Production, Sales & Reserves
Roc Oil Company Limited
25 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 reserves
update ahead of its 4Q 2007 report which will be released on 31 January 2008 and
its 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 the
previous 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, the
Company's 2007 sales revenue of A$248 million was also a record; up 64% on the
previous 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 is
finalising an independent reserve audit report on ROC's production assets,
excluding the Chinguetti Oil Field, offshore Mauritania. On this basis, ROC
advises 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 financial
results through an increase in the non-cash amortisation expense. ROC's
preliminary 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 of
approximately A$12/bbl, totalling approximately A$21 million for the year ending
31 December 2007.
The Company's 2P reserves for end-2007 referred to above, do not include any of
the oil and gas resources identified by the five discoveries ROC has made since
May 2006, four of which are being actively reviewed and/or appraised and one of
which has been relinquished. In this context, the following points are worth
noting:
• Approximately 3.7 MMBOE of net ROC resources in the Wei 6-12S Oil Field
complex in the Beibu Gulf, offshore China, will be reclassified as net ROC
2P reserves if, as expected, a declaration of commerciality is made later
this year. In that event, the reclassification will effectively replace all
of the 2P reserves ROC produced during 2007.
• The commercial potential of the Frankland Gas Field and the Dunsborough
Oil and Gas Field in the offshore Perth Basin will be better known after
completion of the two well drilling programme which is scheduled to start in
early February 2008. Currently, these two fields are tentatively estimated
to contain approximately 5 to 9 MMBOE recoverable reserves net to ROC.
• The Zhao Dong reserve revision does not alter the fact that a potential
for 10 MMBOE net ROC possible reserves is recognised within the Block. Much
of this unrisked and unbooked reserve upside will be evaluated as part of
the ROC-operated > US$ 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 the
modest 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-wide
reserve and near to medium term production sense, it is far from serious. It is
not expected to have any effect on Zhao Dong production performance during 2008
when it is anticipated production will be in line with last year, ca 1.7 MMBBL
net to ROC.
In the end, the amount of oil recovered from Zhao Dong over the next ten or more
years, will be a function of the collective recovery factors of the many
different reservoirs in the three fields. While its petroleum potential is
self-evident, the geology of the Zhao Dong Block has a touch of the Rubik's Cube
about it. Therefore, it is not entirely surprising that it took - and is still
taking - some time to get to grips with the detailed nature of the reservoir nor
that the remaining in-place oil resource at Zhao Dong will not be better defined
until 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 such
that if, over the next ten years, the overall recovery factor proves to be just
a few percent better than that which is currently assumed, the 2007 reserves
revision would be more than offset.
The first few wells in the 2007 programme generally underperformed expectations
and this is necessarily reflected in the year end 2P reserves revision. However,
these first few wells were just the start of an aggressive drilling programme
that will see more than 100 wells drilled between 2007 and 2011. These early
2007 wells provided vital subsurface insights which were progressively fed into
the data base as the drilling programme unfolded through the year. Results from
the last four wells drilled towards the end of 2007 were generally better than
expected. This uptick in performance in the latter part of 2007 certainly
doesn't mean that we have mastered the intricacies of Zhao Dong, but it could be
viewed 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 precise
amount of oil that will ultimately be produced from the Zhao Dong fields. As
such, the most recent reserve review is perhaps best regarded as a snap frozen
product of the information available at this moment in time which is really just
the small tip of a huge database that will be assembled over the next several
years.'
In accordance with ASX and AIM Rules, the information in this Release has been
reviewed and approved by Dr John Doran, Chief Executive Officer, Roc Oil Company
Limited, BSc (Hons) Geology, MSc and PhD. Dr Doran, who is a member of the
Society of Petroleum Engineers, has more than 30 years relevant experience
within the industry and consents to the information in the form and context in
which it appears.
Damian Fisher
General Manager
External Affairs & Investor Relations
For further information please contact:
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)20 7495 5707/+61 (0)2 8356 2000
Mob: +44 (0)7751 3671 49/+61 (0)417 261 727
Email: khird@rocoil.com.au
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: bobbym@buchanan.uk.com
Mob: +44 (0)7802 875 227
This information is provided by RNS
The company news service from the London Stock Exchange