Rockpool Acqui Regulatory News (ROC)

1 Aug 2006 07:04

Roc Oil Company Limited01 August 2006 1 August 2006 ROC OIL COMPANY LIMITED ("ROC") STOCK EXCHANGE RELEASE DRILLING UPDATE WEI 6-12S-1, OIL DISCOVERY, OFFSHORE CHINA KEY POINTS • Preliminary appraisal results from the second sidetrack well drilled at the recent Wei 6-12S-1 oil discovery in Block 22/12 in the Beibu Gulf, offshore China, range from encouraging to as expected. • Encouragingly, four oil-filled sands, representing a total of 22 metres gross and 16 metres net oil pay, were encountered in the Upper Sand Package, more than 45 metres downdip from the original well and outside structural closure as presently mapped. Two of these sands are not present in the discovery well. • Information from the two sidetrack wells, taken in conjunction with the latest analysis of data from the discovery well, confirms that the Upper Sand Package is not a single reservoir system but is made up of as many as seven distinct oil sands, all with different oil-water contacts and separate oil - and in two cases, oil and gas - columns. In six cases individual oil columns are inferred to range in height from 40 metres to 60 metres while one column, in a five metre sand, is inferred to be possibly as much as 180 metres. • As expected, the Middle and Lower Sand packages were encountered between 100 metres and 230 metres downdip from the discovery well and are therefore water-wet. Drill and pressure data from the two sidetracks and the discovery well established a 60 metre oil column in the Middle Sand package and infer a possible 105 metre oil column in the Lower Sand Package updip from the second sidetrack. • A deep stratigraphic exploration target proved to be a reservoir quality sand sequence without hydrocarbons. 1. OPERATIONS Since the last Stock Exchange Release on 26 July 2006 regarding the Wei 6-12S-1exploration well in Block 22/12, Beibu Gulf, offshore China, the secondsidetrack hole, Wei 6-12S-1Sb ("1Sb") has drilled to Total Depth of 2,950 metresbelow Rotary Table. As at midnight (local time) on 31 July 2006, logging operations were almostcomplete. 2. SIDETRACK DRILLING PROGRAMME RATIONALE Following the discovery of 95 metres of net hydrocarbon pay, including 80.5metres net oil pay, within a 477 metre gross reservoir sequence drilled by theWei 6-12S-1 exploration well, the Block 22/12, Joint Venture immediatelyembarked on a two month appraisal drilling programme. As a result, twosidetracks were drilled from the original discovery well, both of which achievedtheir main objective: the acceleration of data gathering so as to providemaximum information with regard to determining the field's commercial potential. 3. OVERALL OBJECTIVES AND RESULTS The primary objective of the first sidetrack, Wei 6-12S-1Sa ("1Sa"), was toobtain core data from the main reservoirs encountered in the discovery well. Toachieve this objective 1Sa was located about 50 metres to the east of theoriginal hole. Five cores were cut with 100% recovery, representing 79 metres ofreservoir section and additional logs and pressure data were also acquired. The main aim of the second sidetrack well, 1Sb, was to define more precisely thevertical and lateral extent of the oil accumulations in the Upper Sand Packageby penetrating that sequence more than 45 metres downdip from the discoverywell. As a result of drilling 1Sb, as many as seven separate reservoir sands,all with different oil-water contacts and separate oil - and in two cases, oiland gas - columns, are now recognised in the Upper Sand Package. In six casesindividual oil columns are inferred to range in height from 40 metres to 60metres, with one column, in a five metre sand, inferred to be possibly as muchas 180 metres. This contrasts with the provisional interpretation of the initialdata obtained from the discovery well that suggested that the sands seen in theUpper Sand Package might be part of a single main reservoir with a common oilwater contact (see CEO's Comments in Section 5). A secondary objective of 1Sb was to test a relatively deep, stratigraphicexploration target, not present in the discovery well, which proved to be areservoir quality sand without oil shows. In order to achieve these dual objectives 1Sb's trajectory was designed so thatit would encounter the oil reservoirs in the Middle and Lower Sand Packagesdrilled by the discovery well respectively 100 metres to 230 metres downdip fromthat well and therefore, below their respective oil-water contacts; this provedto be the case. The reservoir quality and continuity of the three sand packages are broadlyconsistent over the ca 400 metres lateral distance represented by the threereservoir penetrations. The overall section thickens downdip and additionalsands, not seen in the discovery well, are present off-structure. 