| MARCH 2003 - RELEASES |
| ROC OIL COMPANY ANNUAL REPORT 2002 & NOTICE OF AGM: (31-03-03) |
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| ACTIVITY UPDATE: (31-03-03) |
KEY POINTS ·
New
contract gas prices for the Saltfleetby Gas Field have been agreed for
the contract year commencing 1 October 2003. The new prices are approximately
5% higher than the current contract prices.
1. SALTFLEETBY GAS, ONSHORE UK ROC is pleased to advise that the contract prices for gas produced from the Saltfleetby Gas Field for the Contract Year commencing 1 October 2003 have been agreed with Innogy plc and are, on average, 5% higher than the existing contract prices which were, in turn, increased by some 50% from 1 October 2002. The higher contract prices reflect continued strengthening in the UK gas market. In addition, ROC is also pleased to advise that it has gas price hedging in place for almost 6 MMSCFD (almost 20% of current production). The hedged period is nine months to 30 September 2003 and the average hedge price is 20.8 pence per therm, equating to A$6.20 per MCF at current exchange rates. As at 31 March 2003 the mark-to-market value of the hedge contracts equated to A$1.1 million. The combination
of continuing better than expected production from the Saltfleetby Gas
Field, the contract and spot gas prices received during 1Q03 and the hedging
referred to above suggests that ROC's revenue for 1Q03 will approximate
to the revenue reported for 1Q02 (A$17 million).
ROC's wholly owned subsidiary, Roc Oil (UK) Limited, has reported that the 20/7a-D exploration well on the Squirrel Prospect in Licence P.272, Block 20/7a, has reached a Total Depth of 2,688 metres (True Vertical Depth subsea) without encountering significant hydrocarbons. The well, which commenced drilling on 9 March 2003, is currently being plugged and abandoned prior to rig release.
EnCana (UK)
Limited (Operator) . . .
. . . . . . . . .19.816%
John
Doran
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| "PERTH BASIN SHOWCASE" - PRESENTATION TO SECURITIES INSTITUTE OF AUSTRALIA ("SIA"): (27-03-03) |
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PRESENTATION The Chief Executive Officer of Roc Oil Company Limited ("ROC"), Dr John Doran, is scheduled to present today to the Securities Institute of Australia an update on the Company's activities in relation to the Cliff Head Oil Field in the northern part of the offshore Perth Basin. Please find attached a summary of the text and the key illustrations used in this presentation. A copy of the full presentation can be obtained upon request to the Company and the summary distributed herein will be posted on ROC's web site (click here to view the summary presentation).
THE
SIGNIFICANCE OF THE CLIFF HEAD OIL DISCOVERY, EXECUTIVE SUMMARY
Fifteen months ago, the Cliff Head Oil Field had not been discovered. Since then the reservoir has been penetrated by four wells, all of which found a common oil-water contact. Two of the wells have been thoroughly cored and one has been production tested with very encouraging results. Technical and commercial studies are underway with a view to determining whether or not the field can be developed commercially. The results of these studies are expected in 3Q03. Already the Cliff Head Oil Field has achieved a number of industry "firsts". If it is declared commercial it will achieve several other industry milestones, not least of which is the fact that it will be the first commercial oil field to be discovered offshore Australia by a Joint Venture composed predominantly of a diverse group of junior Australian oil explorers without the involvement of a large conventional oil company. Prior to the discovery of the Cliff Head Oil Field, the offshore northern Perth Basin was considered to be poorly prospective for oil and largely devoid of good reservoir. The results from Cliff Head have clearly shown that this perception was wrong. ROC, as operator of the Cliff Head Oil Field, has not previously issued an explicit estimate of the recoverable proved and probable reserves at Cliff Head. However, following the recently completed drilling campaign a reserve range can now be estimated: between 20 MMBO and 30 MMBO recoverable. The likely threshold for commercial development is believed to be about 15 MMBO recoverable, assuming receipt of US$17.00 for each barrel sold. The recoverable reserve estimate referred to above is based on an oil in-place range of 66 MMBO to 99 MMBOIP and a recovery factor of approximately 30%. One of the key technical results achieved during the last round of drilling was the successful production testing of CH-3-ch1 which provided positive results relating to reservoir quality, thereby giving the Joint Venture more confidence regarding the likely recovery factor. The 3,000 BOPD flow rate through a 28/64 inch choke was constrained by surface facilities, but it was still significantly better than expected. The flow provided the rationale that was needed to cause the Joint Venture to seriously consider the commercial development of the field. The Cliff Head Oil Field is currently mapped as covering just over 6 sq km/1,500 acres with a maximum vertical relief of 100 metres. The field is currently defined by approximately 130 kilometres of 2D seismic and four wells. The oil is waxy (30%) and viscous (6 to 8 Centipoise) but has no problem flowing to surface via a down hole pump, as clearly evidenced by the production test. It is too early to be dogmatic as to how the Cliff Head Oil Field may be developed - or even if it will be developed. However, there are a number of possible