| MARCH 2000- RELEASES |
ACTIVITIES UPDATE (29-03-00) |
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1. DRILLING OPERATIONS 1.1 UK North Sea (ROC 10% working interest, 12.85% contributing interest) The 30/22b-2 well has reached a total depth of 2820 metres and has been plugged and abandoned after failing to encounter any significant hydrocarbons. The total well duration was 19 days, approximately 7 days less than budgeted. Dr
John Doran |
ACTIVITIES UPDATE (22-03-00) |
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1. DRILLING OPERATIONS (10% ROC) As of 21 March 2000 the 30/22b-2 well in the UK North Sea (formerly referred to as 30/22b-B) was drilling ahead in 8-1/2 inch hole at a depth of 1408 metres after setting 13-3/8 inch casing at 980 metres. The well is expected to reach a total depth of 3200 metres by early April. The well is testing a prospect which, in ROC's opinion, is moderately high risk with an upside potential in excess of 100 million barrels of recoverable oil in an area where the threshold for commercialisation is thought to be in the order of 10 MMBO. 2. PRODUCTION 2.1 UK (various, mainly 100% ROC) Gas production from ROC's 100% owned Saltfleetby Gas Field for the first 19 days of March averaged 51.3 MMSCFD, essentially unchanged from February's average of 52.2 MMSCFD. Estimated condensate production is 1100 BCPD. Oil production is averaging an estimated 2300 bopd to date in March, slightly down on February's average of 2422 bopd due to minor onshore well operational problems that have now been rectified. 2.2 Mongolia (100% ROC) Oil production continues at approximately 130 BOPD. There is in excess of 24,000 barrels of oil in storage tanks at ROC's field facility awaiting export sale to China in 2Q2000. 3. RESERVES Independent consultants, RDS Resource Ltd (RDS) and Adams Pearson Associates Inc have conducted an end 1999 review of ROC's UK onshore and offshore reserves respectively. The key points to emerge from the reviews are: · Although ROC produced 0.54 MMBOE during the 22 weeks between the acquisition of the UK assets on 29 July 1999 (the 'Acquisition Date') and 31 December 1999 the Company's proved reserves at end 1999 were 14.0 MMBOE, up 0.7 MMBOE (5%) on the proved reserve figure at the Acquisition Date. The increase in proved reserves is largely due to an increase in the proved reserves at the Saltfleetby Gas Field based upon seismic and drilling data and evaluation results received subsequent to the issue of the Prospectus. · ROC's year end 1999 proved reserves represent a percentage gas:oil split of 47:53. · Proved and unrisked probable gas reserves at the Saltfleetby Gas Field have increased to 50.6 BCF, up 7.5 BCF (17.5%) on the equivalent figure at the Acquisition Date. · Largely because ROC has chosen to reclassify the reserve status of the gas accumulation at Eskdale as "possible reserves" rather than "probable reserves" the Company's unrisked probable reserves at end 1999 were 19.5 MMBOE, down 5.5 MMBOE (22%) from the equivalent figure at the Acquisition Date. This is considered to represent a prudent view of the Eskdale gas accumulation. However, it should be noted that in its end 1999 report RDS attributed 25 BCF (4.2 MMBOE) of unrisked probable gas reserves to the Eskdale Field. ROC believes that further work, more specifically the drilling of a well, is required before the gas contained in the Eskdale structure can be accurately attributed to a reserve category other than "possible". It should also be noted that if ROC had chosen to adhere to the RDS probable reserve figure for year end-1999 the Company's unrisked probable reserves would have been within 10% of the equivalent figure at the Acquisition Date. · On the above basis, ROC's official proved and unrisked probable reserves stood at 33.5 MMBOE at end 1999. · As announced in ROC's release to ASX dated 7 March 2000, there is currently some discrepancy between the condensate yield figures provided to ROC by the Theddlethorpe Processing Plant and the equivalent figures calculated from well test results which formed the basis of condensate reserve figures for the Saltfleetby Field. The situation relating to condensate yield is expected to be clarified in the near future as a result of the installation of a test separator at the Saltfleetby Gas Field. In any event, the difference in the condensate yield would only have a relatively minor effect (up to 600,000 barrels of oil equivalent) on the company's total proved and unrisked probable reserve figure. 4. KYLE FIELD DEVELOPMENT (12.5% ROC) The Kyle Joint Venture has received formal consent from the British Government's Department of Trade and Industry (DTI) to undertake the Extended Well Test (EWT) on well 29/2c-12z in the Kyle Oil Field in the UK North Sea. The DTI's approval allows for the production of approximately 1.7 million barrels of oil via the 130 day EWT, which is expected to commence by 1 June 2000. The Petrojaal-1 FPSO, which has been contracted to conduct the EWT, has an established operating record in the North Sea. The Kyle Joint Venture continues to consider alternative production schemes for the implementation of a Life-of-Field development of the Kyle Field. Dr
