Rockpool Acqui Regulatory News (ROC)

31 Jan 2007 07:02

Roc Oil Company Limited31 January 2007 ROC OIL COMPANY LIMITED (ABN 32 075 965 856) REPORT TO SHAREHOLDERS Activities for the Quarter Ended 31 December 2006 CEO COMMENTS ROC's quarterly sales volume hit the one million barrel mark for the first time.This represents reasonable progress compared to 4Q 2005 when the sales volumewas about 3,000 barrels. Other quarterly records include $66 million salesrevenue and 0.85 MMBO production. Gross oil production from the ROC-operatedCliff Head Oil Field, offshore Western Australia, hit the two million barrelmark, just eight months after production start-up. In the above context, ROC's upside share price potential during 2007 could beviewed as being tied to oil price movements. To ensure that the share price isnot simply a captive of the oil price, the Company's 2007 drilling and newventure programmes have been designed on a scale that would allow the shareprice to disconnect from oil price trends in the event of successful exploration/appraisal drilling and/or new asset acquisition. If the Company achieves ameasure of success on these fronts then, regardless of whether oil pricesstabilise, weaken or strengthen, the share price would have the potential tojump ahead of the oil price trend line. This sequential growth strategy means that the big growth year which has justgone will be followed immediately by another with equal growth potential. KEY ACTIVITIES 1. REVENUE & PRODUCTION • Total working interest oil production of 847, 087 BBLS (9,207 BOPD); up 3% compared to 825,039 BBLS (8,968 BOPD) in the previous Quarter • Total sales revenue of $66.1 million; up 4% compared to $63.4 million in the previous Quarter. • Total sales volume of 1,048,282 BBLS; up 33% compared to 788,749 BBLS in the previous Quarter. 1.1 Cliff Head Oil Field, WA-31-L, Offshore Western Australia (ROC: 37.5% & Operator) Gross oil production rates of approximately 8,700 BOPD (ROC WI: 3,261 BOPD) forthe Quarter with a high of 15,500 BOPD. Intermittent production constraintsrelated to separate issues including: trucking capacity; electrical malfunctionat the offshore platform; and minor mechanical downtime at the onshore plant. On31 December, the field produced its two millionth barrel of oil, eight monthsafter production start-up 1.2 Zhao Dong C & D Fields, Bohai Bay, Offshore China (ROC: 24.5% & Operator) Following the imposition of a 22,000 BOPD production constraint announced inOctober 2006, gross oil production was approximately 21,100 BOPD (ROC WI: 5,180BOPD) with minor downtime experienced due to winter weather conditions. SeeSection 6: Post Quarter Events 1.3 Chinguetti Oil and Gas Field, PSC Area B, Offshore Mauritania (ROC: 3.25%) Gross oil production averaged approximately 23,400 BOPD (ROC WI: 760 BOPD). On 1November, ROC announced a downgrade of initial gross 2P reserves to 52.4 MMB0.On 16 November, the Operator, Woodside, issued an interim gross 2P reserveestimate of 53.0 MMBO. The CH-18 production infill well commenced drilling on 29December. See Section 6: Post Quarter Events 2. DEVELOPMENT 2.1 Blane Oil Field, North Sea (ROC: 12.5%) Development drilling and completion of the second production well wasaccomplished on 13 October. Pipe-lay work for the flow line to the Ula platformcommenced in early October and was completed by November. The Operator advisesthat first oil production is still expected during 2Q 2007. For internalplanning purposes ROC is assuming first oil late in that period. 2.2 Enoch Oil and Gas Field, North Sea (ROC: 12.0%) Production testing of the single development well was completed 21 October withthe well recording several flow rates on various choke sizes generally in linewith expectations. Pipeline post-lay work was also completed during the Quarter.The Operator advises that first oil production is now expected during 2Q 2007.For internal planning purposes ROC is assuming first oil early in that period.2.3 Zhao Dong C4 Oil Field, Bohai Bay, Offshore China (ROC: 11.58% unitised &Operator) On 31 December, PetroChina advised ROC that it had been notified by the NationalDevelopment and Reform Commission of the Chinese Government's approval toproceed with the C4 Development Plan. The next step is the approval of theDevelopment Budget by the Joint Management Committee. 3. EXPLORATION AND APPRAISAL 3.1 Perth Basin, Offshore Western Australia (ROC: 7.5% - 50% & Generally Operator) Activity focused on contracting a suitable rig for 1H 2007 to drill theFrankland-1 and Perseverance-1 exploration wells in WA-286-P and WA-325-Prespectively. 3.2 Wei 6-12 South Oil Field, Block 22/12, Beibu Gulf, Offshore China (ROC: 40% & Operator) Appraisal studies of the Wei 6-12 South and Wei 6-12 oil fields continued duringthe Quarter. See Section 6: Post Quarter Events 3.3 Mauritania (ROC: 2.0 - 5.0%) On 8 December the Dana-operated Aigrette-1 exploration well in Block 7 (ROC:4.95%) was drilled to a Total Depth of 5,152 metres and plugged and abandonedafter encountering hydrocarbon-bearing sandstones within the Cretaceous targetzone. Whilst the result is technically encouraging, the discovery is likely tobe sub-commercial. The well completed the 2006 Mauritanian exploration drillingprogramme. 