30th Apr 2008 07:02
Roc Oil Company Limited30 April 2008 ROC OIL COMPANY LIMITED (ABN 32 075 965 856) REPORT TO SHAREHOLDERS Activities for the Quarter Ended 31 March 2008 CEO COMMENTS ROC continues to live in a split level world. Several quarterly financialmetrics are at all time highs while the seven exploration and appraisal wellsdrilled during the Quarter were all dry or not clearly commercial. The 25%decline in the share price during the Quarter suggest that, perhaps,predictably, the share market presently attaches more importance to the wellresults than to the Company's overall production and revenue performance.Therefore, the fact that the records set in the previous quarter regarding salesrevenue and realised oil price and in 4Q 2006 with regard to sales volumes, wereall broken during the Quarter, does not lessen the Company's need to score a fewgoals on the drilling front - and with active drilling programmes underway inAngola and Mauritania that possibility certainly exists. KEY ACTIVITIES 1. CONSOLIDATED REVENUE & PRODUCTION 1.1 Total working interest production of 1 MMBOE (10,961 BOEPD), 98% oil; down 8% compared to 1.08 MMBOE (11,771 BOEPD) in the previous quarter. 1.2 Record sales volumes of 1.12 MMBOE; up 7% compared to the previous record of 1.05 MMBOE set in 4Q 2006. 1.3 Record total sales revenue of US$101.7 million; up 16% compared to the record of US$88 million set in the previous quarter. 1.4 Record average realised oil price in the Quarter of US$91.17/BBL; up 6% from the record of US$86.39/BBL set in the previous quarter. 2. PRODUCTION ASSETS 2.1 Cliff Head Oil Field, WA-31-L, Offshore Western Australia (ROC: 37.5% & Operator) Gross oil production averaged 8,035 BOPD (ROC: 3,013 BOPD); down 15% on theprevious quarter due to expected field decline. During the Quarter planning wascommenced for conduct of well workovers to replace two electric submersiblepumps with larger pumps which will improve well productivity. 2.2 Zhao Dong C&D Oil Fields, Bohai Bay, Offshore China (ROC: 24.5% & Operator) Gross oil production averaged 19,025 BOPD (ROC: 4,661 BOPD), 2% lower than theprevious quarter. Evaluation of sub-surface reservoir and well performance andpreparations for workovers to support the 2008 drilling programme continuedthroughout the Quarter. 2.3 Enoch Oil and Gas Field, North Sea (ROC: 12.0%) Gross production averaged 7,146 BOPD and 4.2 MMSCFD (ROC: 858 BOPD and 0.5MMSCFD); down 13% compared to the previous quarter. The Enoch producing well wassuccessfully put on gas lift early in January 2008. 2.4 Blane Oil Field, North Sea (ROC: 12.5%) Gross oil production averaged 15,226 BOPD (ROC: 1,903 BOPD); down 1% compared tothe previous quarter. The Ula gas compression upgrade project, which willprovide a dedicated gas supply for gas lift for Blane's producing wellscontinued. Drilling of the planned water injection well to provide pressuresupport to the two active producing wells commenced on 4 March 2008. The well isdue to be completed by the end of April 2008 (see section 7 - Post QuarterEvents). 2.5 Chinguetti Oil Field, PSC Area B, Offshore Mauritania (ROC: 3.25%) Gross oil production averaged 10,968 BOPD (ROC: 356 BOPD); down 11% on theprevious quarter due to natural field decline. The programme for three wellinterventions and two new infill wells, due to commence in 2Q 2008, is expectedto deliver an increase in production during 2H 2008. 3. DEVELOPMENT ASSETS 3.1 Zhao Dong C&D Oil Fields, Bohai Bay, Offshore China (ROC: 24.5% & Operator) During the Quarter, work progressed on the rig upgrades and modifications andthe winter maintenance tasks were completed. Upgrade work on the offshoredrilling and production platforms as part of the Incremental Development Plancontinued. Fabrication of the template for pile driving for the additionaldrilling platform and pile fabrication was completed. A number of slotrecoveries and well recompletions on the existing drilling platform wereachieved prior to the start of the 2008 12 well development drilling programmein the C&D Oil Fields, which commenced on 20 March 2008. Initially five wellswill be batch drilled before completion of the wells and commencement ofproduction from those wells. 3.2 Zhao Dong C4 Oil Field, Bohai Bay, Offshore China (ROC: 11.575% unitised & Operator) Work in relation to construction and fabrication of facilities for developmentof the C4 Oil Field continued. Installation of the C4 conductor pod (CP2) wassuccessfully completed ahead of schedule on 26 March 2008 - a major milestonefor the project. Work associated with the construction of the platform terminaland the fabrication and coating of pipe for the pipelines continued. 