Rockpool Acqui Regulatory News (ROC)

14 Mar 2005 07:01

Roc Oil Company Limited14 March 2005 14 March 2005 ROC OIL COMPANY LIMITED STOCK EXCHANGE RELEASE JOINT VENTURE COMMITS TO DEVELOP THE CLIFF HEAD OIL FIELD, OFFSHORE WESTERN AUSTRALIA KEY POINT • The WA-286-P Joint Venture has taken a Final Investment Decision with regard to the Cliff Head Oil Field, offshore Western Australia, which will result in the field being developed for production, subject to receipt of final Government approvals. First oil is expected to flow within 12 months at an initial rate in excess of 10,000 BOPD through facilities with 15,000 BOPD capacity. Proven and probable field reserves, in the fully appraised part of the Cliff Head structure, are currently estimated to be about 14 MMBO. There is upside reserve potential in areas adjacent to the field which are currently undrilled but which will be accessible from the production platform. The total development cost is expected to be A$227 million. Within the context of Australia's offshore oil and gas industry, the Cliff Head Development Project represents a number of "firsts", including the first oil field to be developed in the offshore Perth Basin. 1. FINAL INVESTMENT DECISION Roc Oil (WA) Pty Ltd, a wholly owned subsidiary of Roc Oil Company Limited("ROC"), operator for and on behalf of the WA-286-P Joint Venture (the "JointVenture"), is pleased to advise that the Joint Venture has taken a FinalInvestment Decision with regard to the development of the Cliff Head Oil Fieldin the offshore Perth Basin, Western Australia. As a result, production is expected to start within 12 months, subject toreceipt of final Government approvals. Initial production rates will be inexcess of 10,000 BOPD through facilities with 15,000 BOPD design capacity. 2. RESERVES AND POTENTIAL Proved and probable recoverable reserves are estimated to be in the order of 14MMBO within that part of the field which has been fully appraised. Additionalpossible as yet undrilled reserve potential exists in three adjacent areas thatwill be accessible from the Cliff Head production platform. Specifically: • Previously, the reservoir sand sequence in the northwestern part of the Cliff Head structure was mapped as being below the field's oil-water contact. Subsequent to the integration of seismic velocity data acquired from the drilling of the Cliff Head-5 and Cliff Head-6 wells, the latest seismic mapping now suggests that a significant amount of potential reservoir in this part of the structure may be above the field's oil-water contact. • To the east of the field, as currently mapped, there are shallow water shoals which have previously prevented the acquisition of seismic data. However, because of encouraging results from a current transition zone 2D seismic survey in very shallow waters in WA-286-P and the adjacent TP/15, it is now proposed that this survey be extended so as to better define the potential of the area immediately east of the Cliff Head Oil Field. • To the northeast of the field, the current very shallow water transition zone 2D seismic survey has also indicated that reserve potential may exist up-dip from Mentelle-1, an exploration well, drilled in 2003, which had significant residual oil shows in the upper part of the reservoir objective. 3. FIELD DEVELOPMENT The Cliff Head Oil Field Development Project is expected to cost a total ofapproximately A$227 million. There are four main components: • Offshore PlatformA small, normally unmanned, offshore platform with seven active wells: five oilproducers and two water injectors. The platform will also have two spare slotsto allow for the drilling of additional wells in the future. The first of thefive oil producing wells, Cliff Head-6, was drilled to Total Depth and casedlast week and, as of today, has been suspended for future production. Theplatform will be located in 18 metres of water, 11 km from the coast and 14 kmfrom an onshore processing plant at Arrowsmith. • Pipelines and UmbilicalsTwo 14 km 250 mm pipelines, plus umbilicals, will link the platform to theonshore processing plant. One pipeline will transport oil from the platform tothe plant. The other pipeline will transport produced water from the plant tothe platform for re-injection into the reservoir. The pipelines and umbilicalswill be installed by using directional drilling techniques under the beach. • Onshore Processing PlantA processing plant will be constructed at Arrowsmith on a site formerly occupiedby a lime plant. The Arrowsmith Plant will provide crude oil stabilisation andseparation facilities and also water