Note: ROC's net entitlement crude stock position increased by 63,193 BBLS duringthe period so that at the end of 3Q 2007 ROC was in an underlift position of115,959 BBLS compared to a 52,766 BBLS underlift at the end of the previousquarter. 7.3 Expenditure Incurred+---------------------------+-------------+-------------+-------------+| | 3Q 2007 | 2Q 2007 | YTD || | $'000 | $'000 | |+---------------------------+-------------+-------------+-------------+|Exploration | | | |+---------------------------+-------------+-------------+-------------+|Angola | 31,795| 18,474| 57,847|+---------------------------+-------------+-------------+-------------+|China | 1,283| 320| 2,217|+---------------------------+-------------+-------------+-------------+|Mauritania | 86| 460| 691|+---------------------------+-------------+-------------+-------------+|Australia | 389| 21,149| 21,668|+---------------------------+-------------+-------------+-------------+|UK | 56| 68| 229|+---------------------------+-------------+-------------+-------------+|Equatorial Guinea | 5| 192| 299|+---------------------------+-------------+-------------+-------------+|Madagascar | 441| 2,161| 2,602|+---------------------------+-------------+-------------+-------------+|Other | 198| 562| 1,011|+---------------------------+-------------+-------------+-------------+|Total Exploration | 34,253| 43,386| 86,564|+---------------------------+-------------+-------------+-------------+ +---------------------------+-------------+-------------+-------------+|Development | | | |+---------------------------+-------------+-------------+-------------+|Zhao Dong C & D Fields | 8,746| 6,235| 16,177|+---------------------------+-------------+-------------+-------------+|Zhao Dong C4 | 1,900| 144| 2,049|+---------------------------+-------------+-------------+-------------+|Blane | 5,051| 5,608| 21,707|+---------------------------+-------------+-------------+-------------+|Enoch | 1,103| 3,726| 10,712|+---------------------------+-------------+-------------+-------------+|Chinguetti | 412| 701| 3,575|+---------------------------+-------------+-------------+-------------+|Total Development | 17,212| 16,414| 54,220|+---------------------------+-------------+-------------+-------------+| | | | |+---------------------------+-------------+-------------+-------------+|Total Exploration & | 51,465| 59,800| 140,784||Development | | | |+---------------------------+-------------+-------------+-------------+ 7.4 Hedging At 30 September 2007, the company's hedge position for the period through toDecember 2011 is summarised below. +-------+---------------------------+----------------------------+| | Brent Oil Price Swaps | Brent Oil Price Puts |+-------+-------------+-------------+-------------+--------------+| | Volume | Weighted | Volume | Weighted || | |Average Brent| |Average Brent || | | Price | | Price || | | USD/BBL | | USD/BBL |+-------+-------------+-------------+-------------+--------------+| 2007 |351,000 |67.68 |75,000 |50.00 |+-------+-------------+-------------+-------------+--------------+| 2008 |1,177,987 |71.40 |- |- |+-------+-------------+-------------+-------------+--------------+| 2009 |851,998 |70.01 |- |- |+-------+-------------+-------------+-------------+--------------+| 2010 |686,994 |68.46 |- |- |+-------+-------------+-------------+-------------+--------------+| 2011 |455,997 |66.31 |- |- |+-------+-------------+-------------+-------------+--------------+| |3,523,976 |69.46 |75,000 |50.00 |+-------+-------------+-------------+-------------+--------------+ 8. POST QUARTER EVENTS Following discussions with the relevant government authorities, ROC has nowobtained approval to release the following information on its recently completeddrilling activities onshore Angola. ROC's second exploration well in the CabindaSouth Block, onshore Angola, Cevada-1, was drilled to a Total Depth of 1,358metres. The third exploration well, Soja-1, was drilled to a Total Depth of2,856 metres. Both wells had good hydrocarbon shows but neither is judged to becommercial. Cevada-1 was plugged and abandoned and Soja-1 is being plugged andabandoned. The Simmons rig will now continue the drilling programme withTrigo-1, which is due to start drilling by end-November, which will beimmediately followed at the beginning of January by Milho-1. 9. FURTHER INFORMATION For further information please contact ROC's Chief Executive Officer, JohnDoran, Chief Operating Officer, Bruce Clement or General Manager, ExternalAffairs & Investor Relations, Damian Fisher on: Phone: (02) 8356 2000 Email: jdoran@rocoil.com.auFacsimile: (02) 9380 2066 Web Site: www.rocoil.com.auAddress: Level 14, 1 Market Street, Sydney, NSW 2000, Australia +------------------------------------------------------------------------+|definitions |+---------+--------------------------------------------------------------+|BBL(S) |means barrel(s) |+---------+--------------------------------------------------------------+|BCF |means billion cubic feet |+---------+--------------------------------------------------------------+|BOE |means barrels of oil equivalent (6 MSCF = 1 BOE) |+---------+--------------------------------------------------------------+|BOPD |means barrels of oil per day |+---------+--------------------------------------------------------------+|BOEPD |means barrels of oil equivalent per day |+---------+--------------------------------------------------------------+|BCPD |means barrels of condensate per day |+---------+--------------------------------------------------------------+|GWC |means gas-water contact |+---------+--------------------------------------------------------------+|MCF |means thousand cubic feet |+---------+--------------------------------------------------------------+|mBRT |means metres below rotary table |+---------+--------------------------------------------------------------+|mMDRT |means measured depth below rotary table |+---------+--------------------------------------------------------------+|mTVDSS |means metres true vertical depth below sea level |+---------+--------------------------------------------------------------+|MSCF |means thousand standard cubic feet |+---------+--------------------------------------------------------------+|MMSCF |means million standard cubic feet |+---------+--------------------------------------------------------------+|MMSCFD |means million standard cubic feet per day |+---------+--------------------------------------------------------------+|MMBO |means million barrels of oil |+---------+--------------------------------------------------------------+|MMBOE |means million barrels of oil equivalent |+---------+--------------------------------------------------------------+|OWC |means oil-water contact |+---------+--------------------------------------------------------------+|PSC |means Production Sharing Contract |+---------+--------------------------------------------------------------+|Quarter |means the period 1 July 2007 to 30 September 2007 |+---------+--------------------------------------------------------------+|ROC |means Roc Oil Company Limited and includes, where the context || |requires, its subsidiaries |+---------+--------------------------------------------------------------+|SCF |means standard cubic feet |+---------+--------------------------------------------------------------+|TCF |means trillion cubic feet |+---------+--------------------------------------------------------------+|US$ |means US dollars |+---------+--------------------------------------------------------------+|$ |means Australian dollars |+---------+--------------------------------------------------------------+ In accordance with ASX and AIM Rules, the information in this Release has beenreviewed and approved by Dr John Doran, Chief Executive Officer, Roc Oil CompanyLimited, BSc (Hons) Geology, MSc and PhD. Dr Doran, who is a member of theSociety of Petroleum Engineers, has more than 30 years relevant experiencewithin the industry and consents to the information in the form and context inwhich it appears. 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 This information is provided by RNS The company news service from the London Stock Exchange