31st Jan 2005 07:01
Roc Oil Company Limited31 January 2005 ROC OIL COMPANY LIMITED (ABN 32 075 965 856) REPORT TO SHAREHOLDERS Activities for the Quarter Ended 31 December 2004 SUMMARY The period reviewed was characterised by very high levels of operationalactivities and some very far reaching asset and corporate transactions. Withthousands of square kilometres of 3D seismic acquired and 10 wells drilled,exploration and appraisal activity was at record levels, as were pre-developmentand development activities which related to six fields in four differentcountries - UK (North Sea), Mauritania, Australia and China.On the transactional front, the very profitable sale of Saltfleetby Gas Field,the acquisition of an option to acquire up to 26% over the 8,000 BOPD ArdmoreField and a 9.9 million share placement at a premium to market have repositionedthe Company in many ways, not least of which related to ROC's net cash positionat 27 January of approximately A$190 million. -------------------------------------------------------------------------------- HIGHLIGHTS Production 2,800 BOEPD Similar to the previous quarter, but down 38% on the corresponding quarter in 2003, consistent with long term production decline in the Saltfleetby Gas Field. Sales Revenue $11.3 million Up 40% on previous quarter, but down 25% on the corresponding quarter in 2003. Sales revenue was up primarily because of higher seasonal gas prices in UK. Note, this is the last quarter of production and sales revenue from the Saltfleetby Gas Field. Saltfleetby Gas Field Sale Sold for £44 million. Profit after tax of at least $72 million. Ardmore Oil Field Acquisition Executed agreements providing ROC with option to acquire up to 26% of producing Ardmore Oil Field, UK North Sea. Cliff Head Oil Field Development FEED completed, major contracts tendered, FID scheduled for February 2005. Costs up 20% to 25% on FEED estimates based on firm contract tenders. Chinguetti Oil Field Development Development activities continue. Development drilling recommenced in December 2004 and is scheduled to be completed in mid 2005. Tevet Discovery New field discovery offshore Mauritania. Tiof Appraisal Up to end January 2005, 4 appraisal wells were drilled on the Tiof Oil Field, offshore Mauritania. Angola PSA activated Agreement with Sonangol to trigger the Production Sharing Agreement for the Cabinda South Block, Onshore Angola. Pre-development activities on Engineering work continued ahead ofWei 12-8-west, China and Blane planned mid-2005 development decisions forand Enoch, UK North Sea Wei 12-8-west, Blane and Enoch. First oil potential in 2007 for Wei 12-8-west and late 2006 for Blane and Enoch. ROC's cash balance $190 million Following the share placement and closing of the Saltfleetby sale, ROC's cash balance is approximately $190 million. Subsequent Events On 21 January 2005, ROC closed the sale of the Saltfleetby Gas Field for £44 million. On 27 January 2005, 9.9 million shares (5.3% of the issued capital) were issued at $2.00 per share to two European-based institutions. The Errington-1 exploration well discovered tight gas saturated sands that merit further review. QUARTERLY REPORT - 31 DECEMBER 2004 CONTENTS SUMMARY Page1. CEO'S REPORT. 42. STATISTICS. 52.1 Production. 52.2 Sales Revenue (Unaudited) 52.3 Expenditure (Unaudited) 52.4 Exploration & Appraisal Drilling. 62.5 Seismic. 7 3. PRODUCTION. 73.1 Gas Production. 73.2 Oil and Condensate Production. 73.3 Sales Revenue. 7 4. DEVELOPMENT. 84.1 UK. 84.2 Australia. 84.3 Mauritania - Chinguetti Oil & Gas Field (ROC: 3.25%) 84.4 China - Beibu Gulf Block 22/12 (ROC: 40% and Operator) 9 5. EXPLORATION AND APPRAISAL. 95.1 Australia (ROC: Generally 37.5% And Operator) 95.2 New Zealand - Pep 38767, Taranaki Basin (ROC: 40% And Operator) 95.3 UK. 95.4 West Africa. 105.5 China - Beibu Block 22/12 (ROC: 40% And Operator) 11 6. ASSET ACQUISITIONS & DIVESTMENTS. 116.1 UK Onshore - Saltfleetby Gas Field (ROC: 100% And Operator) 116.2 UK North Sea - Ardmore Oil Field (ROC: 26% Option) 116.3 Mauritania - Chinguetti Exploitation Area, PSC Area B (ROC: 3.25%) 126.4 Mauritania - Block 7 (ROC: 5.5%) 126.5 Equatorial Guinea - Block H (ROC: 18.75%) 126.6 Angola - Cabinda South Block (ROC: 60% And Operator) 12 7. CORPORATE. 127.1. Gas Price Hedging. 127.2 Website. 12 8. POST-QUARTER EVENTS. 138.1 Sale of Saltfleetby Gas Field. 138.2 Mauritania. 138.3 Cliff Head Capital Costs. 138.4 Placement 138.5 Errington-1, Tight Gas Discovery. 138.6 Transition Zone Seismic, Offshore Western Australia. 