3.4 Equatorial Guinea (ROC: 18.75% & Technical Manager) Activity focused on finalising contract negotiations for the Aban Abraham deepwater drilling vessel, currently being upgraded in Singapore, with a view todrilling the Aleta Prospect in 2H 2007. 3.5 Angola (ROC: 60% & Operator) A two-year drilling rig contract was signed with Simmons Drilling OverseasLimited for the Simmons 80 rig to commence drilling in the onshore Cabinda SouthBlock by May 2007. The rig is currently being upgraded in Dubai. Upgrade work commenced in the UK on the ROC-owned Explorer rig with a view toshipping it to Cabinda during 1Q 2007 for start-up of drilling during April/May2007. On 11 December, the Cabinda South Joint Venture formally approved the 2007 WorkProgramme and Budget which includes three firm exploration wells. The totalbudget approximates to US$54 million of which approximately US$43 millionrelates to drilling activity. The 217 km 2D seismic programme was completed in the Cabinda South Block,onshore Angola, marking the end of an 18-month seismic acquisition phase whichacquired a total of 416 sq km of 3D and 722 km of 2D seismic. This work effortrepresents in excess of 75,000 man-days on ground in Cabinda. 4. CORPORATE On 2 November, ROC announced a fully underwritten 3 for 8 Renounceable Rights Issue, at $2.70 per share, which raised approximately $219 million. The purpose ofthe Rights Issue was to reduce debt incurred in relation to the acquisition ofthe Zhao Dong asset and to provide greater financial flexibility for the Companyas it continues to build shareholder value. Approximately 91% of eligibleshareholders subscribed to the issue. The final number of shares allotted on 8 December under the terms of the RightsIssue was 81,226,213, taking ROC's total issued capital to 297,822,206 fullypaid ordinary shares. As at 31 December, ROC had approximately 18,450 shareholders, up 44% compared to1 July 2006 5. FINANCIAL Approximately $200 million of the funds raised in the Rights Issue was used toreduce corporate debt so that, at Quarter-end ROC had approximately $60.6million in cash and $173.7 million of debt. 5.1 Production+----------------------------------+-------------+-------------+-------------+| | 4Q 2006 | 3Q 2006 | Change || | BBLS | BBLS | % |+----------------------------------+-------------+-------------+-------------+|Australia - Cliff Head | 300,030| 321,721| (7) |+----------------------------------+-------------+-------------+-------------+|China - Zhao Dong C & D Fields | 476,514| 410,225| 16 |+----------------------------------+-------------+-------------+-------------+|Mauritania - Chinguetti | 69,895| 92,687| (25) |+----------------------------------+-------------+-------------+-------------+|Other | 648| 406| 60% |+----------------------------------+-------------+-------------+-------------+|Total Production | 847,087| 825,039| 3% |+----------------------------------+-------------+-------------+-------------+ Production quoted is ROC's working interest share of total production. ROC's netentitlement production for the period was 790,344 BBLS (3Q: 775,064 bbls) 5.2 Sales+--------------------------+----------------------+------------------------+| | 4Q 2006 | 3Q 2006 |+--------------------------+-----------+----------+-----------+------------+| | BBLS | $'000 | BBLS | $'000 |+--------------------------+-----------+----------+-----------+------------+|Australia - Cliff Head | 300,982| 21,401| 320,604| 28,789|+--------------------------+-----------+----------+-----------+------------+|China - Zhao Dong C & D | 620,191| 36,334| 405,036| 29,334||Fields | | | | |+--------------------------+-----------+----------+-----------+------------+|Mauritania - Chinguetti | 126,483| 8,366| 62,740| 5,268|+--------------------------+-----------+----------+-----------+------------+|Other | 626| 45| 369| 34|+--------------------------+-----------+----------+-----------+------------+|Total Sales | 1,048,282| 66,146| 788,749| 63,425|+--------------------------+-----------+----------+-----------+------------+ ROC's net entitlement crude stock position decreased by 258,000 BBLS during theperiod and at the end of 4Q 2006 ROC was in a net overlift position of 102,000BBLS. 5.3 Expenditure+----------------------------------+--------------+--------------+| | 4Q 2006 | 3Q 2006 || | $'000 | $'000 |+----------------------------------+--------------+--------------+|Exploration | | |+----------------------------------+--------------+--------------+|Angola | 10,511| 14,882|+----------------------------------+--------------+--------------+|China | 11| 4,306|+----------------------------------+--------------+--------------+|Mauritania | 3,885| 4,643|+----------------------------------+--------------+--------------+|Australia | 182| 1,863|+----------------------------------+--------------+--------------+|UK | 58| 694|+----------------------------------+--------------+--------------+|Equatorial Guinea | 55| 51|+----------------------------------+--------------+--------------+|Other | 949| 558|+----------------------------------+--------------+--------------+|Total Exploration | 15,651| 26,997|+----------------------------------+--------------+--------------+|Development | | |+----------------------------------+--------------+--------------+|Cliff Head | 736| 9,926|+----------------------------------+--------------+--------------+|Zhao Dong | (531)| 