development options which are being considered including the transportation of the fluids produced offshore to onshore facilities via a 11 kilometre insulated pipeline. Fluid separation and processing would take place onshore before produced water is transported back to the field, via a separate pipeline, for water injection. Depending on the production rates, there are a number of options available with regard to moving the oil to market. The 10,000 BOPD to 20,000 BOPD production rates envisaged for the early stages of the field's life means that one of the more compelling options is to transport the oil by pipeline to an offshore single buoy mooring for loading into visiting tankers. Production would be from between five and seven wells, all horizontal or highly deviated and all with down hole pumps. There would be two or three water injectors to maintain reservoir pressure. All wells would be drilled from one or two small well head platforms - probably only one if the reserves end up at the low end of the current 20 MMBO to 30 MMBO range. First oil is expected during 2005 - but the Joint Venture will do its utmost to bring this date forward. The optimum development concept and timing will be determined by the results of the technical studies that are currently underway. The detailed timing of the project will also reflect the speed with which the administrative and environmental approvals can be expedited. The three exploration wells that were also drilled during the recent drilling campaign were all dry. This is not entirely unexpected given the fact that exploration in this area is still at an early stage. The overall commercial success ratio for exploration drilling in this part of the offshore northern Perth Basin between late-2001 to early-2003 is 1 in 4 - still good by industry standards. One of the attractive features of the offshore Perth Basin is that, by global standards, the wells are relatively inexpensive. A typical vertical exploration well costs US$1.5 million/A$2.5 million. Cored deviated appraisal wells cost about US$2.4 million/A$4.0 million and a production test costs approximately US$2 million/A$3.3 million. All of these figures are exclusive of rig mobilisation/ demobilisation costs which vary according to many factors including the area from which the rig is sourced and the number of wells in the programme. As a ballpark figure, more than US$0.5 million/A$1 million can be added to each well to cover these costs. Excluding the rig mobilisation/demobilisation costs, the total cost of the five well 2003 drilling programme, including two cored appraisal wells and a production test, was about US$13 million/A$22 million - about the same cost as a single dry hole in some parts of the world. The precise cost of the potential development is not yet known. The range currently available is rather broad because the present recoverable reserve range of 20 MMBO to 30 MMBO spans a number of key decision points which will significantly affect the cost of the development, eg whether or not there will be one or two Well Head Platforms. On this basis it is probably best for investors to view the potential cost of developing the Cliff Head Oil Field in terms of dollars per barrel. In this context, an approximate cost of US$3.50/bbl is currently considered to be a reasonable estimate. The Cliff Head Oil Field is in an area where there is a very important rock lobster fishing industry. ROC and its co-venturers have been quick to recognise that this is a fact of life in the offshore northern Perth Basin. So far, there have not been any significant problems. ROC has found the rock lobster fishermen, both individually and collectively, to be fair and reasonable, perhaps because all relevant parties are doing the same thing - making their livelihoods by managing a resource in the real world. ROC has also gone to some lengths to work with the environmental community, particularly that part of it interested in the migration of Humpback whales. This is simply part of the Company's corporate culture: wherever it works in the world it considers itself to be an integral and constructive member of the local community and tries to act in an appropriate manner by working within the constraints of that community. The Cliff Head Oil Field is relevant to ROC for a number of reasons. Most importantly, it has the potential to add commercial reserves to the Company's reserve base, which, at the moment, is far too small. It has also established the Company as a bona fide offshore drilling operator. If the field is declared commercial it will provide the Company with its first operated offshore development. The field also has the potential to be a cornerstone upon which ROC can build a bigger business, both in Australia in general and the Perth Basin in particular. Finally, if the field proves to be commercial it will lend further weight to the argument that, for a company like ROC, pursuing a "sensibly contrary" strategy is the most appropriate way to add fundamental value to the Company. ROC is highly leveraged to success in both the area immediately around Cliff Head and the entire offshore northern Perth Basin. The Company has interests between 20% and 37.5% in seven million contiguous acres, all of which are operated by ROC. These permits stretch for more than 350 kilometres along the West Australian coastline and incorporate the prospective Permian Play Fairway in the southern part of which lies the Cliff Head Oil Field. ROC is an internationally focussed company, active in five other countries apart from Australia: the UK, Equatorial Guinea, Mauritania, Angola and China. The Company's workforce is drawn from 21 different countries and, collectively, it speaks 15 different languages fluently. However, the Company's net acreage position is totally dominated by Australia, specifically the Perth Basin. Cliff Head is one of three appraisal projects currently being considered for commercial development by ROC and its various co-venturers around the world. The other two are the Chinguetti Oil Field, offshore Mauritania and a collection of five fields in Block 22/12 in the Beibu Gulf, offshore China, where ROC has a 40% interest and operatorship. Coincidentally, all of these projects are aiming to achieve first oil during 2005. The Cliff