injection pumping capability. As a resultof a recent exchange of letters of intent, the oil is expected to be truckedapproximately 350 km from the Arrowsmith plant to the BP oil refinery atKwinana, south of Perth. • DrillingThe drilling of the four remaining producing wells and two water injection wellsrepresents approximately 30% of the capital cost of the project. All producingwells will be highly deviated, with three currently planned as horizontal wells. As a result of a tender process initiated last year, a number of agreements havebeen negotiated with several contractors, including Ensco Australia Pty Ltd,which will supply the Ensco 67 jack-up drilling rig. Day-to-day management of the construction and installation phase of the CliffHead Development Project will be based in ROC's Perth office where a projectteam, under the leadership of Mr Duncan Mitchell, was established in 2004 duringthe Front End Engineering and Design ("FEED") stage of the project. Mr Mitchell,with more than 20 years experience in the contracting industry, mainly withinternational contractor Kellogg Brown and Root, has been working with ROC onthe Cliff Head Development since early 2004. The drilling and completioncomponent of the project will be managed out of ROC's Sydney office. 4. SIGNIFICANCE Cliff Head will be the first field to be developed in the offshore Perth Basin.In fact, the field will be the first oil field to be developed off the WesternAustralian coast south of the Exmouth Sub-basin, some 1,000 km to the north. The field is also the first oil field to be discovered and developed offshoreAustralia by a Joint Venture the majority (71%) of which is owned by juniorAustralian oil companies, one of which is the operator. At the moment there are only four Australian publicly-listed companies thatproduce oil - as opposed to gas and/or condensate - offshore Australia: BHPBilliton Limited Woodside Petroleum Limited, Santos Limited and Tap Oil Limited.When the Cliff Head development is complete there will be three more Australianpublic companies joining this list of offshore oil producers: AustralianWorldwide Exploration Ltd, Voyager Energy Limited and ROC. 5. JOINT VENTURE The Cliff Head Joint Venture comprises Equity Roc Oil (WA) Pty Ltd (Operator)............................37.5% AWE Oil (Western Australia) Pty Ltd .......................27.5% Wandoo Petroleum Pty Ltd ..................................24.0% Voyager (PB) Limited........................................6.0% CIECO Exploration and Production (Australia) Pty Ltd .......5.0% 6. CEO'S COMMENTS Commenting on the Final Investment Decision for Cliff Head, ROC's ChiefExecutive Officer, Dr John Doran, stated: "Cliff Head has had an interesting couple of months. Initially, capital costswent up and reserves went down. Then capital costs came down and oil prices wentup. The end result is that the field will be developed because of an unusualcombination of circumstances, not least of which is the general perception thatnear and medium term oil prices will not fall much below US$30/BBL for anysignificant length of time. The Cliff Head Oil Field was discovered by ROC's first well in Australia, but wedon't embark on offshore development projects for sentimental reasons; we do itto make money for shareholders. Fortunately, on a stand-alone basis, the CliffHead development, as it is now envisaged, meets the Company's investmentcriteria and is expected to provide ROC with a very satisfactory rate of return. The Cliff Head development will also establish significant onshore and offshoreinfrastructure in the region. This may prove to be relevant in the event thatfurther fields are discovered and developed in and around the Cliff Head OilField and in the adjoining coastal area Despite its modest size, the development of the Cliff Head Oil Field is animportant landmark for the offshore oil industry in Western Australia and, inseveral different ways, for each of the Joint Venture participants. ROC is able to fund its entire net share of the development costs, approximatelyA$85 million, from internal sources, but it will consider prudent alternativefinancial arrangements, including project related debt. Dr John Doran For further information please contact:Chief Executive Officer Dr John Doran on Tel: +61-2-8356-2000 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 Development Tel: +44 (0)207 586 7935 Fax: +44 (0)207 722 3919 Email: khird@rocoil.com.au Nick Lambert Bell Pottinger Corporate & Financial Tel: +44 (0)207 861 3232 This information is provided by RNS The company news service from the London Stock Exchange