Rockpool Acqui Regulatory News (ROC)

11 Jan 2006 07:01

Roc Oil Company Limited11 January 2006 11 January 2006 ROC OIL COMPANY LIMITED ("ROC") STOCK EXCHANGE RELEASE________________________________________________________________________________ ACTIVITY AND PORTFOLIO UPDATE ________________________________________________________________________________ KEY POINTS: • The Cliff Head Oil Field Development remains on schedule for first oil in 1Q 2006. • Weather, operational and equipment delays, increased costs for materials and services, together with other mechanical revisions and other industry factors, have resulted in a A$25 million (ca 10%) cost increase over the current budget. • Up to 21 exploration and appraisal wells scheduled for 2006. • New website live from 7.00 pm Wednesday, 11 January, 2006. ________________________________________________________________________________ 1. CLIFF HEAD DEVELOPMENT PROJECT Roc Oil (WA) Pty Limited, as Operator on behalf of the Cliff Head Joint Venture,advises that the development of the Cliff Head Oil Field remains on track forfirst oil production in 1Q 2006. Production start-up is currently expectedduring 1Q 2006 with full field production due to be achieved shortly thereafter. Recent project milestones include: • The jacket for Cliff Head "A" platform was installed on site in late December 2005. • Construction and pre-commissioning of the topsides for the Cliff Head "A" platform has been successfully completed in Malaysia. Sail-away is expected later this week, with a scheduled arrival at the Cliff Head site in late January 2006. • Drilling of the planned five producing wells(1) and two water injection wells has commenced with the batch drilling of the 30 inch and 20 inch conductors completed in late December 2005. • The Ensco-67 drilling rig commenced(DEL: :DEL) batch development drilling of the 12 1/4 inch hole sections of the five oil production and two water injection wells in late December 2005. Drilling and completion activity is expected to finish in early April 2006. • On completion of drilling at Cliff Head, the Ensco-67 drilling rig will be utilised to drill exploration wells in nearby WA-286-P and TP/15 exploration permits. • Construction of the onshore Arrowsmith Production Facility is now 85% complete and commissioning work has begun. • A Cliff Head oil sales contract was executed in December 2005 between BP and all the parties to the Joint Venture under which all of the crude oil production for the life of the field will be sold into BP's Kwinana Refinery. Budget When the Final Investment Decision was made in March 2005, an A$227 millionbudget, including contingencies, was agreed. In late 2005, the Joint Ventureannounced that it had expanded the scope of the project to include drilling anadditional well, at a cost of approximately A$12.5 million, to access andproduce an additional one million barrels of oil which took the budget to A$240million. Subsequently, weather, operational and equipment delays, mechanical revisionsand rising industry costs of materials and services have resulted in an increasein overall costs of approximately A$25 million (ca 10%). Commenting on the progress to date, ROC's CEO, Dr John Doran, stated that: "We hate cost overruns. We derive no comfort from the fact that they arebecoming the norm in many parts of the resource sector. It's all very welltalking in the abstract about the rising cost of goods and services but it hitshome when you reali(INS:s:INS)(DEL:z:DEL)e that, for all practical purposes, theincreased Cliff Head budget will - on a post-tax basis - reduce ROC's netpresent value by about A$3.8 million, equivalent to two cents per share."The Cliff Head Joint Venture comprises:(INS::INS) +---------------------------------------------------+--------------+| | Equity |+---------------------------------------------------+--------------+|Roc Oil (WA) Pty Ltd (Operator) |37.5% |+---------------------------------------------------+--------------+|AWE Oil (Western Australia) Pty Ltd |27.5% |+---------------------------------------------------+--------------+|Wandoo Petroleum Pty Ltd |24.0% |+---------------------------------------------------+--------------+|ARC Energy (PB) Limited |6.0% |+---------------------------------------------------+--------------+|CIECO Exploration and Production (Australia) Pty |5.0% ||Ltd | |+---------------------------------------------------+--------------+ 2. DRILLING AND PORTFOLIO MANAGEMENT ACTIVITY ROC actively manages its acreage position in order to high grade its portfolio.As a result, different areas of operation attain different profiles at differenttimes; often reflecting the ebb and flow of the Company's drilling activitiesand results. In this context, 2006 is scheduled to be a big drilling year forROC with up to 21 exploration and appraisal wells planned (Attachment 1) Below is a summary of the main portfolio management and related events occurringwithin ROC's areas of activity: • Australia Apart from the Cliff Head Development Project referred to above, ROC's main nearterm focus in Australia will be the Jacala-1 exploration well in the deep wateroffshore Carnarvon Basin, which is due to commence in mid-February, and theseveral exploration wells scheduled to be drilled in the offshore Perth Basin in2Q 2006 (Attachment 1). • Angola The ongoing