John Doran |
RELEASE SHAREHOLDERS UPDATE (21-03-00) |
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RELEASE SHAREHOLDERS' UPDATE Under separate cover ROC is sending out a Shareholders' Update to all of the Company's more than 6,000 shareholders. Most of the Shareholders' Update is based upon information released by ROC to ASX on 14 March 2000: the Company's 1999 ASX Preliminary Final Report; 1999 Annual Financial Report; Revised 2000 Financial Forecast and Preliminary 2000 Drilling Program. It is intended that hard copy Shareholders' Updates will be issued to all shareholders on a regular basis in May, August, November and March each year. Dr
John Doran Return to ASX Releases main page
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ACTIVITIES UPDATE & 1999 FINANCIAL RESULTS (14-03-00) |
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1999 FINANCIAL RESULTS Earlier today, under separate cover, ROC released to ASX its 1999 Preliminary Final Report and its 1999 Annual Financial Report, a summary of which is provided below and in Attachment 1. For at least two reasons ROC's 1999 Annual Financial Report is not readily comparable to the Company's equivalent report for 1998 or its anticipated results for 2000. · Prior to 31 December 1999, which is the end of ROC's financial year, the Company had been a publicly listed company for only 21 weeks. Previously, ROC was a privately-owned company without any significant production, revenue or reserves. · The Company's core producing asset, the Saltfleetby Gas Field, commenced production 17 days before the end of the reporting period, so its impact on the 1999 results is somewhat muted. Therefore, it is more appropriate that any summary of the 1999 Annual Financial Report compares the results to ROC's initial public offering (IPO) Prospectus forecast, issued on 21 June 1999, rather than to the 1998 results. The main points to note are: · An operating loss after abnormals and income tax expense of $6.0 million is $3.6 million (38%) less than the Prospectus forecast loss of $9.6 million. As an indication of the impact of production from the Saltfleetby Gas Field, it should be noted that ROC recorded an unaudited after tax profit of $1.4 million for the month of January 2000. · Sales revenue from ROC's UK operations was $15.2 million for the 22 weeks since the date of acquisition of the UK operations; down $9.4 million (38%) compared to a Prospectus forecast of $24.6 million. Again, as an indication of the relevance of the Saltfleetby Gas Field, it should be noted that ROC's UK sales revenue for January 2000 was $8.6 million, equivalent to 57% of the Company's total UK sales revenue for 1999. · As detailed in its Prospectus, ROC's 1999 UK sales revenue was constrained by a 2000 BOPD hedging arrangement, at a Brent oil price of US$13.00/bbl, which was put in place by the previous owner of the assets. This hedging arrangement terminated on 31 December 1999. The effect of the hedge was to significantly offset an average US$22.70/bbl received for the non-hedged oil production during the 22 week period that ROC owned the assets prior to the end of the reporting period. · Sales revenue of $1.3 million received from the export and sale of approximately 54,000 barrels of test oil from Mongolia to China compares to a Prospectus forecast of zero. · Total revenue for 1999 was $19.7 million, down $5.6 million (22%) on a Prospectus forecast of $25.3 million. Primarily, this was because the start-up of production at the Kyle Field in the North Sea was delayed beyond 1999, the Saltfleetby Gas Field Development experienced a six week delay and an anticipated onshore drilling programme in the UK was deferred pending a thorough technical review. All of these delays have been fully documented in ROC's numerous releases to ASX during the latter part of 1999. Importantly, the delays do not imply a complete loss of reserves or value but simply a deferral of production start up and a slight reduction in the net present value of those reserves. · UK production for the 22 weeks that ROC owned the UK assets prior to the end of the reporting period averaged 2,488 BOPD, 127 BCPD and 4.7 MMSCFD. This equates to a