13 1. CEO'S REPORT A company only sells its main asset when it has a view that more production willbe cost efficiently acquired and/or developed within the next 12-18 months andthe purchase price offered is very compelling. That was the background to the sale of the Saltfleetby Gas Field. That sale,together with the acquisition of an option over the producing Ardmore Oil Fieldand a US$15 million placement of shares at a premium to market has provided theCompany with a new centre of gravity and a broader strategic outlook.Over the last 5 years, Saltfleetby has been a wonderful asset; a prodigious andreliable supplier of cash that, almost single handedly, fuelled ROC's expansioninto West Africa, China, Australia and New Zealand. In this context, most of the Company's current crop of global exploration,appraisal and development projects have their origins below the flat fields ofLincolnshire - a truly "sensibly contrary" thought! Now, with a cash position which is even stronger than before, ROC is well placedto move forward on several fronts within and beyond its current portfolio. Whilethis may appear an exciting time it is also a time for very careful thoughtbefore the deployment of funds, because as the industry and market continue ontheir upbeat courses, bad deals are much easier to find. Whether or not the Ardmore Option proves to be a good or a bad deal will belargely determined by the results of the next workover to be undertaken inFebruary and the next well which will be drilled over the next few months. IfArdmore 'works' it will go a long way towards replacing Saltfleetby reserves andproduction. If it doesn't 'work' it will have absorbed less than 10% of theSaltfleetby sale price. Either way, the Ardmore transaction has alreadysignalled to the relevant parts of the industry that ROC has the ability andappetite to move very quickly on complex transactions provided that they meetthe Company's fundamental investment criteria. While the report period has witnessed some key transactions, the Company'soperational activities have soared to record levels of seismic, drilling,pre-development studies and development projects, which is consistent with ROC'sorganic growth strategy. The Errington-1 tight gas discovery will be subject to further evaluation aspart of ROC's emerging tight gas sand strategy for onshore UK which will alsoinclude the Cloughton well in Yorkshire. As with the Ardmore Option, if ROC'stight gas strategy 'works' it will go a long way towards replacing theSaltfleetby reserves. If it doesn't 'work' ROC's total investment in the projectwill be less than 5% of the Saltfleetby sale proceeds. Finally, on a more sombre note, the worldwide increase in contractor costs andmaterials hit the potential Cliff Head Oil Field development in January 2005with a 20% to 25% increase in estimated capex. As a result the project economicshave been bruised. Fortunately oil prices have also headed in the same upwarddirection as capex, which is not entirely coincidental. The net effect is thatthe project remains within ROC's funding ability and the field's economicviability remains essentially intact. However, the Cliff Head-5 'pathfinder'well which is due to be drilled in February 2005 has become more significant inmitigating risk than was originally envisaged when the well was proposed lastyear. A 'bad' result at CH-5 won't necessarily kill the project but it wouldsend parts of it back to the drawing board for fundamental revision withassociated delay. A 'good' result at CH-5 is expected to lead to a FinalInvestment Decision by end February 2005 and first oil in 1Q2006.These are the considerations that ensure that, despite its relatively highprofile transactions during the review period, ROC remains firmly focused onoperations. 2. STATISTICS 2.1 Production +-------------------------------+--------------+-------------+------------+|OIL AND NGLS (BBL) |September '04 |December '04 |Change || | Quarter | Quarter | |+-------------------------------+--------------+-------------+------------+|UK - Onshore Oil (Keddington) | 2,707| 3,815| +41%|| | | | |+-------------------------------+--------------+-------------+------------+|UK - Onshore NGL (Saltfleetby) | 22,460| 22,324| -1%|| | | | |+-------------------------------+--------------+-------------+------------+|Australia - Onshore Oil | 419| 735| 75%||(Jingemia) | | | || | | | |+-------------------------------+--------------+-------------+------------+ +-------------------------------+-------------+-------------+------------+|GAS (MCF) | | | || | | | |+-------------------------------+-------------+-------------+------------+|UK - Onshore (Saltfleetby) | 1,359,480| 1,388,590| +2%|+-------------------------------+-------------+-------------+------------+ +-------------------------------+-------------+-------------+------------+|TOTAL PRODUCTION (BOEPD) | 2,741| 2,808| 2%|+-------------------------------+-------------+-------------+------------+2.2 Sales Revenue (Unaudited)+-------------------------------+--------------+-------------+------------+| |September '04 |December '04 | Change || | Quarter | Quarter | || | $'000 | $'000 | |+-------------------------------+--------------+-------------+------------+|UK Oil and NGLs | 954| 990| 4%|+-------------------------------+--------------+-------------+------------+|UK Gas | 7,072| 10,234| 45%|+-------------------------------+--------------+-------------+------------+|Australian Oil | 19| 37| 95%|| | | | |+-------------------------------+--------------+-------------+------------+|Total | 8,045| 11,261| 40%|| | | | |+-------------------------------+--------------+-------------+------------+ Sales revenue was up 40% from the previous quarter due mainly to higher seasonalgas prices in the UK. Revenue from oil and NGLs increased 6% due to increasedproduction in both Australia and the UK. 2.3 Expenditure (Unaudited)+--------------------------------+---------------------+---------------------+| | September '04 | December '04 || | Quarter | Quarter || |$'000 | $'000 |+--------------------------------+---------------------+---------------------+|Exploration | | || | | |+--------------------------------+---------------------+---------------------+|Australia/NZ | 1,511| 4,231|+--------------------------------+---------------------+---------------------+|UK | 1,195| 4,827|+--------------------------------+---------------------+---------------------+|Other International | 2,370| 13,023|+--------------------------------+---------------------+---------------------+|Development | | |+--------------------------------+---------------------+---------------------+|UK | 340| 542|+--------------------------------+---------------------+---------------------+|Other International | 2,721| 3,787|+--------------------------------+---------------------+---------------------+|Total | 8,137| 26,410|| | | |+--------------------------------+---------------------+---------------------+ Exploration expenditure for the quarter included Mauritania ($6.4m), Angola($6.6m, which included provision for ROC's $5.8 m share of the signature bonuspayable under the PSA), UK ($4.8m) New Zealand ($1.0m) and Australia ($3.2m).Included in Australian exploration expenditure are FEED costs of $1.3m relatedto the Cliff Head Oil Field. Developments expenditure for the quarter predominantly comprises costs relatedto the Chinguetti development, offshore Mauritania and predevelopmentexpenditures in relation to the Blane and Enoch in the UK North Sea.2.4 Exploration & Appraisal Drilling +-----------+------------+----------+---------------+------------------------+| Category | Well | Location | Operator | Comment at End of || | % Interest | | | Quarter |+-----------+------------+----------+---------------+------------------------+|Exploration|Dorade-1 |PSC Area |Woodside |The well was plugged and|| |3.2% |C, Block |Mauritania Pty |abandoned as a dry hole.|| | |2, |Ltd | || | |Mauritania| | |+-----------+------------+----------+---------------+------------------------+|Exploration|Capitaine-1A|PSC Area |Woodside |The well was drilled to || |3.693% |B, |Mauritania Pty |a Total Depth of 3,130m || | |Mauritania|Ltd |and was plugged and || | | | |abandoned as a dry hole.|+-----------+------------+----------+---------------+------------------------+|Exploration|Tevet-1 |PSC Area |Woodside |The well encountered a || |3.693% |B, |Mauritania Pty |gross gas column of 70m,|| | |Mauritania|Ltd |a gross oil column of || | | | |44m and was plugged and || | | | |abandoned as planned. |+-----------+------------+----------+---------------+------------------------+|Appraisal |Tiof-4 |PSC Area |Woodside |The well was drilled to || |3.693% |B, |Mauritania Pty |a Total Depth of 2,908m || | |Mauritania|Ltd |encountering a gross oil|| | | | |column on 113m. The well|| | | | |was plugged and || | | | |abandoned as planned. |+-----------+------------+----------+---------------+------------------------+|Appraisal |Tiof-3, ST1,|PSC Area |Woodside |Production test data || |ST2 |B, |Mauritania Pty |from the well was || |3.693% |Mauritania|Ltd |limited to various || | | | |samples and pressure || | | | |measurements due to || | | | |operation difficulties. || | | | |The well was suspended || | | | |as a potential future || | | | |development well. |+-----------+------------+----------+---------------+------------------------+|Exploration|Errington-1,|PEDL-028, |Roc Oil (GB) |After Quarter-end || |100% |Onshore UK|Ltd |wireline logging was || | | | |completed. Wireline log || | | | |interpretation indicates|| | | | |gas saturated tight || | | | |sands over a gross || | | | |vertical interval of || | | | |approximately 135m of || | | | |which approximately 100m|| | | | |represents net sand. The|| | | | |well was suspended as a || | | | |tight gas discovery. |+-----------+------------+----------+---------------+------------------------+|Exploration|Merou-1, |PSC Area |Woodside |The well was drilled to || |3.693% |B, |Mauritania Pty |a Total Depth of 3,060m || | |Mauritania|Ltd |encountering gas shows || | | | |interpreted to be sub || | | | |commercial. The well was|| | | | |plugged and abandoned. |+-----------+------------+----------+---------------+------------------------+|Appraisal |Tiof-5, |PSC Area |Woodside |The well was drilled to || |3.693% |B, |Mauritania Pty |a Total Depth of 3,010m || | |Mauritania|Ltd |encountering a gross oil|| | | | |column of 23m. The well || | | | |was plugged and || | | | |abandoned as planned. |+-----------+------------+----------+---------------+------------------------+|Exploration|Fiddich-1 |WA-226-P, |Origin Energy |The well was drilled to || |7.5% |Australia |Developments |a Total Depth of 1341m || | | |Pty Ltd |without encountering || | | | |significant hydrocarbons|| | | | |shows and was plugged || | | | |and abandoned. |+-----------+------------+----------+---------------+------------------------+|Appraisal |Tiof-6, |PSC Area |Woodside |After Quarter-end the || |3.693% |B, |Mauritania Pty |well was drilled to a || | |Mauritania|Ltd |total depth of 2,963m. || | | | |Preliminary || | | | |interpretations of logs || | | | |suggest the well || | | | |intersected oil over a || | | | |gross interval of || | | | |approximately 124m. |+-----------+------------+----------+---------------+------------------------+ 2.5 Seismic +---------+-------------+--------------+---------+----------+---------------+| Type | Location | Operator | % | Size |Comment at End || | | |Interest | | of Quarter |+---------+-------------+--------------+---------+----------+---------------+| 3D |PSC Area D, |Dana Petroleum| 2.0% |1,816 km2 |Completed. || |Block 8, |(E&P) Limited | | | || |Mauritania | | | | |+---------+-------------+--------------+---------+----------+---------------+| 3D |PSC Area A, |Woodside | 4.155% |3,046 km2 |Completed. || (Kiffa) |Mauritania |Mauritania Pty| | | || | |Ltd | | | |+---------+-------------+--------------+---------+----------+---------------+| 2D |WA-349-P, |Roc Oil (WA) | 50.0% | 369.4 km |Completed ||(Melissa)|Australia |Pty Ltd | | | |+---------+-------------+--------------+---------+----------+---------------+| 2D |WA-325-P, |Roc Oil (WA) | 37.5% | 121.5 km |Completed || (Fiona) |Australia |Pty Ltd | | | |+---------+-------------+--------------+---------+----------+---------------+| 2D |WA-286-P, |Roc Oil (WA) | 37.5% | 169.6 km |Completed || (Naomi) |Australia |Pty Ltd | | | |+---------+-------------+--------------+---------+----------+---------------+| 3D |PSC Area C, |Woodside | 5.0% |3,096 km2 |At Quarter-end || (Atar) |Block 6, |Mauritania Pty| | planned |1,755km2 || |Mauritania |Ltd | | |acquired. |+---------+-------------+--------------+---------+----------+---------------+| 2D |PEDL-127, |Roc Oil (GB) | 100% | 34 km |Completed ||(Norfolk)|Onshore UK |Ltd | | | |+---------+-------------+--------------+---------+----------+---------------+| 3D |PEP-38767, |Roc Oil (NZ) | 40.0% | 35 km2 |Completed. ||(Totara) |New Zealand |Pty Ltd | | | |+---------+-------------+--------------+---------+----------+---------------+ 3. PRODUCTION Production for the Quarter, which averaged 2,808 BOEPD, was primarily from theSaltfleetby Gas Field and the Keddington Oil and Gas Field, both onshore UK.3.1 Gas Production Total gas production for the Quarter from the Saltfleetby Gas Field was 1.4 BCF(15.1 MMSCF/D), up 2% on the previous quarter. Gas production for the Quarterwas down 38% compared to the corresponding quarter in 2003.3.2 Oil and Condensate Production UK oil production for the Quarter was 3,815 BBL (41 BOPD), up 41% on theprevious quarter and down 28% on the corresponding period last year.Condensate production for the Quarter, all from the Saltfleetby Gas Field, was22,324 BBL (243 BCPD), down 1% on the previous quarter and down 37% on thecorresponding period last year. Australian oil production for the Quarter was 735 BBL from the Jingemia OilField. 