Open Briefing

Roc Oil Company Limited
23 August 2006





Roc Oil Company Limited
Level 14
1 Market St
Sydney NSW 2000



Date of lodgement: 23-Aug-2006
Title: Open Briefing. Roc Oil. Changes to Reserves & Production

Record of interview:

corporatefile.com.au
Roc Oil Company Limited ('ROC') has been very active this year and the share 
price has increased by around 60% since this time last year. Can you briefly 
recap your achievements so far?

CEO John Doran
We've had a very successful year so far - and we'll be working hard to ensure
that it continues.

I wouldn't be surprised if this extraordinary 1H 2006 hasn't left some
shareholders wondering how to rank all the different activities.

Specific 1H 2006 activities include an oversubscribed placement in the UK;
completion of the Cliff Head development in the Perth Basin offshore Western
Australia, within 14 months of the Final Investment Decision, which was a
significant tick on our operator's report card; commencement of non-operated
production in offshore Mauritania with further non-operated North Sea
development projects set to join ROC's growing club of producing assets in 1H
2007; the discovery of the ROC-operated Wei 6-12 South oil field in the Beibu
Gulf, offshore China and the A$350 million acquisition of the Zhao Dong
producing fields in the Bohai Basin, offshore China.

Unfortunately, there is neither the time nor space to cover all the events in a 
single Open Briefing(R) so it might be best to concentrate on changes to ROC's 
production and reserve profiles and how these activities impact on ROC both now 
and in the future.

OFFSHORE CHINA

corporatefile.com.au
ROC recently announced that it had completed the purchase of a 24.5% operated
interest in the Zhao Dong Block ('the Block') in the Bohai Bay, offshore China
for a cash consideration of US$260 million. What impact will the transaction
have on your net proved, probable and possible reserves?

CEO John Doran
In round figures, proved and probable ('2P') reserves have doubled to about 30
million barrels of oil ('MMBO'). We don't carry possible reserves because we
look on that category as representing unbooked upside.

corporatefile.com.au
What impact will it have on net production? Can you also talk about the expected
production profile over time at Zhao Dong?

CEO John Doran
Production shot up by more than 150%, and it is now in excess of 12,000 barrels
of oil per day ('BOPD'). In terms of oil production by non-diversified,
publicly-listed Australian explorers, ROC ranks fourth after Woodside Petroleum
Ltd, Santos Ltd, and Oil Search Ltd. In China, ROC is the third largest foreign
operator of gross oil production after Conoco Phillips, Inc and Kerr-McGee
Corporation/Anadarko Petroleum Corporation. That's a reasonable step up compared
to six months ago when ROC's production was less than 50 BOPD.

corporatefile.com.au
What does this deal say about ROC's strategic direction?

CEO John Doran
The deal reflects a well established strategy. We like diversity and we like to
stay within our core areas. This deal diversifies ROC's production base by
providing a third production leg in a core area where we previously didn't have
any production. To be able to do this in China was particularly satisfying.
We've been dealing with Chinese energy companies since 1998 and not only did the
price-reward equation appeal, but it also represented a good strategic fit.

corporatefile.com.au
Why would Apache sell its 24.5% stake?

CEO John Doran
That's really a question for Apache. However, with company-wide proved reserves
of approximately two billion barrels of oil equivalent, Zhao Dong, with its 15
million barrels of proved and probable reserves net to Apache, may not have been
at the centre of that company's radar screen. In addition, Zhao Dong was
Apache's only asset in China which contrasts with their recent growth activities
which have focused on the Gulf of Mexico and Argentina.

corporatefile.com.au
How does this deal compare with other oil and gas asset acquisitions either in
China or elsewhere in the world? What valuation metrics did you consider before
agreeing to the acquisition?

