25th Jan 2008 07:01
Roc Oil Company Limited25 January 2008 25 January 2008 ROC OIL COMPANY LIMITED ("ROC") STOCK EXCHANGE RELEASE 2007 PRODUCTION, SALES REVENUE AND RESERVES UPDATE ROC is pleased to provide a preliminary production, sales revenue and reservesupdate ahead of its 4Q 2007 report which will be released on 31 January 2008 andits 2007 Financial Results which will be released on 28 February 2008. 1. Production ROC's 2007 production of ca 3.5 MMBOE (9,668 BOEPD) was a record; up 77% on theprevious year. Ninety-nine percent of the production was oil. 2. Sales/Revenue Despite a year-end underlift position of approximately 0.24 MMBO net ROC, theCompany's 2007 sales revenue of A$248 million was also a record; up 64% on theprevious year, due to increased production and strong oil prices. 3. Reserves ROC has completed its internal 2007 year-end reserve review and RISC Pty Ltd isfinalising an independent reserve audit report on ROC's production assets,excluding the Chinguetti Oil Field, offshore Mauritania. On this basis, ROCadvises that: • ROC's remaining company-wide proved and probable (2P) reserves at 31 December 2007 are 21.4 MMBOE, all of which are being produced or being developed. • There has been a reduction of 2.1 MMBOE relating to ROC's 2P net reserves in the C and D oil fields, in the Zhao Dong Block, offshore China, before any adjustment for 2007 production. Compared to ROC's 2P reserves at 31 December 2006, this change in Zhao Dong reserves represents a reduction of approximately 7.5% of ROC's company-wide 2P reserves. • There are no other material revisions to ROC's 2P reserves. The change in Zhao Dong 2P reserves will have an impact on ROC's 2007 financialresults through an increase in the non-cash amortisation expense. ROC'spreliminary assessment, subject to audit, indicates that the reserves change,together with estimated future costs to develop the 2P reserves at Zhao Dong,will result in an increase in the amortisation expense for Zhao Dong ofapproximately A$12/bbl, totalling approximately A$21 million for the year ending31 December 2007. The Company's 2P reserves for end-2007 referred to above, do not include any ofthe oil and gas resources identified by the five discoveries ROC has made sinceMay 2006, four of which are being actively reviewed and/or appraised and one ofwhich has been relinquished. In this context, the following points are worthnoting: • Approximately 3.7 MMBOE of net ROC resources in the Wei 6-12S Oil Field complex in the Beibu Gulf, offshore China, will be reclassified as net ROC 2P reserves if, as expected, a declaration of commerciality is made later this year. In that event, the reclassification will effectively replace all of the 2P reserves ROC produced during 2007. • The commercial potential of the Frankland Gas Field and the Dunsborough Oil and Gas Field in the offshore Perth Basin will be better known after completion of the two well drilling programme which is scheduled to start in early February 2008. Currently, these two fields are tentatively estimated to contain approximately 5 to 9 MMBOE recoverable reserves net to ROC. • The Zhao Dong reserve revision does not alter the fact that a potential for 10 MMBOE net ROC possible reserves is recognised within the Block. Much of this unrisked and unbooked reserve upside will be evaluated as part of the ROC-operated > US$ 500 million development activities which are currently underway. 4. CEO's Comments Commenting on the above, ROC's Chief Executive Officer, John Doran stated that: "The record production and record revenue figures speak for themselves but themodest reduction in 2P reserves at Zhao Dong probably deserves further comment.Specifically: The Zhao Dong reserve revision is a tad disappointing, but, in a Company-widereserve and near to medium term production sense, it is far from serious. It isnot expected to have any effect on Zhao Dong production performance during 2008when it is anticipated production will be in line with last year, ca 1.7 MMBBLnet to ROC. In the end, the amount of oil recovered from Zhao Dong over the next ten or moreyears, will be a function of the collective recovery factors of the manydifferent reservoirs in the three fields. While its petroleum potential isself-evident, the geology of the Zhao Dong Block has a touch of the Rubik's Cubeabout it. Therefore, it is not entirely surprising that it took - and is stilltaking - some time to get to grips with the detailed nature of the reservoir northat the remaining in-place oil resource at Zhao Dong will not be better defineduntil a major subsurface data review has been completed by year end. However,what is already clear is that the magnitude of the in-place oil resource is suchthat if, over the next ten years, the overall recovery factor proves to be justa few percent better than that which is currently assumed, the 2007 reservesrevision would be more than offset. The first few wells in the 2007 programme generally underperformed expectationsand this is necessarily reflected in the year end 2P reserves revision. However,these first few wells were just the start of an aggressive drilling programmethat will see more than 100 wells drilled between 2007 and 2011. These early2007 wells provided vital subsurface insights which were progressively fed intothe data base as the drilling programme unfolded through the year. Results fromthe last four wells drilled towards the end of 2007 were generally better thanexpected. This uptick in performance in the latter part of 2007 certainlydoesn't mean that we have mastered the intricacies of Zhao Dong, but it could beviewed as indicating that we are getting to grips with the challenge. The bottom line is that it is far too early to be dogmatic as to the preciseamount of oil that will ultimately be produced from the Zhao Dong fields. Assuch, the most recent reserve review is perhaps best regarded as a snap frozenproduct of the information available at this moment in time which is really justthe small tip of a huge database that will be assembled over the next severalyears." In accordance with ASX and AIM Rules, the information in this Release has beenreviewed and approved by Dr John Doran, Chief Executive Officer, Roc Oil CompanyLimited, BSc (Hons) Geology, MSc and PhD. Dr Doran, who is a member of theSociety of Petroleum Engineers, has more than 30 years relevant experiencewithin the industry and consents to the information in the form and context inwhich it appears. 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: [email protected] Or visit ROC's website: www.rocoil.com.au Dr Kevin Hird General Manager - Business Development Tel: +44 (0)20 7495 5707/+61 (0)2 8356 2000 Mob: +44 (0)7751 3671 49/+61 (0)417 261 727 Email: [email protected] Michael Shaw Oriel Securities Limited (Nominated Adviser) Tel: +44 (0)20 7710 7600 Bobby Morse Buchanan Communications Tel: + 44 (0)20 7466 5000 Fax: + 44 (0)20 7466 5001 E-Mail: [email protected] Mob: +44 (0)7802 875 227 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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