3.3 Sales Revenue Quarterly sales revenue was A$11.3 million, up $3.2m (40%) on the previousquarter and down $3.8m (25%) on the corresponding quarter in 2003.The average sales gas price received during the Quarter was 27.32 pence pertherm (approximately A$7.80 per MCF), up 44% on average sales gas pricesreceived during the previous quarter and up 12% on the average sales gas priceof 24.4 pence per therm received for the corresponding quarter in 2003. 4. DEVELOPMENT 4.1 UK 4.1.1 Onshore (ROC: 100% and Operator)UK onshore development expenditure for the Quarter was less than $10,000,related to the Keddington Oil Field. 4.1.2 North Sea (ROC: 12% - 15.2%)UK offshore development expenditure for the Quarter was $0.5 million. Workcontinued on pre-development engineering and the preparation of FieldDevelopment Plans for the Blane Oil Field and the Enoch Oil and Gas Field whichare scheduled for completion in mid-2005. 4.2 Australia 4.2.1 Cliff Head Oil Field (ROC: 37.5% and Operator)Significant progress was made on the Cliff Head Oil Field development during theQuarter. Front End Engineering and Design ("FEED") was completed in October andrequests for tenders were issued and bids were received for the majorconstruction contracts for the project. Pre-development work continued ondetailed design and the procurement of materials and equipment, preparation ofthe Field Development Plan ("FDP"), crude oil marketing and also environmentalapprovals. Geological and reservoir engineering modelling were completed and aPre-Development Field Report and preliminary FDP were submitted to the WesternAustralian Department of Industry and Resources. The Cliff Head PublicEnvironmental Review was approved by the WA government and was subsequentlysubmitted to the Federal government for approval. During the Quarter, planning was also progressed for the drilling of the CliffHead-5 and Cliff Head-6 appraisal/early development wells in the southeasternpart of the field and the main horst area of the field respectively. The wellsare currently scheduled for drilling in February 2005. In January 2005 tendered contract prices for the major contracts for the projectwere received. Based on these prices the development costs for the project areestimated to be approximately $250 million, including approximately 10%contingency. This capex estimate is some 25% higher than the estimated cost atthe end of FEED. Increased construction costs of this order, seen throughout theupstream petroleum industry activity levels and in all facets of the businessare close to record levels as availability of major equipment becomes tight.A final investment decision ("FID") is scheduled to be made by the WA-286-PJoint Venture during February 2005. First oil from the field is scheduled forend 2005 or early 2006. 4.2.2 Jingemia Oil Field, EP-413, Perth Basin, Onshore Western Australia (ROC:0.25%)The field continued to produce over 3,000 BOPD on extended production testing,prior to long-term production facilities being installed. Planning continued fortwo development/ appraisal wells. 4.3 Mauritania - Chinguetti Oil & Gas Field (ROC: 3.25%) The Chinguetti Development Project is continuing, with progress on reservoirstudies, the Development and Production plan and construction of the facilities.The Environmental Impact Assessment for the project received formal approvalfrom the Mauritanian Ministry for Mines and Industry.The drilling of Chinguetti development wells recommenced on 3 December 2004 andis planned to continue until mid-2005. 4.4 China - Beibu Gulf Block 22/12 (ROC: 40% and Operator) During the Quarter, the pre-feasibility study, geological modelling andreservoir engineering modelling of the Wei 12-8-west field were completed. It isanticipated that this project will move into a full feasibility study and thepreparation of a Development Plan during the first half of 2005. 