CEO John Doran
There are very few comparable deals in the public domain in China. A purchase
price of US$17.33/BBL for proved and probable reserves compares well with recent
acquisition costs in other parts of the world, such as the North Sea and parts
of West Africa. However, all these valuation metrics suffer from at least two
drawbacks: firstly, they don't take into account the fact that different fiscal
regimes provide different net-backs to industry investors; and secondly, they
ignore the upside potential.

The fiscal regime that applies to Zhao Dong is attractive to ROC for a number of
specific reasons and we think that there may be upside potential to be realised
in the block. Those two points allowed us to pay a fair price for the 2P
reserves and little or nothing for the upside - and considering that this
postulated upside is yet to be realised that seems to have been a fair price
also.

corporatefile.com.au
You plan to develop a third field (C4) at Zhao Dong in 2007 which extends beyond
the permit boundary. What development concept do you envisage? Do you expect any
problematic issues with unitisation?

CEO John Doran
Unitisation details were agreed with the adjoining block co-venturers earlier
this year, so there's no issue on that front. Coincidentally, there are quite a
few similarities between the C4 development and the Cliff Head development,
which ROC just completed. Both are unmanned platforms in shallow water, remotely
controlled and linked by pipelines and umbilicals to treatment facilities,
although in C4's case those facilities will be on an offshore platform, not
onshore. In addition, the oils are not entirely dissimilar and there will also
be an important water-injection component to the C4 development, just like Cliff
Head.

corporatefile.com.au
ROC is taking a significant debt position and will finance the acquisition via a
12 month loan provided by the Commonwealth Bank of Australia ('CBA'). How does
this fit with ROC's conservative financial strategy?

CEO John Doran
The debt is well serviced by ROC's increasingly diversified production, so in
that sense we remain relatively conservative. CBA was very good to deal with:
decisive; constructive; and quick. The provision of a 12-month loan provides ROC
with plenty of time to consider how best to restructure its finances in the
longer term. There's no pressure in that respect. Whatever details we decide
upon, the loan will be recast as a longer term corporate facility secured
against the Company's other diverse assets, including currently producing fields
and fields under development.

corporatefile.com.au
What are ROC's hedging plans? What upside exposure to the oil price will that
give shareholders?

CEO John Doran
ROC's hedging programme has been detailed in recent announcements. In summary,
the hedging programme is designed to expose shareholders to the benefits of
increases in the oil price while, at the same time, placing a modest financial
safety net under the Company in case oil prices tumble. In general terms, about
23% of the Company's forecast total production to June 2011 is hedged via oil
price swaps at a weighted average price of US$68.40/BBL. The rest of the
production is exposed to upward oil price movement. Some of the downside
exposure not covered by the swaps is limited further by put options that cover
an additional 4% of our forecast production for the period to 2011. We have in
place two lines of put options which provide downside price protection at
US$67.00/BBL and US$50.00/BBL, but they do not limit exposure to price upside
because if the price is above the put strike price we'll simply allow the put
options to lapse.

corporatefile.com.au
How do the PSC terms for Zhao Dong compare with those of other oil projects in
China?

CEO John Doran
As far as we can tell, they are comparable, at least in a broad sense. In China,
the Government is entitled to take up to 51% equity in development projects and
if it's a commercial development you always expect them to do that. Once that
Government bite is behind you the actual contract terms are relatively
attractive.

corporatefile.com.au
What about sovereign risk?

CEO John Doran
Maybe we've been lucky since we started working with Chinese companies eight
years ago. That is not a statement you can make with regard to some other parts
of the world international oil business. Lots of people say that the Chinese are
tough to deal with and they certainly negotiate to their full advantage, but
what you don't hear so much about is that they are also very fair - at least
that's ROC's experience to date. Dealing with China National Offshore Oil
Corporation is like dealing with a western company, arguably better than dealing
with many western companies. We haven't had as much experience dealing with
PetroChina, the parent company of which bears comparison in many respects to any
of the majors, but the contact we've had so far has been very positive and we've
appreciated the welcoming attitude they've taken with regard to ROC coming into
Zhao Dong Production Sharing Contract.

corporatefile.com.au
ROC also recently announced the Wei 6-12 South discovery in the Beibu Gulf,
offshore China. To what extent did this discovery - and its possible development
with ROC as operator - influence you to acquire the Zhao Dong Block?