total of 0.53 MMBOE down 0.84 BOEPD (61.3%) from the Prospectus forecast of 1.37 MMBOE for the reasons referred to above. The impact of production from the Saltfleetby Gas Field is evidenced by ROC's production figures for February 2000 which averaged 12,211 BOEPD; comprised of 2,422 BOPD, 1091 BCPD and 52.2 MMSCFD. The relevance of Saltfleetby is also demonstrated by the fact that during the first two months of 2000, ROC's total UK production equated to 0.696 MMBOE, approximately one third more than the Company's total production for 1999. · ROC produced approximately 49,000 bbls of oil in Mongolia versus a Prospectus forecast of zero. · ROC's gas price averaged $3.98/mcf for the 17 days that the Saltfleetby Gas Field was on production immediately prior to the end of the reporting period. · Operating costs for the period were $6.0 million; $1.8 million (23%) less than the Prospectus forecast of $7.8 million. · Development and exploration expenditure for 1999 was $28.3 million; $4.1 million (13%) less than the Prospectus forecast of $32.4 million. · Consistent with ROC's accounting policy, exploration expenditures of $5.1 million were written off and expensed during the financial year, including $3.1 million relating to Mongolia. This is believed to represent a conservative treatment of exploration expenditure in areas where ROC has a continuing interest (see Section 3.3). · At end 1999 a total of US$46 million of the Company's US$50 million debt facility had been drawn down so that the Company's net debt at 31 December 1999 stood at $44.7 million, equivalent to a net debt : shareholders' equity ratio of 26%. 2. REVISED FINANCIAL FORECAST FOR 2000 ROC is not immune from the dynamics which are radically reshaping the business environment within which the international oil industry operates. Therefore, it is not surprising that since it became a publicly listed company on 5 August 1999 ROC has been impacted by a number of changing circumstances which span the spectrum from very good to decidedly less good. Although ROC doesn't expect calendar 2000 to be any less characterised by change, it does believe that now is a good time to revise its Prospectus forecast for 2000 in the light of the general and specific changes which have occurred and the trends that appear to be establishing themselves. One of the keys to any revised financial forecast is the oil price. The Prospectus forecast a Brent oil price for 2000 of US$15.45/bbl. This would now be regarded by many industry participants and observers as overly conservative. In reviewing its financial forecast for 2000, ROC has revised upward its forecast for Brent to US$23/bbl. Although, at the time of ROC's IPO, such a forecast would have seemed overly optimistic, it is in fact below the average realised price (US$26.80/bbl including a small premium to Brent) which ROC has received for its unhedged onshore UK production for the first two months of 2000. The US$23/bbl forecast is also less than the forward Brent price for the balance of 2000, which currently ranges between US$25/bbl and US$26/bbl. As documented in the Prospectus, a US$14.35/bbl hedging arrangement, put in place by the previous owner of the assets, impacts upon 1,000 BOPD of ROC's UK production and has an end 2000 expiry date. This hedging arrangement has been taken into account when compiling the Revised 2000 Financial Forecast. The key points of ROC's 2000 revised forecast are: - · ROC is still on track to meet its Prospectus after tax profit forecast of $13.1 million. The revised after tax profit forecast for 2000 includes $3.8 million of exploration expenditure which is assumed to be expensed during the year, although no such provision was included in the Prospectus forecast for 2000. · A revised forecast operating revenue of $91.0 million is expected to be down $26.1 million (22%) from the $117.1 million forecast in the Prospectus, mainly because of the delay in implementing a Life of Field development at the Kyle Oil Field, the deferral of the Extended Well Test at the Ettrick Oil Field, and the reduced production forecast for the Keddington and Cold Hanworth onshore UK fields due to the deferral of an aggressive drilling programme. The effect of the reduced production profile is partially offset by higher forecast oil prices. · UK production for 2000 is forecast to be 3.7 MMBOE, comprising an average of 2,700 BOPD, 800 BCPD and 40 MMSCFD equivalent to an annualised average rate of 10,200 BOEPD. This is down 4,980 BOEPD (33%) from the Prospectus forecast average of 15,180 BOEPD. The lower revised forecast reflects to the lower calendar 2000 production expectation from the Kyle Field, the deferral of the Ettrick EWT and