5. EXPLORATION AND APPRAISAL 5.1 Australia (ROC: Generally 37.5% And Operator) Australian exploration expenditure for the Quarter was $3.2 million, all ofwhich related to ROC's activities in the Perth Basin, Western Australia,including work on the Cliff Head Oil Field. Three ROC-operated 2D marine seismic acquisition surveys were completed in theQuarter (Section 2.5). An airborne gravity survey was acquired in TP/15 (ROC:20%), which was used to fine-tune planning for a 2D Transition Zone seismicsurvey in TP/15 and WA-286-P (Section 8.5). The Fiddich-1 well in WA-226-P (ROC: 7.5%) was drilled to a total depth of 1,341metres without encountering significant hydrocarbon shows. Drilling planning continued for Hadda-1 (WA-325-P, ROC: 37.5%) and Flying Foam-1(WA-327-P, ROC: 37.5%) to be drilled by the drill ship ENSCO 56 in early 2005. 5.2 New Zealand - Pep 38767, Taranaki Basin (ROC: 40% And Operator) Expenditure for the quarter was $1.0 million relating to the Totara 3D SeismicSurvey (Section 2.5). 5.3 UK UK exploration expenditure for the Quarter totalled $4.8 million, the majorityof which was spent on the Errington-1 well in PEDL-028. 5.3.1 Onshore (ROC: 100% and Operator)Activity in the Quarter focused on exploration drilling, seismic acquisition andreprocessing, and geological studies. Operations commenced at the Errington-1 wildcat well in PEDL-028. Subsequent toQuarter-end log interpretations indicate the well has intersected several tightgas sands (Section 8.5). Acquisition of the Norfolk 2D seismic survey in PEDL-127 was completed on29 November 2004 (Section 2.5). 5.4 West Africa During the Quarter, ROC's total expenditure on West African projects totalled$13.0 million, primarily associated with Mauritania ($6.3 million) and Angola($6.6 million including provision for $5.8m signature bonus). 5.4.1 Mauritania (ROC: 2.0 - 5.5%)Acquisition of the 3D seismic survey in PSC Area D, Block 8 (ROC: 2.0%) wascompleted, with a total of 1,816 full fold square kilometres acquired.Acquisition of the Kiffa 3D seismic survey in PSC Area A (ROC: 4.155%) wascompleted, with a total of 3,046 full fold square kilometres acquired.Acquisition of the 3,096 square kilometre Atar seismic survey in PSC Area C,Block 6 (ROC: 5.0%) commenced on 18 November 2004 and at Quarter-end, 1,755square kilometres had been acquired. The 2004 exploration/appraisal drilling campaign continued, utilising twodrilling vessels, the "West Navigator" and the "Stena Tay". On 3 December 2004,the "Stena Tay" moved to the Chinguetti development operations.The Tevet-1 exploration well (PSC Area B, ROC: 3.693%) was drilled to a totaldepth of 2,715 metres, intersecting a gross gas column of approximately 70metres, above a gross oil column of approximately 44 metres. The well wasplugged and abandoned as an oil and gas discovery. The Dorade-1 (PSC Area C, Block 2, ROC: 3.2%), Capitaine-1A (PSC Area B, ROC:3.693%) and Merou-1 (PSC Area B, ROC: 3.693%) exploration wells were drilled tototal depth without encountering significant hydrocarbons (Section 2.4).Two sidetracks were drilled and cored at Tiof-3 (PSC Area B, ROC: 3.693%).Production test data from the Tiof-3 Sidetrack-2 well was limited to varioussamples and pressure measurements due to operational difficulties. The well wassuspended as a potential future development well. The Tiof-4 appraisal well wasdrilled to a total depth of 2,908 metres. Evaluation of logs, including fluidsampling and downhole pressure measurements, established that the wellintersected a gross oil column of approximately 113 metres, containing severalindividual sands of variable thickness. The well was plugged and abandoned, asplanned. The Tiof-5 appraisal well (PSC Area B, ROC: 3.693%) was drilled to a total depthof 3,010 metres. Preliminary evaluation of logs, including fluid sampling anddownhole pressure measurements, indicate the well intersected a gross oil columnof approximately 23 metres in several individual sands of variable thickness.The well was plugged and abandoned as planned. The Tiof-6 appraisal well (PSC Area B, ROC: 3.693%) was being drilled atQuarter-end. (See Section 8.2). For Chinguetti Field development activity, refer to Section 4.3. 5.4.2 Equatorial Guinea (ROC: 18.75%)Activity for the Quarter focussed on post-Bravo-1 evaluation/studies, geologicaland geophysical studies, and planning for the drilling of one well in 2005.On 30 November 2004, the Joint Venture advised the Ministry of Mines, Industryand Energy ("MMIE") of its intention to continue in to the First Renewal Periodfrom 3 February 2005. The renewal is a one-year exploration period with a onewell obligation (refer also to Section 6.5). 5.4.3 Angola (ROC: 60% and Operator)ROC formally agreed with Sonangol, the national oil company of Angola, totrigger the Production Sharing Agreement ("PSA") relating to the Cabinda SouthBlock, onshore Angola, with an effective date of 1 November 2004. Planning is underway for a seismic acquisition programme for mid-2005 and apossible drilling programme for 2006. 