Geology and history

Geology

• Stacked reservoir system ranging from Permian age clastics to Late Tertiary Minghuazhen Formation.
• Within the block, 27 different stratigraphic levels are known to contain oil; 16 of these are currently productive.
• Most productive zones have excellent quality reservoirs.  Some deeper targets are tighter, but also have an increase in oil API, resulting in better flow character.
• Oil is waxy with a low pour point and a low acid content.

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Development Plan and Facilities

• The Zhao Dong offshore facilities comprise two bridge-linked platforms.  One is dedicated to drilling and accommodation while the other is used for production and processing.
• As at mid-December 2010, the C&D fields have 64 active production wells and 27 water injection wells.
• The C4 Field Unit facilities (commissioned in October 2008) comprise a wellhead platform and pipelines to the C&D Field platform.
• As at mid-December 2010, the C4 unitised field has 6 active production wells.
• ROC's share of production is sold into the export market.

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History

• In 2006 ROC acquired a 24.5% operated interest in the offshore Zhao Dong Block, which contains the C & D producing oil fields.  Production commenced in 2003.  At the time ROC acquired the asset in mid-2006, approximately 20 MMBO had been produced from the C and D fields.
• On 30 September 2007, operations achieved an important milestone: two years , representing more than 1.6 million man-hours, without a Lost Time Injury.
• C&D Fields production is being augmented by development drilling, with approximately 100 wells planned to be drilled over 5 years (from 2007) as part of the Incremental Development Plan ("IDP").  As part of the IDP, 69 wells (56 oil producers and 13 water injectors) were drilled from 2007 to 2010 in the C&D Fields and the ERA. The 2011 drilling campaign of 20 wells commenced on 3 April 2011.  At end-3Q, nine producers and two injector wells had been drilled. 
• As part of the IDP, a second drilling platform (ODB) was installed in 4Q 2008 and was commissioned in April 2009.  A second fluid processing and storage facility (OPB) was installed in 2Q 2009 and commissioned in September 2009.  Both ODB and OPB are located adjacent to the existing Zhao Dong platforms (ODA and OPA).
• Production commenced from the C4 Field (ROC 11.575% unitised interest) and the Extended Reach Area ("ERA") of the C&D Fields (ROC 24.5%) from new facilities commissioned in October 2008.
• The C4 field Unit Development Plan ("UDP") included construction of new facilities and will include the drilling of 24 wells (15 oil producers and 9 water injectors) over 5 years from 2007.  Four producers were drilled in 2008 and three producers were drilled in 2010. The new pipline terminal and pipeline connections were successfully commissioned in October 2008, following which first production from the C4 Field and the ERA began.
• An appraisal well was drilled in the neighbouring Zhanghai Block in 3Q 2011.  The well was completed and production commenced through existing C4 facilities. 
• A gas sales agreement was finalised with PetroChina in February 2010. Installation of a gas export pipeline and facilities was completed and gas export sales commenced on 9 December 2010, eliminating the need for gas flaring during normal operations

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JV participants and interests

	C&D Fields & ERA	C4 Unitised Field	Zhanghai Block
Roc Oil (Bohai) Company (Operator)	24.5%	11.575%	39.2%
PetroChina Company Limited	51.0%	76.850%	51%
New XCL-China LLC (Sinochem)	24.5%	11.575%	9.8%