Head Oil Field is poised to become a core asset for ROC. If Cliff Head
is declared commercial it will establish the northern offshore Perth Basin
as Australia's fourth offshore oil producing province - and ROC as a significant
operator of oil production from Australia's continental shelf. John
Doran
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| SUMMARY OF ROC'S 2002 FINANCIAL RESULTS: (12-03-03) |
KEY POINTS ROC's financial results for 2002 evidence a strong balance sheet with record high year-end cash assets, record low year-end debt and a net cash assets position increased by $28 million (171%) to a record high, but the results do not reflect the Company's exploration and appraisal drilling successes. The results do reflect somewhat lower UK gas prices, less UK gas production, partly due to self-imposed shut-ins at the Saltfleetby Gas Field during times of particularly low UK summer gas prices, and the sale of the Kyle Oil and Gas Field in the UK North Sea, effective 1 January 2002. Subsequent to the inclusion of a series of one-off, non-cash items, the result for the Company was a loss of $21.0 million after tax. Prior to the inclusion of these one-off items, ROC reported a modest underlying profit of $4.1 million.Today, ROC released its ASX Preliminary Final Report (Appendix 4B) detailing the financial results for the financial year ended 31 December 2002, the key elements of which are summarised below and in Attachment 1. · Record year-end cash assets, $81.5 million, up $5.4 million (7%) over end-2001. · Record low year-end bank debt, $37.1 million (US$21.0 million), $22.6 million (38%) less than equivalent end-2001 figure providing ROC with a 20% debt:equity ratio. Debt further reduced to US$17.3 million in January 2003. · Record year-end $44.4 million in net cash assets up $28.0 million (171%). · $21.0 million net loss after tax, after including the after tax effects of non-core UK asset sales ($1.8 million), development asset write down ($5.1 million), exploration expenditure written off and expensed ($13.7 million) and a one-off, non-cash adjustment to deferred income tax liability ($4.5 million). This result compares to a $9.2 million net loss after tax for the prior financial year. · $4.1 million underlying profit after tax before including non-core UK asset sales, development asset write down, exploration expenditure written off and expensed and a one-off, non-cash adjustment to deferred income tax liability; down $19.9 million (83%) on the comparable result for 2001. · $30.0 million exploration expenditure, 10% less than prior financial year. · $24.7 million trading profit, down $23.6 million (49%) on 2001. · $54.0 million sales revenue, down $48.0 million (47%) on 2001, following the sale of the Company's 12.5% interest in the Kyle Oil and Gas Field and a 16% decline in production from the Saltfleetby Gas Field, partly due to self imposed field shut-ins during periods of low prices. · $31.2 million cash flow from operating activities, down $42.1 million (58%) on 2001, equates to $0.29/share and a year-end price to cash flow ratio of 5.1. · $12.5 million EBITDA, down $20.0 million (62%) on 2001. · $31.9 million EBITDAX1 , down $34.7 million (52%) on 2001. ·
$15.8 million income tax expense, which includes a one-off, non-cash
adjustment of $4.5 million to deferred income tax liability and $1.4 million
additional capital gains tax provisions for the sale of non-core UK assets.
The income tax expense relates to income tax on UK operations. Whilst
the trading profit generated in the UK is subject to UK income tax (existing
30% UK Corporation Tax plus the supplementary tax of 10% on UK oil company
profits from 17 April 2002), the majority of other costs, provisions and
write offs included in the statement of financial performance are not
immediately tax deductible as they were incurred in, or relate to, jurisdictions
other than the UK, where ROC has no income against which to offset the
expenditure.
"ROC's 2002 results can be summarised simply: strong balance sheet, weak operating results. To a non-accountant there are three extremely frustrating aspects to these results: ·
In many of the areas where ROC is active, the Company is not presently
able to offset its expenditures against taxable income. Consequently,
it suffers from the impact of large tax expense despite the fact that
the Company's underlying profit is modest. In the event that ROC establishes
profitable production outside the UK, particularly in Australia, this
tax treatment will become less onerous.
John
Doran |
| CLIFF HEAD-4 DRILLING ACTIVITY UPDATE: (12-03-03) |
KEY POINTS ·
The
Cliff Head-4 ("CH-4") appraisal well is completing logging operations.
Preliminary evaluation of wireline logs acquired to date, including pressure
data, indicate 31 metres of gross vertical oil column more than 50% of
which is net oil pay. Reservoir quality ranges from moderate to excellent.