4. EXPLORATION AND APPRAISAL ASSETS 4.1 WA-286-P, Perth Basin, Offshore Western Australia (ROC: 37.5% & Operator) Acquisition of the 546 km2 Diana 3D seismic survey was completed on 12 February2008. The survey data will further define the 2007 Frankland and Dunsboroughdiscoveries and nearby prospects and leads. The Premium "Wilcraft" jack-up rigcompleted a three well exploration and appraisal drilling programme comprisingLilac-1, Frankland-2 and Dunsborough-2. The Lilac-1 exploration well, drilled to a Total Depth of 1,455 mBRT,encountered sands with weak gas shows and fluorescence in the primary reservoirtarget which proved to be water bearing. The well was subsequently plugged andabandoned. Frankland-2, drilled to a Total Depth of 2,330 mBRT, intersected gas in thetarget sands confirming hydrocarbons in the eastern region of the FranklandField. However, the top of the reservoir at Frankland-2 was encountered deep toprognosis and the reservoir itself was of poorer quality than that encounteredin Frankland-1. The well was subsequently plugged and abandoned. At the end of the Quarter, Dunsborough-2 had drilled to a Total Depth of 1,680mBRT and a wireline logging programme was underway (see section 7 - Post QuarterEvents). 4.2 WA-351-P, Carnarvon Basin, Offshore Western Australia (ROC: 20%) The Operator, BHP Billiton Petroleum Pty Ltd, continued to review options foracquiring a 3D seismic programme in 2008, which will focus on Triassic gaspotential. 4.3 Block 22/12, Beibu Gulf, Offshore China (ROC: 40% & Operator - Subject to Government participation in developments for up to 51%) Following Chinese Government approval of the Wei 6-12 Oil Fields reserves,pre-development planning work is progressing. The Overall Development Plan forthe Wei 12-8W and Wei 6-12 Oil Fields is scheduled to be submitted to relevantChinese authorities mid-year and a Final Investment Decision is expected during2H 2008. This project has the potential to move currently unbooked discoveredresources of 4.7 to 5.7 MMBO net to ROC, into booked 2P reserves and to alsofurther strengthen the Company's position in China. On 1 January 2008, ROC commenced a two well exploration programme in Block 22/12. The first well, Wei 6-12W-1, reached a Total Depth of 2,333 mBRT withoutencountering hydrocarbons and was plugged and abandoned on 28 January 2008. Thesecond exploration well, Wei 6-12E-1, commenced drilling on 12 February 2008 andwas respudded as the sidetrack Wei 6-12E-1A and drilled to a Total Depth of2,510 mBRT. The well encountered minor residual oil shows and was plugged andabandoned on 13 March 2008. The results of the Wei 6-12W-1 and Wei 6-12E-1Aexploration wells do not have any adverse impact on the potential development ofthe Wei 12-8W and Wei 6-12 Oil Fields. 4.4 Cabinda South Block, Onshore Angola (ROC: 60% & Operator) During the Quarter, ROC's fourth exploration well in the block, Milho-1, thefirst test of the pre-salt section, finished drilling. The well drilled to TotalDepth of 3,009 metres encountering a classic pre-salt sequence characterised bya thick world-class source rock, with significant oil and gas shows, from whicha small amount of oil was recovered via wireline sampling. The sequence overliesa thick sand interval with good reservoir quality which exhibited minor oilshows but did not contain any recoverable hydrocarbons. Milho-1 was plugged andabandoned on 14 March 2008. Coco-1, ROC's fifth well in its current seven well programme, commenced drillingon 25 March 2008 and is expected to reach Total Depth by the end of May 2008(see section 7 - Post Quarter Events). Work continued on the evaluation of the Massambala-1 heavy oil discovery duringthe Quarter. As a result of 3D seismic reprocessing and core analyses, on 31March 2008, the Cabinda South Block co-venturers agreed to drill up to sixshallow Massambala appraisal wells during 2H 2008 and planning for thisprogramme is underway. 4.5 Offshore Mauritania (ROC: 2 - 5.49%) A 402 km2 3D seismic survey in Block 1 commenced on 23 March 2008. During the Quarter, the Atwood "Hunter" drilling rig drilled the Khop-1exploration well in PSC Area C, Block 6, to a Total Depth of 4,265 mBRT. Thewell was subsequently plugged and abandoned on 30 March 2008 after encounteringthin sands with oil shows that were not considered to be of commercialconsequence. At Quarter end, preparations were underway to start drilling theBanda NW appraisal well in PSC Area B (see section 7 - Post Quarter Events). 