Shareholders' Update: Jul-Oct

Roc Oil Company Limited 19 November 2004 19 November 2004 ROC OIL COMPANY LIMITED (ROC) STOCK EXCHANGE RELEASE SHAREHOLDERS' UPDATE: JULY - OCTOBER 2004 -------------------------------------------------------------------------------- Under separate cover, ROC is mailing out to all of its shareholders a hard copy of its 'Shareholders' Update' in accordance with the Company's practice of maintaining a maximum level of direct communication with all shareholders. Most of the Shareholders' Update is based upon information already released by ROC, including the Company's Report on Activities for the Quarter ended 30 September 2004 released on 29 October 2004. However, the update also provides some new financial information for the nine month period to 30 September 2004 and additional commentary on the Company's activities. An A4 copy of the Shareholders' Update is attached. Bruce Clement Chief Operating Officer For further information please contact: Dr John Doran on +61 2 8356 2000 Fax: +61 2 9380 2635 E-mail: jdoran@rocoil.com.au or visit ROC's website: www.rocoil.com.au -------------------------------------------------------------------------------- Roc Oil Company Limited (ROC) ABN 32 075 965 856 Level 14, 1 Market Street Sydney NSW 2000 Australia Tel: +61-2-8356-2000 Fax: +61-2-9380-2066 Web: www.rocoil.com.au Email: info@rocoil.com.au 19 November 2004 -------------------------------------------------------------------------------- SHAREHOLDERS' UPDATE: JULY - OCTOBER 2004 SUMMARY During the September Quarter and the subsequent month, ROC, along with most of the rest of the industry, was firing on all cylinders. A new field discovery and successful appraisal well offshore Mauritania; continuing progress towards development of oilfields offshore Australia, Mauritania, China and in the UK North Sea, together with a ground-breaking agreement to start exploration work onshore Angola and a successful listing on AIM in London, coincided with record oil and gas prices which generated $8 million revenue for ROC. -------------------------------------------------------------------------------- KEY POINTS • US$13.6 million debt was repaid in July leaving ROC debt free and with cash assets of $90 million at 30 September 2004. • Production of 2,741 BOEPD was down 11% on the previous quarter, largely due to scheduled annual maintenance shut down at the third party owned gas processing plant. • Revenue of $8 million was down 5% for the same reasons as the decline in production, although the decline in revenue was mitigated by higher gas prices. • A two vessel drilling programme commenced offshore Mauritania which will result in 21 wells being drilled during late 2004 and early 2005. • The Tevet-1 exploration well offshore Mauritania encountered a significant oil and gas accumulation which is likely to be regarded as a potential candidate for development via a subsea tie back to the Chinguetti Field. • The Tiof-3 appraisal well offshore Mauritania intersected a 134m gross oil column, 4.2km west of the Tiof-1 discovery well and 3.6km east of the first Tiof appraisal well. • Development of the Chinguetti Oil and Gas Field offshore Mauritania continued, as the Cliff Head Oil Field offshore Australia moved towards a Final Investment Decision at the end of January 2005. Offshore China and in the UK North Sea the Wei 12-8 and Blane oil fields are both the subject of predevelopment studies. • Planning was initiated for up to four exploration wells and two Cliff Head early development wells scheduled to be drilled in ROC's permits in the offshore Perth Basin commencing December 2004, subject to rig availability. • Plans for drilling the wildcat Errington-1 well onshore UK came to fruition during the Quarter, ahead of a 6 November 2004 commencement date. • On 6 September 2004, ROC shares were listed on AIM in London marking a potentially significant expansion of the Company's shareholder base. • On 26 October 2004, ROC agreed to activate its Production Sharing Agreement, onshore Angola, thereby ending a 32 year hiatus in exploration. -------------------------------------------------------------------------------- OTHER FINANCIAL DETAILS ROC's unaudited $16.8 million loss after tax for the nine months to 30 September 2004 compares to a profit of $1.2 million for the corresponding period last year. The loss includes $15.4 million of exploration expenditure written off, which comprises capitalised expenditure in the Humber Basin onshore UK for licences in which no further exploration activity is anticipated as well as $5.6 million exploration expense relating mainly to dry holes drilled in China and expenditure incurred in Angola prior to the PSA being triggered, offset by a tax credit of $1.2 million, which is a result of the release of deferred income tax liability in relation to the exploration expensed and written off in the UK. Exploration and appraisal expenditure year to date totals $17.4 million. Major expenditures include the Front End Engineering Design for Cliff Head ($2.7 million), three exploration and appraisal wells in the Beibu Gulf, China ($5.2 million), 3D seismic and commencement of exploration and appraisal drilling offshore Mauritania in September ($3.8 million) and the Old Hills exploration well, onshore UK ($2.4 million). -------------------------------------------------------------------------------- CEO'S REPORT It's hard not to be upbeat if you're an oil company in this market. After a lengthy period in the wings most participants in the sector moved towards centre stage during the period under review. Record product prices are driving a booming market. A rising tide is carrying most oil and gas stocks higher and ROC is no exception. Since the beginning of July 2004, ROC's share price has risen 25% to a record closing high of $2.04. In a little over a year, the Company's market capitalisation has increased by approximately 200%, with the help of a substantial Rights Issue in 2Q2004. Shareholders who took up their rights in April 2004 have seen their