The oil-water contact is consistent with that established by the other
wells in the field.
Roc Oil (WA)
Pty Limited, Operator for and on behalf of the WA-286-P Joint Venture,
advises that, as at 05.30 hours Western Standard Time on 12 March, 2003,
the CH-4 appraisal well in WA-286-P, in the offshore part of the northern
Perth Basin, was completing logging operations at a Total Depth of 1,598
metres below Rotary Table.
"The two most recent Cliff Head appraisal wells have provided a wealth of geological and engineering information which will take several months to analyse fully. This essential work is currently being undertaken as a matter of urgency, but, until it is completed, it is not possible to categorically state that the field will be developed. However, the initial results from the latest round of appraisal drilling, have given the Joint Venture a very high level of confidence that a formal declaration of commerciality will be made by the third quarter"
The WA-286-P
Joint Venture comprises: Roc Oil (WA)
Pty Ltd (Operator) . . . . . . . . . . .
30.0%
John
Doran
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| DRILLING ACTIVITY UPDATE: (10-03-03) |
KEY POINTS ·
The
Cliff Head-4 (“CH-4”) appraisal well, in WA-286-P, in the offshore
part of the northern Perth Basin, is drilling ahead to a revised Total
Depth of 1,571 metres Below Rotary Table (“mBRT”) after coring
most of the targeted reservoir section. According to preliminary evaluation
of logs acquired while drilling the well has encountered a gross oil column
slightly in excess of 30 metres with net reservoir development consistent
with that seen in previous wells. ·
In
the UK North Sea the 20/7a-D exploration well started drilling 9 March
2003. The well is testing the Squirrel Prospect, approximately 17 km to
the east of the Buzzard Oil Field, which is the largest oil discovery
to be made in the North Sea in more than a decade.
1. PERTH BASIN Roc Oil (WA)
Pty Limited, Operator for and on behalf of the WA-286-P Joint Venture,
advises that, as at 06.00 hours Western Standard Time on 10 March, 2003,
the CH-4 appraisal well in WA-286-P, in the offshore part of the northern
Perth Basin, was drilling ahead towards a revised Total Depth of 1,571
mBRT. The revised Total Depth is a consequence of the Joint Venture’s
decision to drill to top Basement in order to maximise the amount of subsurface
data obtained from the well. CH-4, which is located approximately one kilometre southeast of the bottom hole location of the recently drilled CH-3 appraisal well, is expected to reach the revised Total Depth later today and a full suite of wireline logs is expected to have been acquired by mid week. In accordance with the pre-drill plan and regardless of the additional details obtained, CH-4 will be plugged and abandoned. The Joint Venture is currently considering whether or not to drill Cliff Head-5 as the last well in the current drilling programme which has seen two successful appraisal wells drilled within the Cliff Head Oil Field (CH-3/CH-3-ch3-1 and CH-4) and two dry holes drilled on nearby prospects, (Mentelle-1 and Vindara-1).
Roc Oil (WA)
Pty Ltd (Operator) . . . . . . . . . . .
30.0%
2. UK NORTH SEA EnCana (UK)
Limited, as operator of the Block 20/7a in the UK North Sea, has advised
that the 20/7a-D exploration well started drilling on 9 March 2003. The
well is in 114 metres of water, approximately 17 kilometres east of the
Buzzard Field (Attachment
1). The duration of the well is estimated to be just in excess of
one month with a programme of Total Depth of 2,810 metres True Vertical
Depth Subsea (“TVDSS”). ROC anticipates that its next ASX release regarding the Squirrel well will be issued when the well has reached Total Depth and has been logged unless there are significant results and/or operational delays in the intervening period.
EnCana (UK)
Limited (Operator) . . . . . . . . . . . .
19.816%
John
Doran
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| DRILLING ACTIVITY UPDATE: CLIFF HEAD-4 (03-03-03) |
KEY POINT ·
The
Cliff Head-4 appraisal well, has commenced drilling on 3 March 2003
Roc Oil (WA) Pty Limited ("ROC"), Operator for and on behalf of the WA-286-P Joint Venture, advises that, at 0515 hours Western Standard Time ("WST"), on 3 March 2003, drilling operations commenced at the Cliff Head-4 appraisal well in WA-286-P, in the northern part of the offshore Perth Basin. The Ensco
53 drilling rig has been moved from the Vindara-1 location to the surface
location of Cliff Head-4. Cliff Head-4 will be drilled as a moderate deviation
appraisal well with a subsurface location approximately one kilometre
to the south east of the recently drilled Cliff Head-3 well (Attachment-1).
Cliff Head-4 is programmed to be drilled to a depth of approximately 1,386
metres below Rotary Table.
Roc Oil (WA)
Pty Ltd (Operator) . . . . . . . . . . .
30.0%
John
Doran
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