5.5 China - Beibu Block 22/12 (ROC: 40% And Operator) ROC's net exploration expenditure in China was less than $50,000 for theQuarter. Activity focussed on geological and geophysical studies, reservoir engineeringmodelling, and pre-development studies (refer also to Section 4.4). Evaluationof the exploration potential in the Wei 6-12 area continued around the 2002 oildiscovery. 6. ASSET ACQUISITIONS & DIVESTMENTS 6.1 UK Onshore - Saltfleetby Gas Field (ROC: 100% And Operator) On 21 December 2004, ROC announced that it had entered into agreements with aGerman-Russian joint venture, WINGAS GmbH ("WINGAS"), for the sale of 100% ofthe share capital of one of its wholly-owned subsidiaries, the principal assetof which is the PEDL-005 licence which contains the Saltfleetby Gas Field,onshore UK for a cash consideration of £44 million (A$108.5 million), subject toeffective date working capital adjustments. The net ROC after tax profit on thetransaction is expected to be at least A$72 million, which will be booked inFinancial Year 2005 (Section 8.1). ROC will retain all its other UK assets, including 100% of the producingKeddington Oil Field in PEDL-005 and the Errington tight gas discovery, as wellas its interests in the UK North Sea where the Blane and Enoch Fields are beingreviewed with the aim of establishing first oil production in late 2006. 6.2 UK North Sea - Ardmore Oil Field (ROC: 26% Option) On 30 December 2004, ROC announced it had acquired an option over 26% of theArdmore Oil Field and surrounding acreage in the UK North Sea ("the Assets").Under an agreement with Acorn Oil & Gas Limited, ROC has purchased the right toacquire up to 26% of the Assets by investing £750,000 via a secured seniorranking loan and undertaking to pay 26% of future joint venture cash calls. IfROC chooses to exercise its option to convert its loan to direct equity, apayment of an effective option exercise fee of up to £1.9 million will berequired. The Assets comprise Blocks 30/24a, b, c and d, 30/25b and 30/29b, which includethe Ardmore Oil Field, two small abandoned oil fields, small undevelopeddiscoveries and several undrilled prospects and leads. The Ardmore Oil Field,independently estimated to have remaining reserves in the order of 23 MMBO, iscurrently undergoing a development drilling and workover programme. It is expected that a decision will be made during May 2005, and if ROC convertsto direct equity, it will book its net share of Ardmore's remaining recoverablereserves and associated production revenue during 2Q 2005. 6.3 Mauritania - Chinguetti Exploitation Area, PSC Area B (ROC: 3.25%) The Government of Mauritania exercised its right to participate in theChinguetti Oil Field development through the entity Groupe Projet Chinguetti("GPC"). Effective 9 November 2004, GPC will acquire an initial participatinginterest of 12% in the Chinguetti Exploitation Perimeter, which was granted inMay 2004 under the terms of the PSC for Area B via an Exclusive ExploitationAuthorisation ("EEA"). The interest will be acquired on a pro rata basis fromthe current non-government parties and GPC will be responsible for its share ofdevelopment and past exploration costs associated with the Chinguetti Oil Field.Once finalised, ROC's interest in the Chinguetti EEA will decrease from 3.693%to 3.25%. ROC's interest in the remaining exploration areas of PSC Area Bremains 3.693%. 6.4 Mauritania - Block 7 (ROC: 5.5%) Assignment documentation relating to Woodside's farmin to Block 7 PSC Area D isbeing finalised. Once the transaction is completed, ROC's equity in Block 7 willdecrease from 5.5% to 4.95%, effective 1 January 2003. 6.5 Equatorial Guinea - Block H (ROC: 18.75%) A 20% participant formally notified the Joint Venture of its intention towithdraw from the PSC as of 3 February 2005, the end of the current term.Subject to government approval, the remaining joint venture parties have agreedto distribute the 20% equity on a pro rata basis and have formally notified theMinistry of Mines, Industry and Energy of this intent. Once the transaction isfinalised, ROC's equity will increase from 15% to 18.75% with the original 15%being free carried through the 2005 exploration well. 6.6 Angola - Cabinda South Block (ROC: 60% And Operator) In August 2004, ROC agreed to acquire an additional 20% working interest (25%contributing interest) in the Production Sharing Agreement ("PSA") from itsco-venturer Force Petroleum Limited. Completion of the acquisition was subjectto the usual approvals of Government. The time frame for receipt of approval hasnow lapsed. On this basis, ROC believes it is unlikely that it will acquire theadditional 20% interest. 