investment increase by more than 40% during the following five months. As much as we would like to put it all down to good management and good drilling results, the fact is that record oil and gas prices have transformed the sector. Many industry participants and observers claim that the current market sentiment is the best they have experienced. This raises the obvious question: is this as good as it gets? In ROC's case, we think there is a very good chance that things will get even better. This is not a casual comment but one that is grounded in events which are already underway within the Company's portfolio, as detailed elsewhere in this review. The portfolio is evolving quite nicely at a time when small independent companies with broad spreads of international oil and gas properties at various stages of exploration, appraisal and development are attracting more and more investor attention. That attention is all the more acute if the portfolio comes complete with an active drilling programme. In ROC's case, up to 15 exploration and appraisal wells, two appraisal/development wells at Cliff Head and staged drilling in relation to 12 Chinguetti development wells, all scheduled for the five months from end October 2004, certainly falls within the definition of an active drilling programme. The collective industry experience of ROC's seven person management team approximates to 150 man years. This experience, which has enabled the Company to manage market and industry downturns in the past, is no less important in these more upbeat times. In fact, there is a compelling argument that well-earned corporate scar tissue is even more crucial in the current oil price climate because it allows the Company to keep its feet firmly on the ground even as oil prices soar. That is why the best thing for ROC shareholders is for management to run the Company as if oil was headed back to US$15/barrel. Dr John Doran Chief Executive Officer -------------------------------------------------------------------------------- Roc Oil Company Limited Group Statement of Financial Performance (Unaudited) Year to Date Year to Date 30 June 2004 30 Sept 2004 $'000 $'000 Revenue Sales revenue - Oil 420 591 - NGL 1,331 2,133 - Gas 17,235 24,307 ------------------- Sales Revenue 18,986 27,031 ------------------- Operating Costs Production costs (6,419) (8,765) Amortisation expense (5,103) (7,510) Restoration expense (122) (174) --------------------- Total Operating Costs (11,644) (16,449) --------------------- Trading Profit 7,342 10,582 Net interest income 712 1,452 Net foreign currency gains 1,047 130 Exploration expenditure expensed (4,907) (5,663) Exploration expenditure written off (15,484) (15,484) Other (including general and (5,753) (9,107) administrative costs) --------------------- Loss From Ordinary Activities Before (17,043) (18,090) Income Tax Expense Income tax credit 1,888 1,266 -------------------- Net Loss After Income Tax Expense (15,155) (16,824) ===================== +------------------------------------------------+ |Definitions: | +------------+-----------------------------------+ |BOE |Barrel of oil equivalent. The | | |factor used to convert gas to oil | | |equivalent is based upon an | | |approximate energy value of 6,000 | | |cubic feet per barrel and not price| | |equivalence at the time. | +------------+-----------------------------------+ |BOEPD |Barrel of oil equivalent per day. | +------------+-----------------------------------+ |BOPD |Barrel of oil per day inclusive of | | |NGLs. | +------------+-----------------------------------+ |MMBBL |Million barrels. | +------------+-----------------------------------+ |MMBO |Million barrels of oil. | +------------+-----------------------------------+ |MMBOE |Million barrels of oil equivalent. | +------------+-----------------------------------+ |MMSCF/D |Million standard cubic feet per | | |day. | +------------+-----------------------------------+ |Quarter |Means the period 1 July 2004 to 30 | | |September 2004. | +------------+-----------------------------------+ Roc Oil Company Limited Group Statement of Financial Position (Unaudited) 30 June 2004 30 Sept 2004 $'000 $'000 Current Assets Cash assets 119,841 89,616 Receivables 19,441 6,048 Inventories 2,850 2,577 Other 1,124 2,710 -------------------- 143,256 100,951 -------------------- Non Current Assets Development and production assets 78,893 76,840 Exploration expenditure capitalised 102,613 105,741 Receivables 1,922 3,777 Materials inventory 54 44 Plant and equipment 4,354 4,294 Other 78 76 -------------------- 187,914 190,772 -------------------- Total Assets 331,170 291,723 -------------------- Current Liabilities Payables 22,614 9,036 Interest bearing liabilities 20,131 180 Current tax liabilities 6,634 6,474 Provisions 908 852 ------------------- 50,287 16,542 ------------------- Non Current Liabilities Interest Bearing Liabilities 1,022 977 Deferred tax liabilities 21,118 20,303 Deferred income 162 170 Provisions 4,329 4,234 -------------------- 26,631 25,684 -------------------- Total Liabilities 76,918 42,226 -------------------- NET ASSETS 254,252 249,497 ==================== Equity Contributed equity 291,184 291,218 Accumulated losses (52,323) (53,991) Reserves 15,391 12,270 --------------------- TOTAL EQUITY 254,252 249,497 ===================== ROC'S DRILLING PROGRAMME* October 2004 to March 2005 *ROC's Drilling Programme attached to the copy of this release on ROC's website (http://www.rocoil.com.au/Pages/ASX_Releases/2004_Releases/November-2004.html) For further information please contact: Dr John Doran Tel: +61 2 8356 2000 Fax: +61 2 9380 2635 E-mail: jdoran@rocoil.com.au or visit ROC's website: www.rocoil.com.au Dr Kevin Hird General Manager Business Development Tel: +44 (0)207 586 7935 Fax: +44 (0)207 722 3919 Email: khird@rocoil.com.au Ann-Marie Wilkinson/Nick Lambert Bell Pottinger Corporate & Financial Tel: +44 (0) 207 861 3232 This information is provided by RNS The company news service from the London Stock Exchange

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