4.6 Belo Profond Block, Offshore Madagascar (ROC: 75% & Operator) During the Quarter, planning for an aeromagnetic survey due to commence in May2008 was completed. In parallel with this work an Environmental Impact Study wascompleted. 4.7 Blocks H15 & H16 Equatorial Guinea (ROC: 18.75% & Technical Manager) The arbitration between Pioneer Natural Resources (Equatorial Guinea) Limitedand the other joint venturers, including ROC, continued. 5. CORPORATE On 25 January 2008, ROC advised that its remaining company-wide proved andprobable (2P) reserves as at 31 December 2007 were 21.4 MMBOE, all of which arebeing produced or developed. There was a reduction of 2.1 MMBOE relating toROC's 2P net reserves in the C&D Oil Fields, in the Zhao Dong Block, offshoreChina. There were no other material revisions to ROC's 2P reserves. On 7 March 2008, the Government approved surrender of the WA-325-P and WA-327-Ppermits in the offshore Perth Basin, Western Australia, effective 23 July 2007. 6. FINANCIAL At Quarter-end ROC had approximately US$40.1 million in cash, down US$1.3million (3.1%) on the previous quarter; debt of US$128.4 million, down US$4.9million (4%) on the previous quarter and net debt of US$88.3 million, downUS$3.6 million ( 3.9%) on the previous quarter. 6.1 Production+----------------------+-----------+-----------+-----------+-----------+| | 1Q 2008 | 4Q 2007 | YTD |% Change (4|| | | | | Q07 to || | | | | 1Q08) |+----------------------+-----------+-----------+-----------+-----------+|Oil Production (BBLS) | | | | |+----------------------+-----------+-----------+-----------+-----------+|Cliff Head | 274,192| 326,383| 274,192| (16%)|+----------------------+-----------+-----------+-----------+-----------+|Zhao Dong C&D Fields | 424,159| 438,340| 424,159| (3%)|+----------------------+-----------+-----------+-----------+-----------+|Chinguetti | 32,438| 36,814| 32,438| (12%)|+----------------------+-----------+-----------+-----------+-----------+|Blane | 173,198| 176,183| 173,198| (2%)|+----------------------+-----------+-----------+-----------+-----------+|Enoch | 78,040| 85,679| 78,040| (9%)|+----------------------+-----------+-----------+-----------+-----------+|Other | 311| 340| 311| (9%)|+----------------------+-----------+-----------+-----------+-----------+|Total Oil Production | 982,338| 1,063,739| 982,338| (8%)|+----------------------+-----------+-----------+-----------+-----------+| | | | | || | | | | ||Gas Production (MSCF) | | | | |+----------------------+-----------+-----------+-----------+-----------+|Enoch | 46,316| 73,655| 46,316| (37%)|+----------------------+-----------+-----------+-----------+-----------+|NGL Production (BOE) | | 6,890| 7,360| 7%|| | | | | ||Blane | 7,360| | | |+----------------------+-----------+-----------+-----------+-----------+|Total BOE | 997,417| 1,082,905| 997,917| (8%)|+----------------------+-----------+-----------+-----------+-----------+|BOEPD | 10,961| 11,771| 10,961| (7%)|+----------------------+-----------+-----------+-----------+-----------+ Note: Production quoted is ROC's working interest share of total production.ROC's net entitlement production for the period was 945,591 BOE (4Q 2007:1,015,719 BOE; YTD: 945,591 BOE) after taking out governments' share of profitoil. 6.2 Sales+------------+-------------------+------------------+-------------------+| | 1Q 2008 | 4Q 2007 | YTD |+------------+----------+--------+---------+--------+---------+---------+|Oil Sales | BOE |US$'000 | BOE |US$'000 | BOE | US$'000 ||(BBLS) | | | | | | |+------------+----------+--------+---------+--------+---------+---------+|Cliff Head | 273,484| 26,597| 327,776| 33,413| 274,192| 26,597|+------------+----------+--------+---------+--------+---------+---------+|Zhao Dong C&| 508,326| 42,940| 306,054| 28,078| 508,326| 42,940||D Fields | | | | | | |+------------+----------+--------+---------+--------+---------+---------+|Chinguetti | 26,321| 2,386| 27,356| 2,791| 26,321| 2,386|+------------+----------+--------+---------+--------+---------+---------+|Enoch | 75,425| 7,294| 89,182| 9,403| 75,425| 7,294|+------------+----------+--------+---------+--------+---------+---------+|Blane | 220,659| 21,452| 125,122| 13,971| 220,659| 21,452|+------------+----------+--------+---------+--------+---------+---------+|Other | 311| 30| 340| 42| 311| 30|+------------+----------+--------+---------+--------+---------+---------+|Total Oil | 1,104,526| 100,699| 875,830| 