CEO John Doran
The timing was very relevant. If the Beibu Gulf well had been dry, I suspect ROC
would not have had the same appetite for Zhao Dong. However, the Beibu well was
not dry and once it came in as a significant discovery we were able to apply an
economy of scale to the Zhao Dong purchase that is very exciting. In order to
secure Zhao Dong not only did ROC have to demonstrate its capabilities as an
operator offshore China - which our work in the Beibu Gulf did very well - but
we also had to demonstrate that we had the capacity to operate an offshore
development and Cliff Head provided the evidence that we could deliver the goods
in that respect.

corporatefile.com.au
Can you give an update on what you've achieved with the appraisal program at the
Wei 6-12 South discovery? When do you expect to indicate the size of the
discovery and potential production rates?

CEO John Doran
There's a lot of information being analysed as we speak. The discovery and
appraisal of Wei 6-12S-1 was a fast track process. However, it will still be
some months before we have a good handle on the size of the discovery. Until
then we're not going to waste time with premature speculation about recoverable
reserves. We've given the market guidance as to the amount of oil that may be
in-place, many tens of millions of barrels. By that we mean that the in-place
oil in the Wei 6-12 South structure - including parts of it that are yet to be
drilled - and the neighbouring Wei 6-12 Field which we discovered in 2002, will
range from say, 60 MMBO to towards 100 MMBO. If - and it is an 'if' because the
review is ongoing - the in-place oil proves to be in this range then we would
expect the fields to be commercial and would want to develop them as quickly as
possible.

corporatefile.com.au
In addition to the Wei 6-12 South discovery, what previous discoveries could ROC
potentially develop in the Beibu Gulf?

CEO John Doran
If you've been a dogged reader of ROC's Stock Exchange releases over the last
four years you would find a very consistent theme with regard to our Joint
Venture's operations in the Beibu Gulf: give us one commercial discovery, a
single pearl, and we will likely string a few more together that would otherwise
be uncommercial. There are several known accumulations in the southern part of
the permit area which will merit a fresh look if the recent discovery gets the
green light for development.

corporatefile.com.au
Is the acquisition of the Block an isolated opportunity in China or do you
expect other asset deals or exploration success in China?

CEO John Doran
What's important at the moment is to bed down the Zhao Dong acquisition. There
are other opportunities, but we have no intention of over-stretching to reach
them. If they fit, fine. If they don't, that's OK too because we have plenty on
our plate at the moment. The problem with most other opportunities is that they
usually come to the market via industry auctions and we do our best to avoid
those situations. The uniqueness and beauty of the Zhao Dong purchase was that
we were able to bypass the standard industry bidding process.

OFFSHORE MAURITANIA

corporatefile.com.au
With Chinguetti production performing lower than expectations, do you believe
the field's reserves will be downgraded?

CEO John Doran
Absolutely.  In a nutshell - production risk has replaced development risk,
which is usually the case with new deep water fields.

There's a lot of information available. That may sound as if it's a good thing -
and it is in many ways - but it actually makes reserve recalculations more
complex and very time consuming. It is certainly frustrating for all parties -
market investors and participants alike - that there's no up to date guidance
for Chinguetti reserves and a market vacuum has been created. The irony is that
most observers apparently expect a reserve downgrade.

The Chinguetti Field, which started production in late February 2006, only
sustained a target production rate in excess of 70,000 BOPD for a short period
before declining to 40,000 BOPD by mid-May.  The decline was due to different
factors in each of the six producing wells - gas production, early water arrival
and/or limited productivity depending on the nature of the particular well and
the way it was completed in the reservoir.  On a more positive note, since early
June the rate of production decline has slowed and the production capacity has
been maintained generally between 32,000 to 38,000 BOPD.

