| WEEKLY REPORT (26-05-00) |
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KYLE WELL COMES ON AT 19,000 BOPD; KEDDINGTON-2 INTERSECTS TOP RESERVOIR AND SALTFLEETBY CONTINUES TO OUTPERFORM PROSPECTUS FORECAST 1. OIL PRODUCTION STARTS AT THE KYLE OIL FIELD, UK NORTH SEA (ROC: 12.5%) On 24 May 2000 an Extended Well Test ("EWT") commenced at the 29/2c-12z well in the Kyle Oil Field in the UK North Sea. A stabilised rate of 19,000 barrels of oil per day (BOPD) was achieved prior to the well being choked back to 13,000 BOPD in accordance with the production testing schedule. Production from the well is through the Petrojarl-1 Floating Production Storage and Offloading facility (FPSO) which has a well established North Sea production and operational track record. The EWT is scheduled to last approximately 130 days during which time approximately 1.7 million barrels of oil is expected to be produced. The results of the EWT will be taken into account by the Kyle Joint Venture as it actively considers the drilling of a further appraisal well during the northern summer so as to enable a commitment to be made to a life-of-field development. In this context various full field development options are being reviewed including stand alone development schemes and a tie-back to existing infrastructure in the area (Attachment 1). 2. KEDDINGTON-2 REACHES RESERVOIR TARGET (ROC: 100%) Keddington-2, the first appraisal well on the Keddington Oil Field, has encountered the top of the reservoir objective approximately 5 metres high to prognosis. After encountering hydrocarbon shows at the top of the reservoir, 5½-inch casing was set to a depth of 2,389 metres. The reservoir section will be drilled 400 metres horizontally to a total drill depth of in the order of 2,700 metres. 3. SALTFLEETBY GAS FIELD CONTINUES TO OUTPERFORM PROSPECTUS EXPECTATIONS (ROC: 100%) The Saltfleetby Gas Field continues to exceed Prospectus forecast, producing up to a maximum rate of 50 million standard cubic feet of gas per day. 4. CEO'S COMMENTS Commenting on the various activities referred to above, ROC's CEO Dr John Doran stated: "When it became apparent that first oil from the Kyle Field was going to be delayed beyond December 1999 the obvious concern related to how long the delay would be and what oil price climate would prevail when first oil flowed. Through a number of its recent releases to ASX, ROC has been advising its shareholders that first oil would flow via an EWT "by June 2000". Therefore, it is pleasing to see that this revised timetable has been met, oil prices have remained strong during the interim period and, most importantly, a stabilised flow rate has been achieved which provides eloquent evidence of the field's outstanding reservoir properties and productive potential." Dr
John Doran |
| WEEKLY DRILLING REPORT (10-05-00) |
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ONSHORE UK (ROC 100%) 1.1 Keddington-2 (ROC 100%) As of 6:00 am on 10 May, the Keddington 2 well had been drilled to a total depth of 1,918 metres in the top of the Carboniferous. The directional drilling programme in 6 ¾" inch hole has commenced with an intended total depth of 2700 metres (2194 metres TVD) including a 400 metre horizontal reservoir section in the anticipated basal Westphalian sandstone reservoir. Dr
John Doran |
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WEEKLY DRILLING REPORT (05-05-00) |
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ONSHORE UK (ROC 100%) As of 06:00 am on 4 May, the Keddington 2 well had been drilled to a total depth of 1,423 metres and was changing over drill string in preparation to drilling ahead in 6 ¾ inch hole. The well is to be drilled to a total depth of 2700 metres (2194 metres TVD) including a 400 metre horizontal section, and is targeting basal Westphalian Sandstones. Dr
John Doran Return to ASX Releases main page
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| PRESS RELEASE(01-05-00) |
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ROC SELLS, NON-CORE, ONSHORE UK ASSETS FOR A$57 MILLION - AND REALISES AN ABNORMAL, UNAUDITED A$18 MILLION AFTER TAX PROFIT FROM SEVEN MONTH INVESTMENT 1. THE TRANSACTION ROC is pleased to advise that, on 1 May 2000, various of its wholly-owned UK subsidiaries (the "ROC Subsidiaries"), executed a Sale and Purchase Agreement (the "Agreement") with Star Energy (East Midlands) Limited, a wholly owned subsidiary of Star Energy Limited ("Star") with regard to certain assets onshore UK which ROC considers to be non-core (the "Assets"). The essence of the Agreement is: · Subject to normal post-effective date adjustments, Star will provide to the ROC Subsidiaries a minimum payment (the "Cash Consideration") of £22 million (A$57 million ) in consideration for which those companies will transfer to Star their interests in the following assets: - The Welton Oil Field and associated facilities, together with smaller fields in the Welton Area - defined as PLs 179b, 199a & 256, AL 009, PEDLs 006-1, 006-2 & 022 and EXL 226 - including Nettleham, Cold Hanworth and Scampton North together with the Eskdale gas accumulation in PEDL 002. · With the exception of the exploration part of PL 199a and EXL 226, all the Assets are owned 100% by the ROC Subsidiaries. · The Effective Date of the Agreement is 1 March 2000. · In addition to the Cash Consideration, Star will provide to the ROC Subsidiaries a further cash payment (the "Bonus Payment") at the end of each of the two consecutive twelve-month periods subsequent to the Effective Date, subject to the satisfaction of the following conditions. - For the first twelve month period the average Brent oil price must exceed US$18.50/bbl and total oil production from the Assets must exceed 653,000 barrels, equivalent to 1,789 barrels of oil per day (BOPD). - For the second twelve month period the average Brent oil price must exceed US$18.50/bbl and total oil production from the Assets must exceed 485,000 barrels, equivalent to 1,329 BOPD. · The precise magnitude of the Bonus Payment/s will be determined by the extent to which the average Brent oil price for the relevant twelve month period exceeds US$18.50/bbl, up to a maximum of US$28.50/bbl. On this basis, the maximum Bonus Payment which could be received by the ROC Subsidiaries