Rockpool Acqui Regulatory News (ROC)

27 Jun 2007 07:03

Roc Oil Company Limited27 June 2007 27 June 2007 ROC OIL COMPANY LIMITED ("ROC") STOCK EXCHANGE RELEASE ACTIVITY UPDATE: EQUATORIAL GUINEA ROC advises that a dispute has arisen between Pioneer Natural ResourcesEquatorial Guinea Limited ("Pioneer"), a wholly-owned subsidiary of Dallas-basedPioneer Natural Resources Limited and its co-venturers, including Roc Oil(Equatorial Guinea) Company ("ROC EG"), with regard to Blocks H15 and H16(collectively "Block H"), in the deep water Rio Muni Basin, offshore EquatorialGuinea. The essence of the dispute relates to Farmin Agreements which the non-Pioneerparticipants of the Block H Joint Venture (ROC EG, Atlas Petroleum InternationalLimited ("Atlas") and Osborne Resources Limited ("Osborne")) entered into in2004 with Pioneer by which that company gained equity in the Block H ProductionSharing Contract. At the time of the farmins, Pioneer committed to pay ROC EG's share of the costsof two wells to be drilled in Block H in consideration for which Pioneer earneda 20% interest in the Block from ROC EG and ROC EG retained a 15% interest whichwas to be free carried by Pioneer through the two wells. Immediately after itentered into the Farmin Agreement with ROC, Pioneer also entered into broadlysimilar farmin arrangements with the other Block H co-venturers. The first ofthe two farmin wells, H-1 (Bravo), was drilled in June 2004 and Pioneer therebydischarged its responsibility in that regard. However, ROC EG maintains thatPioneer has breached its obligations with regard to the second farmin well. In August 2005, all the participants in the Block H Joint Venture, includingPioneer, resolved to drill the H-2 (Aleta) well in satisfaction of the JointVenture's minimum work obligations for the first renewal of the explorationperiod under the Production Sharing Contract. That well would also havedischarged Pioneer's obligations to ROC EG under the Farmin Agreement. TheGovernment of the Republic of Equatorial Guinea subsequently approved thedrilling of the H-2 (Aleta) well and, until early this year, all participants inthe Block H Joint Venture were proceeding on the basis that the well would bedrilled, although the precise timing of the well was subject to rigavailability. Earlier this year, Pioneer indicated that it did not wish to proceed with thedrilling of the H-2 (Aleta) well and did not consider itself bound to fundeither its own share of the costs of drilling the well or the carried share ofthe other co-venturers' interests, including ROC EG. Pioneer further indicatedto ROC that there were two reasons for its change of view: the enactment lastyear of a new Hydrocarbons Law by the Republic of Equatorial Guinea andescalating costs of drilling the well. ROC's view is that Pioneer is notentitled to take the position it has. In order to seek clarification of certain procedural matters under the terms ofthe Joint Venture Agreement which governs Joint Venture operations, Pioneercommenced arbitration actions against ROC EG, Atlas and Osborne, on 14 June2007. Subsequently, ROC EG notified Pioneer of claims for breach of Pioneer'scontractual obligations under the Farmin Agreement between ROC EG and Pioneerand further advised Pioneer of its intention to pursue its claims througharbitration. ROC understands that the other non-Pioneer co-venturers are alsointending to move to arbitration with Pioneer. Until these disputes areresolved, it is unlikely that the drilling of the Aleta-1 well will proceed. Commenting on the arbitration proceedings, ROC's Chief Executive Officer, DrJohn Doran, stated that: "Although matters that go to arbitration are often perceived to be of anextremely complex nature, the reality of the Block H arbitration situation isreally quite simple - Pioneer wants to cut and run from its farmin commitmentand ROC doesn't believe that it is entitled to do that. Nothing more. Nothingless. That simple." Damian FisherGeneral ManagerExternal Affairs & Investor Relations For further information please contact: 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 20 7495 5707/+61 2 8356 2000 Mob: +44 775136 7149/+61 417 261 727 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