While the early decline was significantly faster than predicted and the more
recent stabilisation of production is encouraging, the overall assessment of the
impact on recoverable reserves - when completed - is expected to be
negative although the in-place oil estimate may remain close to original
forecasts.

The Operator, Woodside, is reviewing the performance data in order to explain
the decline with one of the potential key factors being a less
continuous reservoir sand system than had been previously assessed.
The Operator has advised the Joint Venture that it is not in a position to
provide updated reserves at this time.  ROC relies on the Operator's assessment
and with a 3.25% equity in the field there isn't much point in ROC undertaking a
full independent assessment at this time.  However, based on the production and
reservoir performance to date, ROC would not be surprised if Chinguetti's 123
MMBO 2P reserves were reduced by 25 to 50%. This view still assumes that Phase
Two of the Development Plan - which involved the drilling of infill wells and
was integral to the original reserve estimate and production forecasts - is
implemented and is successful.

OFFSHORE WESTERN AUSTRALIA

corporatefile.com.au
How has Cliff Head been performing?

CEO John Doran
So far, so good - but it's still early days. If it were not for downstream
constraints the field could certainly be delivering at its nameplate capacity
level of 15,000 BOPD - and that would be with one well, albeit one of the more
modest producers, yet to come on stream. Recent production has generally ranged
between 8,000 BOPD and 12,000 BOPD. Prior to first oil we said that the field
would exceed 10,000 BOPD so that's an important box ticked.

corporatefile.com.au
You've mentioned that Chinguetti has moved from development risk to production
risk - what production risks have you identified for Cliff Head?

CEO John Doran
The journey the oil makes from the downhole pumps in the offshore wells to the
Kwinana refinery south of Perth requires a number of critical mechanical
components to work well. The mechanical and system challenges we've experienced
to date have been generally minor and manageable.

If - and it's a big 'if' because production from Cliff Head has just begun -
present production trends continue we'll be tempted to view that the main
production risk for the field lies not in the rocks themselves, but in the
hardware and the systems that move the oil from reservoir to refinery. If this
proves to be the case, it will be a pleasant surprise because the
pre-development view of the reservoir potential at Cliff Head was fairly subdued
and we constructed our economics accordingly. But, there again, maybe we and
Mother Nature are just going through a little honeymoon period at Cliff Head.
Time will tell.

corporatefile.com.au
If you had one other area to highlight with regard to ROC's activities which
would it be?

CEO John Doran
In a word: Angola.

ROC is becoming a lot more balanced and diversified with regard to production,
as we bed down the Zhao Dong acquisition and advance the potential development
of our new field in the Beibu Gulf. However, we also have to maintain our
exploration momentum - and onshore Angola will play a big part in that process.

ROC's planned Angolan drilling programme will kick-off towards the end of this 
year or as early as possible in 2007.  The precise timing will depend on which 
drilling rig we contract. We plan to drill two or three back-to-back wells based
on seismic we acquired in 2005 and we hope to follow them with a further three 
or four wells subject to the number and nature of the prospects revealed by our 
current 2006 seismic. Whatever the details of our drilling plans, the rocks in 
Angola are every bit as prospective now as they were in January 2006 when they 
were subject to a lot more investor focus in the context of ROC's A$76 million 
placement to UK institutions. All that has happened in the meantime is that 
success on two separate fronts offshore China has moved the market spotlight 
from exploration in Angola to production and potential development in China. 
That's just a perception shift reflecting the most recent events. There's just 
as much reason to be excited about what ROC is doing onshore Angola now as there 
was six months ago.

corporatefile.com.au
Thank you John.
--------------------------------------------------------------------------------
For further information on ROC please visit www.rocoil.com.au or call John Doran
on [phone].

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