87,698|1,104,526| 100,699||Sales | | | | | | |+------------+----------+--------+---------+--------+---------+---------+|Gas Sales | | | | | | ||(MSCF) | | | | | | |+------------+----------+--------+---------+--------+---------+---------+|Enoch | 46,316 | 269 | 73,655 | 282 | 46,316 | 269 |+------------+----------+--------+---------+--------+---------+---------+|NGL Sales | 9,913| 691| -| -| 9,913| 691||(BOE) | | | | | | |+------------+----------+--------+---------+--------+---------+---------+|Total Sales | 1,122,159| 101,659| 888,106| 87,980|1,122,159| 101,659||(BOE) | | | | | | |+------------+----------+--------+---------+--------+---------+---------+ 6.3 Stock ROC's net entitlement crude stock position decreased by 176,567 BBLS during theperiod so that at the end of the Quarter ROC was in an underlift position of67,004 BBLS compared to a 243,571 BBLS underlift position at the end of theprevious quarter. Movements in ROC's stock position will flow through the Profit & Loss Statementduring the period in which the movement occurs. ROC's stock position willfluctuate from period to period. 6.4 Expenditure Incurred+---------------------+-----------+-----------+-----------+| | 1Q 2008 | 4Q 2007 | YTD || | | | || | US$'000 | US$'000 | US$'000 |+---------------------+-----------+-----------+-----------+|Exploration | | | |+---------------------+-----------+-----------+-----------+|Angola | 13,908| 20,311| 13,908|+---------------------+-----------+-----------+-----------+|China | 13,856| 3,659| 13,856|+---------------------+-----------+-----------+-----------+|Mauritania | 1,270| 266| 1,270|+---------------------+-----------+-----------+-----------+|Australia | 22,459| (878)| 22,459|+---------------------+-----------+-----------+-----------+|UK | 50| (76)| 50|+---------------------+-----------+-----------+-----------+|Equatorial Guinea | 111| 55| 111|+---------------------+-----------+-----------+-----------+|Madagascar | 96| 187| 96|+---------------------+-----------+-----------+-----------+|Other | 364| 270| 364|+---------------------+-----------+-----------+-----------+|Total Exploration | 52,114| 23,794| 52,114|+---------------------+-----------+-----------+-----------+| | | | |+---------------------+-----------+-----------+-----------+|Development | | | |+---------------------+-----------+-----------+-----------+|Zhao Dong C&D Fields | 2,725| 8,262| 2,725|+---------------------+-----------+-----------+-----------+|Zhao Dong C4 | 810| 1,812| 810|+---------------------+-----------+-----------+-----------+|Blane | 4,110| 2,160| 4,110|+---------------------+-----------+-----------+-----------+|Enoch | 158| 529| 158|+---------------------+-----------+-----------+-----------+|Chinguetti | 383| 223| 383|+---------------------+-----------+-----------+-----------+|Total Development | 8,186| 12,986| 8,186|+---------------------+-----------+-----------+-----------+| | | | |+---------------------+-----------+-----------+-----------+|Total Exploration & | 60,300| 36,780| 60,300||Development | | | |+---------------------+-----------+-----------+-----------+ 6.5 Hedging The Company's remaining hedge positions for the period from 1 April 2008 toDecember 2011 are summarised below. +-------+------------------------------+| | Brent Oil Price Swaps |+-------+--------------+---------------+| | Volume | Weighted || | | Average Brent || | | Price || | | USD/BBL |+-------+--------------+---------------+| 2008 |858,987 |71.46 |+-------+--------------+---------------+| 2009 |851,998 |70.01 |+-------+--------------+---------------+| 2010 |686,994 |68.46 |+-------+--------------+---------------+| 2011 |455,997 |66.31 |+-------+--------------+---------------+| |2,853,976 |69.48 |+-------+--------------+---------------+ During the Quarter, the cash flow loss as a result of the settlement of the oilprice derivative contracts was US$ 7.4 million. 