4. PRELIMINARY DETAILED RESULTS 1Sa and 1Sb have provided drill, log, sample and pressure data which willrequire months to analyse properly. However, a preliminary evaluation of theresults of the three wells drilled to date provides useful insights into thenature and extent of the field. Specifically: 4.1 Upper Sand package Although it penetrated the top of the sequence some 48 metres downdip from thediscovery well, 1Sb drilled four oil sands within the Upper Sand Package none ofwhich has an oil-water contact. These sands, which collectively represent 22metres of gross pay and 16 metres of net oil pay, are detailed below in order ofincreasing depth: • The highest oil sand in 1Sb, has a gross pay of 5.5 metres, 100% net. It equates to a one metre sand in the discovery well where it occurs above and separate from, the higher of two gas sands reported in that well. This oil sand was not specifically referred to in the 17 May 2006 Stock Exchange release that first detailed the discovery because it was considered to be immaterial. The fact that the sand has thickened downdip and an oil-water contact has not been drilled by the downdip sidetrack is encouraging. The minimum oil column inferred for this sand is 48 metres. • The higher of two gas sands in the discovery well is also present in 1Sb where it has a gross pay of six metres and a net pay of 5.5 metres. However, in 1Sb, this sand is oil-filled, thereby confirming the presence of a down dip oil leg associated with the highest gas sand in the discovery well. The minimum inferred oil column for this sand is 53 metres. It is further inferred that this oil leg underlies a minimum 39 metre gas column part of which was penetrated by the updip discovery well. • An oil sand, with six metres of gross pay and about three metres of net pay, occurs within the Upper Sand Package but is absent from the updip discovery well. There is no oil-water contact in this sand in 1Sb and the inferred oil column for the sand is 60 metres. • The deepest oil sand encountered in 1Sb has a gross pay of 4.5 metres thick and a net pay of about two metres. This sand is also present in the discovery well where it provided a pressure reading that was considered to be possibly spurious because its implied a very long downdip oil column. This pressure information has been essentially replicated in both sidetracks thereby increasing the possibility that the oil column in this sand may be in the order of 180 metres, although further work needs to be done to more precisely evaluate this scenario. Three sands which contain hydrocarbons in the Upper Sand Package in thediscovery well are present as water-wet sands in 1Sb. Inferred vertical oilcolumns for these sands, up dip from 1Sb, range from 40 metres to about 60metres. In two cases, the inferred oil-water contacts are broadly coincident with aseismic anomaly which suggests that such features may prove to be useful toolswith regard to delineating oil and gas accumulations in and around the field. All of the oil columns seen in the Upper Sand Package penetrated by the threewells drilled to date appear to extend below structural closure as currentlymapped. Unless there is a significant unrecognized seismic velocity anomaly tothe east of the three wells it would seem that there is a stratigraphiccomponent to the trapping mechanism at the level of the Upper Sand Package.There is no seismic velocity anomaly in the immediate vicinity of the threewells drilled to date. 4.2 Middle Sand Package This is the main oil sand drilled by the discovery well. In that well, theinterval has a gross thickness of 60 metres, of which 31 metres is net oil pay.The discovery well drilled through an oil-water contact - the only onepenetrated by any of the three wells so far drilled in the field - which appearsto be just below structural closure as currently mapped. Because 1Sb wasdesigned to intersect the Middle Sand Package 106 metres downdip from thediscovery well, it was expected to be water-bearing and that proved to be thecase. Encouragingly, the first sidetrack, 1Sa, recovered clean oil from near the baseof the main reservoir in this Middle Sand