interpretation of the seismic acquired in 2005 continues to provideencouragement. Preliminary mapping of four of the more than half a dozenpotential target horizons indicates that most of the 33 wells drilled in the1,075 sq km permit area prior to 1972 were either invalid structural tests ornot optimally located on the structures. Additionally two of three existingwells within the permit that yielded hydrocarbon flows on drill string testingwere favourably located in respect to structural closure, with the other wellstill to be determined. There is every indication that onshore Cabinda will be a prime exploration focusfor ROC in 2006 and beyond. Currently, ROC is waiting on responses toinvitations to tender for seismic and drilling work in 2006. • Mauritania After the Zoule-1 exploration well is finished, the rig will move to the Dorelocation to drill the last well in the current series of wells offshoreMauritania. Although the final results of Zoule-1 will not be known for certainuntil logging operations have been completed, drill andmeasurement-while-drilling data gathered to date do not give any cause foroptimism. Subsequent to Dore-1 (DEL:- :DEL)and subject to all the usual industry vagaries(DEL: -:DEL) exploration and appraisal drilling is expected to resume offshoreMauritania in 2Q 2006 (Attachment 1). The Chinguetti Oil Field Development continues on schedule and on revised budgetas previously reported with first production due 1Q 2006. • Equatorial Guinea As Technical Manager of Blocks H15 and H16 in the deep water Rio Muni Basinoffshore Equatorial Guinea, ROC is actively talking to potential rig contractorswith regard to drilling the Aleta Cretaceous channel sand prospect in 3Q 2006(Attachment 1). • North Sea The Blane & Enoch Developments in the North Sea continue as previously reportedwith first production scheduled for late 2006. • Onshore UK The exploration focus of ROC's UK operated activities will be the Willows-1exploration well which is due to spud in March(DEL:,:DEL) 2006 (Attachment 1).The well will test a potentially significant, but high risk, gas prospect inYorkshire. • China ROC is continuing discussions with the relevant government authorities in Chinawith a view to establishing whether or not the Wei 12-8 West Field, in Block 22/12, can be developed commercially. At this stage of the process, neither thetiming nor the outcome of these discussions can be predicted with anyconfidence. ROC, as operator for the Block 22/12 Joint Venture in the Beibu Gulf, offshoreChina expects to start drilling the Wei 6-12 South prospect in March(DEL:,:DEL)2006 (Attachment 1). Also in China, ROC's 50%-owned subsidiary China Oil Shale Development CompanyLimited ("COSDECO"), the vehicle through which the Company monitors and reviewsoil shale opportunities in China, is expected to receive a small initial amountof revenue as the result of contractual agreements between third parties whichhave triggered a modest commission payment relating to the supply of equipmentand technology. ROC has decided not to participate in the first stage of theFushun Oil Shale Project ("FOSP") in Liaoning Province which it has beendiscussing with the relevant government authorities. However, ROC remains opento the review of subsequent opportunities in the oil shale business in China,including Phase 2 of FOSP. • New Zealand In order to maintain its executive and financial focus on those areas within itsportfolio with greatest perceived value, ROC has entered into discussions with athird party regarding the possible divestment of its interest in the onshoreTaranaki Basin, New Zealand in return for a 2% over-riding royalty. • New Ventures The Company continues to actively seek new ventures. However, the combination ofhigh vendor expectations in the current industry climate, a general lack ofcompelling new opportunities and ROC's own inventory of current projectsinclines the Company to the view that during 2006 new venture deals will be fewand far between. 3. FINANCE Loan Facility - US$60 million ROC is close to completing a US$60 million Borrowing Base Loan Facility to beapplied to the funding of its 2006 development activities, in particular theCliff Head Oil Field and Chinguetti Oil Field Projects. A US$30 million BridgingFacility is also being finalised to provide flexibility in funding options during 1Q 2006 while conditions precedent for the Borrowing Base Loan Facility are being completed. Cash & Receivables As of 31 December, 2006, ROC had approximately $68 million in cashand receivables and no debt. CORPORATE A new ROC website is scheduled to go live at 7:00pm on Wednesday, 11 January2006 (Sydney Time). The website address remains unchanged: www.rocoil.com.au For further information please contact: Dr John DoranMichelle Manook Tel: +61-2-8356-2000Corporate Affairs Fax: +61-2-9380-2635 Email: jdoran@rocoil.com.au: Or visit ROC's website: www.rocoil.com.au Dr Kevin Hird General Manager Business Developments Tel: +44(0)207 586 7936 Fax: +44(0)207 722 3919 Email: khird@rocoil.com.au Nick Lambert Bell Potteringer Corporate & Financial Tel: +44 (0)207 861 3232 To view the full text of this announcement, please paste the following link intoyour web browser http://www.asx.com.au//asxpdf/20060111/pdf/3v14gbshts1q4.pdf This information is provided by RNS The company news service from the London Stock Exchange