7. POST QUARTER EVENTS The Banda Northwest appraisal well in PSC Area B, offshore Mauritania (ROC:3.693%), was drilled to Total Depth of 2,703mBRT and sidetracked to a revisedTotal Depth of 2,934 mBRT. As at 30 April 2008, the current operation wasrunning wireline logs. The Blane sidetrack water injection well (ROC: 12.5%) was drilled to Total Depthof 3,622mBRT and was completed. The forward programme is to complete the tie-inof the wellhead to the water injection line pre-laid from the Ula platform, some34 kilometres north east of the Blane subsea complex. The Dunsborough-2 appraisal well in WA-286-P, Perth Basin, offshore WesternAustralia (ROC: 37.5%) was plugged and abandoned on 4 April 2008 after interpretation of logs, pressure data and fluid samples indicated that theextensive oil shows seen in cores were residual (non-producible). Drilling of Coco-1 in the Cabinda South Block, onshore Angola, (ROC: 60%)continues with the expectation that drilling at the Coco-1 location will becompleted during May 2008 after which two further sub-salt exploration wellswill be drilled: Sesamo-1 and Arroz-1. Drilling operations from the newly installed C4 (ROC: 11.575%) conductor pod atCP2 commenced on 15 April 2008 with the driving of nine surface conductor pipesfor wells targeted into the C4 Oil Field and Extended Reach Areas (ROC: 24.5%).All conductor pipe has been installed and batch drilling of top-holes commencedon 25 April. 8. FURTHER INFORMATION For further information please contact ROC's Chief Executive Officer, John Doran, Chief Operating Officer, Bruce Clement, or General Manager, External Affairs & Investor Relations, Damian Fisher, on: Phone: (02) 8356 2000 Email: [email protected]: (02) 9380 2066 Web Site: www.rocoil.com.auAddress: Level 14, 1 Market Street, Sydney, NSW 2000, Australia Dr Kevin HirdGeneral Manager - Business DevelopmentTel: +44 (0)20 7495 5707/+61 (0)2 8356 2000Mob: +44 (0)7751 3671 49/+61 (0)417 261 727Email: [email protected] Michael ShawOriel Securities Limited (Nominated Adviser)Tel: +44 (0)20 7710 7600 Bobby MorseBuchanan CommunicationsTel: + 44 (0)20 7466 5000Fax: + 44 (0)20 7466 5001E-Mail: [email protected]: +44 (0)7802 875 227 +------------------------------------------------------------------------+|definitions |+---------+--------------------------------------------------------------+|BBL(S) |means barrel(s) |+---------+--------------------------------------------------------------+|BCF |means billion cubic feet |+---------+--------------------------------------------------------------+|BOE |means barrels of oil equivalent (6 MSCF = 1 BOE) |+---------+--------------------------------------------------------------+|BOPD |means barrels of oil per day |+---------+--------------------------------------------------------------+|BOEPD |means barrels of oil equivalent per day |+---------+--------------------------------------------------------------+|BCPD |means barrels of condensate per day |+---------+--------------------------------------------------------------+|MCF |means thousand cubic feet |+---------+--------------------------------------------------------------+|mBRT |means metres below rotary table |+---------+--------------------------------------------------------------+|mTVDSS |means metres true vertical depth below sea level |+---------+--------------------------------------------------------------+|MSCF |means thousand standard cubic feet |+---------+--------------------------------------------------------------+|MMSCF |means million standard cubic feet |+---------+--------------------------------------------------------------+|MMSCFD |means million standard cubic feet per day |+---------+--------------------------------------------------------------+|MMBO |means million barrels of oil |+---------+--------------------------------------------------------------+|MMBOE |means million barrels of oil equivalent |+---------+--------------------------------------------------------------+|OWC |means oil-water contact |+---------+--------------------------------------------------------------+|PSC |means Production Sharing Contract |+---------+--------------------------------------------------------------+|Quarter |means the period 1 January 2008 to 31 March 2008 |+---------+--------------------------------------------------------------+|ROC |means Roc Oil Company Limited and includes, where the context || |requires, its subsidiaries |+---------+--------------------------------------------------------------+|SCF |means standard cubic feet |+---------+--------------------------------------------------------------+|TCF |means trillion cubic feet |+---------+--------------------------------------------------------------+|US$ |means US dollars |+---------+--------------------------------------------------------------+|$ |means Australian dollars |+---------+--------------------------------------------------------------+ 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 of relevant experiencewithin the industry and consents to the information in the form and context inwhich it appears. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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