Package which had previously beenconsidered to be a likely transition zone. The discovery well established a 60metres oil column in this sand updip from 1Sb. 4.3 Lower Sand Package Although the discovery well did not drill through an oil-water contact in thissand package pressure data suggested that 1Sb would be too far (>200 metres)downdip to encounter oil in the equivalent sands and that proved to be the case.However, 1Sa cored part of this interval and a preliminary review of these datasuggests that the reservoir quality is better than the test flow rate of 1,720BOPD might indicate and that the test result was constrained by formationdamage. Pressure data gathered from 1Sb infer that there is potentially a 105metre oil column in this sand updip from that well. The lower part of this oilcolumn appears to be below structural closure as presently mapped. 5. CEO'S COMMENTS. Commenting on the drilling results to date ROC's Chief Executive Officer, JohnDoran, stated that: "Overall, this appraisal programme has provided encouraging results and nounpleasant surprises. The recognition of multiple oil reservoirs in the Upper Sand Package withsubstantial individual oil columns is a significant step forward in ourunderstanding of the size and nature of the field. One of the challenges of the discovery is explaining in non-technical terms whatis going on in a field which has a variety of different sands, the vast majorityof which contain oil, spread out over hundreds of metres vertically within atrap that, although associated with a structure that is well defined by 3Dseismic, seems to have a significant stratigraphic component, the exact extentof which is unknown. This is, however, a welcome challenge compared toexplaining a dry hole. As a result of three months of continuous operations on a well that was expectedto be have been finished within a few weeks if it had been dry, the JointVenture has been left with three important reservoir penetrations, a wealth ofsubsurface data that requires detailed analysis and strong evidence that thisnewly discovered oil accumulation may extend beyond structural closure aspresently mapped. If the field had a single reservoir and was confined by structural closure,assessing its true nature would have been quicker and simpler. In allprobability, we would now have a fairly good idea as to the ultimate size of theaccumulation. The fact that the field seems to be at least partly defined bystratigraphic elements means that although the data gathered to date is expectedto confirm the commerciality of the discovery, more appraisal and/or developmentdrilling will be required before accurate recoverable reserve numbers can beprovided for the field as a whole. This is not to say that the field willnecessarily prove to be huge, just that it is likely to be bigger than if it waslimited by structural closure. A lack of specific recoverable reserve figures can be frustrating forshareholders and potential investors but, in the long run, it is consideredbetter to admit that such precise numbers are beyond our technical reach at thisparticular moment rather than generate figures which may inadvertently misleadand cause a reserve downgrade in the future. Although exact numbers for recoverable reserves are not yet available it ispossible to provide a tentative sense of direction as to the likely order ofmagnitude of in-place oil and the commercial potential of the field. The balanceof current probabilities suggests that the oil in-place is likely to be measuredin terms of many tens of millions of barrels and, if this proves to be the case,a commercial development would be anticipated." 6. JOINT VENTURE COMPOSITION The Block 22/12 Joint Venture comprises*: Roc Oil (China) Company 40% and OperatorHorizon Oil Limited 30%Petsec Energy Ltd 25%Oil Australia Pty Ltd** 5% \* The China National Offshore Oil Company ("CNOOC") is entitled to participate upto a 51% funding equity level in any commercial development within Block 22/12. ** A subsidiary of First Australian Resources In accordance with new Alternative Investment Market of the London StockExchange ("AIM") rules the information in this report has been reviewed by anappropriately qualified person with more than five years relevant industryexperience, specifically, Dr John Doran, Bsc (Hons) Geology; M.Sc; PhD, ChiefExecutive Officer, Roc Oil Company Limited, and a member of the Society ofPetroleum Engineers. 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 EN