the deferral of the drilling programme relating to some of ROC's onshore UK fields referred to above. · The revised expectation of cash flow from operations is $58 million, down $12 million (18%) from the Prospectus forecast of $70 million. This equates to $0.54 per share and represents a price to cash flow multiple of 2 based on the recent ROC share price of $1.10. This compared to a $0.66 per share Prospectus forecast (equivalent to a 3 x multiple) based on an IPO share issue price of $2.00. · The revised EBITDA forecast is $60.4 million, down $13.4 million (18%) from the Prospectus forecast of $73.8 million. On the basis of a recent share price of $1.10, this equates to an Enterprise Value to EBITDA multiple of 2.7 compared to the Prospectus forecast of 2.8 based on an IPO share issue price of $2.00. · The revised 2000 after tax profit forecast represents a price to earnings ratio of 9 compared to the Prospectus forecast of 16 based on an IPO share issue price of $2.00/share. 3. PRELIMINARY 2000 DRILLING PROGRAMME ROC's drilling activities during calendar 2000 are expected to be focused on five areas: onshore UK; UK North Sea; Mongolia; Australia and, possibly, Morocco. 3.1 Onshore UK As announced in its ASX release dated 24 February 2000, ROC's first well onshore UK will be Keddington-2, which will be a new horizontal well designed to appraise the Keddington Oil Field. The well is expected to start drilling in April 2000 after being deliberately delayed from late 1999 in order to provide ROC with the opportunity to assess the production performance of the Keddington Field which, in August 1999, experienced what appeared at the time to be a significant increase in water production. As previously announced to ASX, in recent months water production at Keddington appears to have stabilised and oil production has increased to a point where ROC now believes that the field merits a second well. As also announced in ROC's release to ASX dated 24 February 2000, Keddington-2 is expected to be followed in mid-2000 by Saltfleetby-5, which will test the gas bearing potential in the Namurian sequence which lies below the main gas reservoir in the Saltfleetby Gas Field. If the well confirms the reservoir potential of the Namurian it will represent a significant addition to gas reserves at Saltfleetby. These additional reserves could be brought onto production for minimal capital expenditure. If the Namurian in Saltfleetby-5 is disappointing the well could be completed as a gas producer in the Westphalian which is the field's main gas reservoir. In this event, ROC would be able to enhance the net present value of the field by accelerating gas production in the lead up to the U.K.'s winter when gas prices are normally at their highest. ROC is continuing its technical review of the rest of its onshore UK acreage. The Company is particularly intrigued by the exploration potential of the Humber Basin which, for all practical purposes, is 100% held by ROC and is considered to be under-explored, despite the fact that it contains the Saltfleetby Gas Field. 3.2 UK North Sea As announced in its ASX release dated 8 March 2000 ROC has reached agreement with Kerr-McGee Oil (UK) plc to increase its equity in North Sea exploration Block 30/22b from 1.125% to 10% ahead of the drilling of the next exploration well in the block which started drilling on 13 March 2000. Although ROC considers this well to be in the moderately high risk category, there is no doubt that if the well realises the upside potential of the prospect it will have a very significant impact on ROC's reserves, increasing them by almost one third. A much more modest discovery would also be economic because of the low threshold for commercialisation in this part of the North Sea. The well is expected to reach total depth by mid April. A 130 day Extended Well Test (EWT) is still scheduled to begin at the Kyle Field in late May/early June, as referred to in ROC's previous releases to ASX. ROC maintains the view that an appraisal well should be drilled on the northeast side of the Kyle structure in order to determine whether or not the oil-bearing reservoir extends into that area. However, it must be emphasised, that the Kyle Joint Venture is yet to reach formal agreement with regard to any further drilling in the Kyle area prior to completion of the EWT. Together with its various operators and co-venturers ROC continues to review the technical and commercial merits of the Company's North Sea acreage, particularly in relation to the several undeveloped fields in which ROC has an interest. Currently, ROC is inclined to the opinion that these assets, which, with the arguable exception of the Kyle Oil