7. CORPORATE 7.1. Gas Price Hedging There was no gas or oil price hedging in place and no new hedging was enteredinto during the Quarter. 7.2 Website During the Quarter, ROC's website (www.rocoil.com.au) received approximately27,930 visits (a "visit" being an occasion when one or more of the website pageshave been opened). This compares to 23,712 visits in the prior Quarter. 8. POST-QUARTER EVENTS SUBSEQUENT TO 31 DECEMBER 2004, THE FOLLOWING POST-QUARTER EVENTS OCCURRED. 8.1 Sale of Saltfleetby Gas Field On 21 January 2005 the sale of the 100% owned ROC company which owns theSaltfleetby Gas Field was completed. 8.2 Mauritania The Tiof-6 appraisal well was drilled to a total depth of 2,963 metres.Preliminary interpretation of logs acquired while drilling and wireline loggingoperations, including fluid sampling and downhole pressure measurements,indicate the well has intersected oil over a gross interval of approximately 124metres. The Tiof-6 appraisal well was suspended as planned on 17 January 2005. It isplanned that the well will be production tested at a later stage.On 17 January 2005, the "West Navigator" rig returned to the Chinguetti OilField to complete Chinguetti tophole drilling, before returning to resume Tiof-6test preparations. As at 23 January 2005, 2,698 square kilometres of the Atar 3D seismic survey hadbeen acquired (87% of total). 8.3 Cliff Head Capital Costs During late January 2005 ROC advised that the likely capital costs fordeveloping the Cliff Head Oil Field, offshore Western Australia had increased byabout 25% to approximately $250m including 10% contingency. 8.4 Placement On 27 January ROC completed a placement to two European-based institutions toraise US$15m/A$19.8m by issue of 9,900,990 fully paid ordinary shares at a priceof $2.00 per share representing an 11% premium to the previous 10 day averagetrading price. The shares represent approximately 5.3% of the issued sharecapital of the Company. 8.5 Errington-1, Tight Gas Discovery On 29 January 2005 the rig was released from the Errington-1 location 35km westof Newcastle after the well had been cased and suspended as a tight gasdiscovery with the intention that it will be evaluated further later this yearas part of ROC's onshore UK tight gas strategy. Wireline log interpretationindicates gas saturated tight sands over a gross vertical interval ofapproximately 135m of which approximately 100m represents net sand. 8.6 Transition Zone Seismic, Offshore Western Australia An innovative Transition Zone seismic survey in the shallow surf zone waters offTP/15 commenced on 21 January 2005. The survey is focused on firming up nearshore drill targets west of the Hovea and Jingemia onshore oil fields. further information For further information please contact ROC's Chief Executive Officer, Dr JohnDoran on: Phone: (02) 8356 2000Facsimile: (02) 9380 2066Email: jdoran@rocoil.com.auAddress: Level 14, 1 Market Street, Sydney, NSW 2000, Australia.Web Site: www.rocoil.com.au +-------------------------------------------------------+ |Definitions: | |"BBL" means barrels | |"BCF" means billion cubic feet | |"BOE" means barrels of oil equivalent | |"BOPD" means barrels of oil per day | |"BOEPD" means barrels of oil equivalent per day | |"BCPD" means barrels of condensate per day | |"BPD" means barrels per day | |"GWC" means gas-water contact | |"MCF" means thousand cubic feet | |"mBRT" means metres below rotary table | |"mTVDSS" means metres true vertical depth below sea | |level | |"MMSCF" means million standard cubic feet | |"MMSCF/D" means million standard cubic feet per day | |"MMBO" means million barrels of oil | |"MMBOE" means million barrels of oil equivalent | |"NGL" means natural gas liquids | |"OWC" means oil-water contact | |''PEDL'' means Petroleum Exploration Development | |Licence | |"PSC" means Production Sharing Contract | |"Quarter" means the period 1 October 2004 to 31 | |December 2004 | |"ROC" means Roc Oil Company Limited and includes, where| |the context requires, its subsidiaries | |"SCF" means standard cubic feet | |"TCF" means trillion cubic feet | +-------------------------------------------------------+ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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