| KEY
POINTS
·
Chinguetti-4-2, the first well in a multiwell 2002 drilling program offshore
Mauritania, is due to commence end July
· The next well in Mongolia, East Tsagaan
Els-1, is due to start before the end of August
· A 421 sq km 3D seismic program offshore
China, is due to start later this week
· ROC accepts Government's offer of 55% of
WO1-24 exploration area offshore Perth Basin and exercises its option
to acquire 55% of the adjacent WO1-22 exploration area
· Seasonally low gas prices in the UK and
short-term operational problems with the interconnector gas pipeline between
the UK and Europe, cause ROC to temporarily shut in Saltfleetby gas production
in order to optimise gas sales. The shut-in will temporarily reduce revenue
but it is not expected to have any significant impact on ROC's overall
2002 profit.
1.
EXPLORATION
1.1 Drilling
1.1.1
PSC
Areas A, B and C, Offshore Mauritania (ROC: 2.4% to 5.0%)
Chinguetti-4-2,
the first well to be drilled on the Chinguetti structure since the Chinguetti
Oil Field was discovered in 2001, is expected to commence drilling towards
the end of this month. The well will be the first of a back- to-back,
multiwell, exploration and appraisal drilling program that will be undertaken
during the latter part of 2002. The other firm well in this program, Thon-1,
is an exploration well in PSC Area C. The details of the two contingent
wells that represent the balance of the currently agreed program are yet
to be finalised by the Joint Venture.
Chinguetti-4-2
will be drilled on the untested side of the Chinguetti structure, approximately
2.5 km to the north of the discovery well. As such, Chinguetti-4-2 is
considered to be a significant step out, which will impact on the perception
of the near term commercial potential of the Chinguetti area.
1.1.2
East
Gobi Basin, Mongolia (ROC: 50% and carried)
ROC
has agreed with its farmee, Dongsheng Jinggong Petroleum Development Group
Company Limited ("Dongsheng"), which is paying 100% of the cost
of the current Mongolian exploration drilling program, that the second
well in the 2002 program, East Tsagaan Els-1, will test a fault block
located approximately six kilometers to the northeast of the Tsagaan Els
field. Drilling is expected to start in late August 2002 when construction
of the drilling site is complete.
1.2 Seismic
1.2.1
Block
22/12 Beibu Gulf, Offshore China (ROC: 25% and Operator)
Working
within a very tight, self imposed timeframe, the Block 22/12 Joint Venture
and the relevant Government authorities in China have approved a 421 sq
km 3D seismic survey which is expected to commence recording later this
week. The survey, which will be conducted by Veritas DGC (Malaysia) SDN
BHD, is designed to provide modern 3D seismic coverage over virtually
all of the permit area, including the five hydrocarbon accumulations which
have previously been discovered, and several areas of specific exploration
interest. It is hoped that the survey will provide the Joint Venture with
an excellent technical foundation for the location of at least one exploration
well and possibly one or more appraisal wells, to be drilled during 2003.
The co-venturers in the Beibu Gulf block 22/12 are:
ROC Oil (China) Company - Operator . . . . . . . . . .
. 25%
Bligh Oil and Minerals NL . . . . . . . . . . . . . .
. . . . . . 40%
Petsec Petroleum Inc. . . . . . .
. . . . . . . . . . . .
. . . . 25%
First Oil Australia Pty Limited . . . . . . . . . . .
. . . . . . 10%
1.2.2
Onshore
UK (ROC: 100% and Operator)
Processing
of the onshore UK 3D seismic data, acquired earlier this year, is currently
expected to be completed by early October 2002. Subject to the results,
ROC's drilling schedule for its onshore UK acreage remains unchanged with
the first of two or more exploration wells expected to start drilling
in early 2003.
1.3 New
Ventures
1.3.1
Blocks
WO1-22 and WO1-24, Offshore Perth Basin, Australia (ROC: 55% and Designated
Operator)
ROC
has advised the Commonwealth-Western Australian Joint Authority that it
wishes to accept the offer of an exploration permit over the WO1-24 exploration
area in the offshore Perth Basin, details of which were provided in ROC's
release to ASX dated 25 June 2002.
In a similar
context, ROC has advised a subsidiary of Voyager Energy Limited that it
wishes to exercise its option to acquire a 55% interest in an exploration
permit over the separate but contiguous exploration area, WO1-22, which
the relevant Government authority has offered to that company as detailed
in ROC's 25 June 2002 ASX release. ROC's acquisition of this interest
is subject to Government approval.
As a result,
ROC will have a 55% interest in and be operator of the two contiguous
areas which cover approximately 12,500 sq km/3 million acres of the northern
offshore Perth Basin, immediately north of WA-286-P which contains the
Cliff Head Oil Field.
2.
PRODUCTION
2.1 Onshore
UK (ROC: 100% and Operator)
Seasonally
low UK gas prices have been accentuated by short-term operational problems
with the interconnector gas pipeline connecting the UK to Europe, which
has halted gas exports from the UK. As a result of this combination of
circumstances, UK gas prices have dipped below a spot gas price of 10
pence per therm (approximately A$3.00/mcf) and caused ROC to temporarily
shut-in gas production at its 100% owned and operated Saltfleetby Gas
Field. This decision was taken because the UK forward gas price for both
the fourth quarter 2002 and first quarter 2003 is more than 150% above
the current spot gas price. ROC's strong cash position allows it to manage
its gas sales in this manner so that it can achieve optimum value for
Saltfleetby production. The shut-in will temporarily reduce revenue but
it is not expected to have any significant impact on ROC's overall 2002
profit.
Robert
Gerrard
General Counsel & Company Secretary
E-mail: rgerrard@rocoil.com.au
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