over the first twelve month period is £2.2 million (A$5.7 million) and £3.0 million (A$7.8 million) over the second twelve month period. However, due to hedging arrangements put in place by ROC during April (see below) £426,000 (A$1.1 million) of the first Bonus Payment will be payable subject only to the production target for the first twelve months being met. · ROC's staff in the UK who are directly associated with the Assets will be offered employment by Star. ROC will retain the balance of its Lincoln-based workforce who are focused on ROC's other onshore UK assets which are regarded as being core to the Company's future, particularly the Saltfleetby Gas Field and the Humber Basin exploration acreage. · The transaction is subject to normal industry terms and conditions including the receipt of formal approval from the UK Department of Trade and Industry. The transaction does not have any significant impact upon ROC's interest in the Saltfleetby Gas Field, the Keddington Oil Field or the Company's onshore Humber Basin exploration acreage in east Lincolnshire and Yorkshire, all of which continue to be wholly-owned by the company. Neither does the Asset sale have any impact on ROC's UK North Sea assets. 2. IMPACT ON ROC'S 2000 PROFIT AND DISCRETIONARY CASH FLOW Based on a forecast average Brent oil price of US$23.00/bbl for Calendar 2000 and the sale described herein, ROC's revised unaudited estimate for its after tax profit for Calendar 2000 is A$25 million, compared to ROC's June 1999 Prospectus forecast of A$13.1 million. While the Prospectus forecast did not take into account any profit from the sale of the Assets it did include post 1 March 2000 profit derived from production associated with those assets which is excluded from ROC's revised A$25 million profit forecast. ROC further estimates that, in the event that the Assets were to maintain their current mature field decline rate and the Brent oil price averaged US$18.00/bbl, it would take ROC more than eight years to derive the same amount of after tax discretionary cash flow from the Assets that is generated by the sale. 3. IMPACT ON RESERVES, REVENUE AND PRODUCTION Based on ROC's end-1999 Reserves Report prepared by independent consultants, RDS Resource Limited, the sale of the Assets will reduce ROC's total proved oil reserves by 2.8 million barrels of oil (MMBO), from 14.0 MMBOE to 11.2 MMBOE and its unrisked probable reserves by 2.5 MMBO, from 19.5 MMBOE to 17.0 MMBOE. As a result of the sale of the Assets there will also be a forecast A$23 million reduction in ROC's overall 2000 revenue from A$91 million to A$68 million. During the seven month period during which the Assets were owned by ROC, the Company received just under 500,000 barrels of net oil production, the sales revenue from which, together with revenue derived from third party tariffs and electricity generation and sales, contributed approximately A$16.7 million to ROC's gross revenue for that period. When this revenue is considered in conjunction with the after tax profit derived from the sale of the Assets it highlights the value which has been generated by ROC's purchase of the Assets in July, 1999 and their subsequent sale seven months later. As a result of the sale of the Assets ROC's forecast for its average oil and gas production for Calendar 2000 has been revised to about 8,600 BOEPD, approximately 1,700 BOEPD down from ROC's most recent previous forecast for Calendar 2000. 4. IMPACT ON DEBT AND CASH POSITION It is ROC's intention to utilise approximately £10 million/US$15.5 million/A$26 million , (equivalent to 45% of the sale proceeds) to reduce its Credit Facility with its syndicate of banks, headed by Barclays Capital plc, from US$46.0 million to US$30.5 million. This repayment includes a scheduled pre-payment of US$8 million from operating cash flow which would otherwise have been due in July 2000. Subsequent to the receipt of the sale proceeds and the planned debt reduction, ROC's cash position will be approximately A$64 million (equivalent to A$0.60/share) compared to its outstanding debt of US$30.5 million (A$51 million). 5. HEDGING ARRANGEMENTS In its March 2000 Quarterly Report, released to ASX on 28 April, ROC announced that, during April 2000, it had hedged 1,000 BOPD production for the balance of Calendar 2000 at a Brent oil price of US$23.12/bbl. This hedging arrangement will be assigned to Star. As far as other hedging arrangements are concerned, it should be noted that the 1,000 BOPD hedge at US$14.35/bbl (put in place by the previous owners of ROC's UK assets) will remain ROC's responsibility although ROC's oil and condensate production for the balance of 2000 is forecast to be in excess of the hedged amount. 6. COMMENTS Commenting upon the transaction, ROC's CEO Dr John Doran stated that: · "The deal, which has been subject to discussions between ROC and Star since late 1999, delivers a handsome profit to ROC but it also provides Star with a key strategic asset which will allow that company to further develop its position as one of the leading operators of oil production onshore UK. The Welton Area lends itself to the application of Star's core operating expertise and this should ensure that the fields and the associated workforce have an optimum future. · ROC agreed to acquire the Assets in March 1999 at a time of low oil prices and, in this sense, the purchase and subsequent sale is a good example of ROC's sensibly contrary approach to the oil and gas business. · The sale is consistent with comments in several of ROC's recent ASX announcements which emphasised the Company's belief that one of the best way for an oil and gas company to create value for shareholders is for it to proactively manage its asset portfolio so that core assets are fully developed and low margin, non-core assets to which it may be difficult to add value, are monetised. This sale is an example of that corporate philosophy in action. · ROC shareholders may well choose to take a positive view of the value created by the sale but the acid is now on ROC's management to create further value by reinvesting the sale proceeds wisely. In the final analysis, it is the nature of that reinvestment that will determine the real relevance of this sale to ROC's shareholders." Dr
John Doran |