4,155|+----------------------------------+--------------+--------------+|Blane | 16,772| 13,723|+----------------------------------+--------------+--------------+|Enoch | 5,841| 5,239|+----------------------------------+--------------+--------------+|Chinguetti | 1,664| 545|+----------------------------------+--------------+--------------+|Total Development | 24,482| 33,588|+----------------------------------+--------------+--------------+|Total Exploration & Development | 40,133| 60,585|+----------------------------------+--------------+--------------+ 5.4 Hedging No additional oil price hedging was undertaken in the current Quarter. Thefollowing hedges were settled during the period for which ROC received revenueof $3 million. +--------------------------+----------+----------+----------+----------+----------+| | BBLS | Weighted | BBLS | Weighted |TOTAL BBLS|| | | Average | | Average | || | | Brent | | Brent | || | |Price USD/| | Price | || | | BBL | | USD/BBL | |+--------------------------+----------+----------+----------+----------+----------+|Oil Price Swaps | 141,000| 49.58| 300,000| 72.47| 441,000|+--------------------------+----------+----------+----------+----------+----------+|Oil Price Puts | 60,000| 50.00| 140,000| 67.00| 200,000|+--------------------------+----------+----------+----------+----------+----------+ 6. POST QUARTER EVENTS 6.1 On 9 January, ROC was advised that oil production at the Zhao Dong C & D oil fields, Bohai Bay, offshore China could be increased subject to an overall fluid rate constraint. As a result daily production has risen from the curtailed level of 22,000 BOPD to approximately 24,000 BOPD, subject to normal winter weather constraints. 6.2 As of 14 January, the CH-18 production well at the Chinguetti Oil Field, offshore Mauritania, had been drilled to a Total Depth of approximately 2,883 metres after encountering a gross oil pay interval of approximately 213 metres and a net oil pay of 35 metres which is in line with pre-drill expectations. The well is scheduled for completion in mid-February. 6.3 On 30 January, ROC announced that it had completed an Appraisal Report relating to the Wei 6-12 South and Wei 6-12 oil fields in Block 22/12 in the Beibu Gulf, offshore China (ROC 40%(1) & Operator). The most likely oil in-place for the two fields is 56 MMBO. When the results of the Report, which focused only on the two known fields, are combined with the current understanding of the two adjacent, undrilled prospects, the most likely oil in-place for the four features in the Wei South Complex is approximately 83 MMBOIP. The upside oil in-place for these four features is 108 MMBOIP. The most likely recoverable oil estimate for the four features is 29 MMBO, of which 19 MMBO relates to the two known fields. The upside potential of the four features is 37 MMBO of which 27 MMBO relates to the two known fields. On this basis, the Joint Venture is moving towards Front End Engineering and Design ("FEED") which is scheduled to begin in 2Q 2007 and a Final Investment Decision which is expected in 2H 2007. 6.4 Formal consent was received relating to the relinquishment of the WA-349-P permit in the Perth Basin, effective 5 January 2007. 7. FURTHER INFORMATION For further information please contact ROC's Chief Executive Officer, Dr JohnDoran 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 |+-------------+---------------------------------------------------------------+|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 |+-------------+---------------------------------------------------------------+|m BRT |means metres below rotary table |+-------------+---------------------------------------------------------------+|MMSCF |means million standard cubic feet |+-------------+---------------------------------------------------------------+|MMSCF/D |means million standard cubic feet per day |+-------------+---------------------------------------------------------------+|MMBO |means million barrels of oil |+-------------+---------------------------------------------------------------+|MMBBLS |means million barrels |+-------------+---------------------------------------------------------------+|MMBOE |means million barrels of oil equivalent |+-------------+---------------------------------------------------------------+|MMBOIP |means million barrels of oil in place |+-------------+---------------------------------------------------------------+|NGL |means natural gas liquids |+-------------+---------------------------------------------------------------+|OWC |means oil-water contact |+-------------+---------------------------------------------------------------+|PSC |means Production Sharing Contract |+-------------+---------------------------------------------------------------+|Quarter |means the period 1 October 2006 to 31 December 2006 |+-------------+---------------------------------------------------------------+|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 |+-------------+---------------------------------------------------------------+|WI |means working interest entitlement |+-------------+---------------------------------------------------------------+ --------------------------(1) Pre Government back-in for 51% This information is provided by RNS The company news service from the London Stock Exchange