Field, were regarded as being peripheral to the Company at the time of the IPO, have, in fact, become more interesting during the intervening period. In this context, the various operators of the fields are actively trying to determine if, when and how, these fields can be commercially developed in the near to medium term. 3.3 Mongolia For more than two years ROC's staff have been analysing the technical and commercial merits of the company's exploration acreage in Mongolia's East Gobi Basin. In early 2000 this very detailed work effort started coming to fruition. As a result, several very large prospects have been identified in ROC's Production Sharing Contracts (PSCs). More specifically: · Basin analysis indicates that in the order of 100 billion barrels of oil that may have been generated in the two most prospective sub-basins within the East Gobi Basin. It must be emphasised that only a fraction of this generative oil potential may have been entrapped in valid prospects. · ROC's mapping of the 2,500 km of seismic it acquired in the area during 1998 and 1999 as well as pre-existing seismic data the Company reprocessed, has identified several very large prospects and leads with a total in-place oil potential estimated to be in the order of 3 billion barrels. Again, it must be emphasised that only a fraction of the amount of oil in-place contained in any particular prospect would be produced as recoverable reserves. · ROC's largest drill target in the East Gobi Basin is the Chono Prospect, which covers approximately 24 sq km/5,930 acres and has a vertical relief in the order of 900 metres/2,950 feet. The Chono Prospect has an estimated in-place oil capacity in excess of 1 billion barrels. The prospectivity of the Chono feature, which appears to be a simple faulted anticline, is enhanced by the fact that the anticipated reservoirs and source rocks are believed to belong to a, newly recognised, Jurassic Foreland sequence, which has never been drilled within ROC's PSCs. Surface mapping has indicated that this sequence may include good quality reservoir and potentially high quality oil source rocks with very high total organic carbon (TOC) content. Chono is only one of several potential drill targets which are now recognised in the East Gobi Basin. Despite the diversity of the play types, the main reservoir objectives in virtually all of the prospects lie within 2,000 m of the surface. In order to test the real potential of these prospects ROC is just starting to talk to selected third parties to determine whether it would be in the best interests of ROC's shareholders for the Company to balance its exploration risk by farming out a minority interest in the acreage in return for being fully carried through a 3 or 4 well, US$6 million, drilling programme that could commence in mid-2000. 3.4 Australia As reported in ROC's release to ASX dated 24 February 2000, the Company has exercised its option to acquire a 45% interest in WA-286-P in the offshore Perth Basin by funding 60% of the cost of the next well to be drilled in that permit. This well is expected to start drilling between August and October 2000 with ROC as permit operator, subject to receipt of formal government approval. It is anticipated that the well will target a novel play concept which, if successful, would have a very significant impact upon ROC's reserve base, not to mention the industry's and market's perception of this part of offshore Perth Basin. 3.5 Morocco Offshore Morocco is another area where ROC has been able to identify very large prospects, representing a wide diversity of play types, as a result of more than two years of technical work. Trident and Eureka are just two of several prospects and leads which have been recognised within ROC's Reconnaissance Licence, offshore Morocco. The former is a Middle Jurassic carbonate play, which covers an area of more than 500 sq km/123,000 acres, has a vertical relief of hundreds of metres and an in-place oil capacity of more than 2 billion barrels. Part of Trident's attraction is that light oil has already been recovered from the Middle Jurassic sequence in another structure within ROC's Reconnaissance Licence. The Eureka Prospect is a Lower Cretaceous deltaic sandstone play which covers an area of about 140 sq km/34,600 acres. Eureka, defined by a detailed 2-D seismic grid of good quality data, has a vertical relief of about 150 m/490 ft and an in-place oil capacity in excess of 1 billion barrels. Following the Moroccan government's granting of a four month extension for ROC's Reconnaissance Licence, the company is considering whether shareholders' best interests are served by trying to bring in a third party as part of a exploration risk management strategy or by converting the Reconnaissance Licence to a 100% ROC-owned Production Sharing Contract for subsequent exploration activity. 4. CEO'S COMMENTS Commenting upon ROC's 1999 ASX Preliminary Final Report, the 1999 Annual Financial Report, the Revised 2000 Financial Forecast and the Preliminary 2000 Drilling Programme the Company's CEO, Dr John Doran, stated that: "For anybody who has been following the Company's many releases to ASX since August 1999 there would be few surprises in ROC's 1999 financial results or revised financial forecast for 2000. The underlying story is a familiar one. For a variety of well documented reasons, ROC's production profile for late 1999 and that forecast for 2000 are lower than anticipated in the Prospectus but the impact of this is offset, to a greater or lesser extent, by higher than anticipated oil prices. Therefore, the Company's loss for 1999 was less than forecast in the Prospectus and its net after tax profit for 2000 is expected to meet Prospectus forecast. When ROC's 1999 financial results and revised 2000 financial forecast are viewed in terms of the key financial criteria which the market considers to be important, it would seem that the pendulum of market perception has reacted to the challenges which ROC faced with some of its peripheral North Sea and onshore UK assets between August and November 1999, but has not responded to the successful development of the Company's core asset, the Saltfleetby Gas Field. For the last three months ROC has had cause to put out nothing but good news. The Company's Board of Directors believes that if this trend is maintained as ROC moves through 2000 the share price will be re-rated to reflect the very sound fundamentals evidenced by the 1999 financial reports and revised 2000 forecast. This re-rating process would be accelerated if ROC's multi-well, multi-country, exploration drilling programme meets with significant success. This programme is now beginning to firm-up after some deliberate delays designed to achieve better end results. Only time will tell if this prudent technical approach, particularly to the onshore UK drilling programme, will provide the Company and its shareholders with the desired results. However, there is no doubt that several of the prospects being considered for drilling during 2000, have the potential to totally transform the company - which is really what ROC has been all about since Day One." Dr
John Doran |
ACTIVITIES UPDATE (07-03-00) |
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1. PRODUCTION With an average gas production rate for the month of February of 52.2 MMSCFD, the Saltfleetby Gas Field continues to perform as, or slightly better than, expected. The operator of the Theddlethorpe Gas Processing Plant has provided ROC with an estimate of condensate production from the Saltfleetby gas stream which, for February, approximates to 21 barrels per million cubic feet of gas, equivalent to about 1100 BCPD. ROC is preparing to install a temporary test separator at the Saltfleetby Field in order to determine the accuracy of this figure. ROC's U.K. oil production for February averaged approximately 2450 BOPD, almost all of which came from the Company's onshore oil fields. ROC continues to produce oil in Mongolia at a rate in the order of 130 BOPD. 2. ROC AGREES TO INCREASE ITS INTEREST IN IMMINENT NORTH SEA EXPLORATION WELL ROC is pleased to advise that it has reached an in-principle agreement to increase its equity in North Sea exploration Block 30/22b from 1.125% to 10%, as foreshadowed in the company's release to ASX dated 24 February 2000. The additional equity will be earned by joining Kerr-McGee Oil (UK) plc (Kerr McGee) in a farmin whereby the two companies will fund most of the cost of exploration well 30/22b-B, which is due to start drilling in the next few days. The total cost of the proposed exploration well is expected to be about £3 million/A$7.7 million. The farmin is subject to normal industry terms and conditions, including the completion of documentation and receipt of relevant Government approvals. Kerr-McGee, the designated operator of Block 30/22b, also operates the Janice Field, 8 km north of the proposed well location (Attachment 1). The well will test a prospect with a ROC-estimated upside potential in excess of 100 MMBO recoverable – in an area where the threshold for commercial development is estimated to be about 10 MMBO. In ROC's opinion the prospect is considered to have moderate to high risk with the main risk element being the integrity of the trapping mechanism. This risk is mitigated by the expectation that an excellent potential reservoir, in the form of the Fulmar Sandstone, is in communication with the classic North Sea oil source rock interval, the Upper Jurassic Kimmeridge Clay. As previously advised, regardless of the drilling results, the well is scheduled to be plugged and abandoned because it is designed as a low cost "finder" well, which means that any discovery will be appraised with further drilling and, in all probability, 3D seismic. After the well has been drilled and the farmin completed the relevant equity holdings in the block will be: Kerr-McGee (62.125%), Mobil North Sea Ltd (21.25%), Roc Oil (UK) Limited (10%), including 1.125% held through ROC's 50% interest in Croft (UK) Limited (Croft), Premier Oil plc (2.5%), and Bow Valley Limited (1.125%) held through its 50% shareholding in Croft. Commenting on the farmin ROC's CEO, Dr John Doran, stated that:
3. OFFSHORE PERTH BASIN Further to the exercise of its option to acquire 45% interest in WA-286-P in the offshore Perth Basin and subsequent to discussions with its co-venturers, ROC expects to be appointed Joint Venture operator at the end of March, subject to receipt of formal government approvals etc. In this capacity, ROC will then proceed to work with its co-venturers to prepare for the drilling of an exploration well in the permit prior to November 2000. 4. ROC TO RECEIVE 100,000 SHARES IN ADAIR INTERNATIONAL OIL AND GAS INC (ADAIR) On 23 February 1999, ROC, as a privately-owned company, signed a Confidentiality Agreement with Partners In Exploration LLC (PIE), with regard to Blocks 20 and 42 ("The Blocks") in the Republic of Yemen ("Yemen")(Attachment 2). At the time of this agreement ROC was reviewing the exploration potential of part of The Blocks via a Memorandum of Understanding (MOU), signed between ROC and the Government of Yemen. ROC's review coincided with the beginning of its preparation for the initial public offering (IPO) which the Company undertook in August 1999. As such, it became necessary for ROC to decide whether or not it should convert the MOU to a Production Sharing Contract (PSC) or allow it to lapse. After careful consideration, ROC decided that the latter course of action was more appropriate for the company at the time, particularly in view of its need to effectively freeze its exploration portfolio immediately prior to the IPO. Subsequent to this decision ROC received a request from PIE that it be allowed to use technical data purchased by ROC and provided to PIE, for the purpose of trying to interest other parties in The Blocks. ROC agreed to allow PIE to proceed in this manner subject to receiving an appropriate success fee in the event that PIE identified a suitable third party. PIE has now advised ROC that, as a result of its recent merger with Adair, it has fulfilled its objective of identifying a suitable third party to work with it in Yemen. Furthermore, Adair has advised that it is also in late stage farmout discussion with a large oil company, with a view to that company acquiring an equity position in The Blocks. As a consequence of the ROC-PIE agreement, Adair has agreed to provide ROC with 100,000 Adair shares. The shares will be issued to ROC within 15 days of the effective date of ratification of the PSC by the Yemeni Government. Half the shares will be escrowed for six months and the other half will be escrowed for twelve months. Adair is a publicly listed US oil and gas company with an issued capital of 51 million as of 2 January 2000. As of 6 March 2000 Adair shares were trading at about US$1.97/share down from a 52 week high of US$3.72/share. Apart from its interest in Yemen, Adair has oil properties in Columbia and the United States, a number of natural gas fired power plants under development on North American Indian reservations and plans to develop a sugar refinery in Yemen. At the end of 1999 Adair was selected by "Business World News" as one of the best investments for the new millennium. As a result, Adair has announced that it is scheduled to be the lead story on CNBC's "Business World News – Millennium Special" program in March 2000 which will be broadcast into 70 million households in the US and 5 million households in Canada. The program will spotlight four companies considered to be well poised for explosive growth in their respective industries – energy, internet, hospitality and information technology – and relevant details will be distributed to more than four million passengers in the seat-back pocket of every Delta, Skywest and American Airlines connection flight. Adair has also announced that it intends to be fully listed on Nasdaq by late 2000. Commenting on the receipt of the Adair shares, ROC's CEO Dr John Doran stated that: -
Dr
John Doran |
