ROC is pleased to provide a preliminary production,
sales revenue and reserves update ahead of its 4Q 2007 report which will be
released on 31 January 2008 and its 2007 Financial Results which will be
released on 28 February 2008.
1. Production
ROC's 2007 production of ca 3.5 MMBOE (9,668 BOEPD)
was a record; up 77% on the previous year. Ninety-nine percent of the
production was oil.
2. Sales/Revenue
Despite a year-end underlift position of
approximately 0.24 MMBO net ROC, the Company's 2007 sales revenue of A$248
million was also a record; up 64% on the previous year, due to increased
production and strong oil prices.
3. Reserves
ROC has completed
its internal 2007 year-end reserve review and RISC Pty Ltd is finalising an
independent reserve audit report on ROC's production assets, excluding the
Chinguetti Oil Field, offshore Mauritania. On this basis, ROC advises that:
- ROC's remaining company-wide proved and probable
(2P) reserves at 31 December 2007 are 21.4 MMBOE, all of which are being
produced or being developed.
- There has been a reduction of 2.1 MMBOE relating
to ROC's 2P net reserves in the C and D oil fields, in the Zhao Dong
Block, offshore China, before any adjustment for 2007 production.
Compared to ROC's 2P reserves at 31 December 2006, this change in Zhao
Dong reserves represents a reduction of approximately 7.5% of ROC's
company-wide 2P reserves.
- There are no other material revisions to ROC's
2P reserves.
The change in
Zhao Dong 2P reserves will have an impact on ROC's 2007 financial results through
an increase in the non-cash amortisation expense. ROC's preliminary
assessment, subject to audit, indicates that the reserves change, together
with estimated future costs to develop the 2P reserves at Zhao Dong, will
result in an increase in the amortisation expense for Zhao Dong of
approximately A$12/bbl, totalling approximately A$21 million for the year
ending 31 December 2007.
The Company's 2P
reserves for end-2007 referred to above, do not include any of the oil and
gas resources identified by the five discoveries ROC has made since May 2006,
four of which are being actively reviewed and/or appraised and one of which
has been relinquished. In this context, the following points are worth
noting:
- Approximately 3.7 MMBOE of net ROC resources in
the Wei 6-12S Oil Field complex in the Beibu Gulf, offshore China, will
be reclassified as net ROC 2P reserves if, as expected, a declaration of
commerciality is made later this year. In that event, the
reclassification will effectively replace all of the 2P reserves ROC
produced during 2007.
- The commercial potential of the Frankland Gas
Field and the Dunsborough Oil and Gas Field in the offshore Perth Basin
will be better known after completion of the two well drilling programme
which is scheduled to start in early February 2008. Currently, these two
fields are tentatively estimated to contain approximately 5 to 9 MMBOE
recoverable reserves net to ROC.
- The Zhao Dong reserve revision does not alter
the fact that a potential for 10 MMBOE net ROC possible reserves is
recognised within the Block. Much of this unrisked and unbooked reserve
upside will be evaluated as part of the ROC-operated >US$ 500 million
development activities which are currently underway.
4. CEO's
Comments
Commenting on the
above, ROC's Chief Executive Officer, John Doran stated that:
"The
record production and record revenue figures speak for themselves but the
modest reduction in 2P reserves at Zhao Dong probably deserves further
comment. Specifically:
The Zhao Dong
reserve revision is a tad disappointing, but, in a Company-wide reserve and
near to medium term production sense, it is far from serious. It is not
expected to have any effect on Zhao Dong production performance during 2008
when it is anticipated production will be in line with last year, ca 1.7
MMBBL net to ROC.
In the end,
the amount of oil recovered from Zhao Dong over the next ten or more years,
will be a function of the collective recovery factors of the many different
reservoirs in the three fields. While its petroleum potential is
self-evident, the geology of the Zhao Dong Block has a touch of the Rubik's
Cube about it. Therefore, it is not entirely surprising that it took - and is
still taking - some time to get to grips with the detailed nature of the
reservoir nor that the remaining in-place oil resource at Zhao Dong will not
be better defined until a major subsurface data review has been completed by
year end. However, what is already clear is that the magnitude of the
in-place oil resource is such that if, over the next ten years, the overall
recovery factor proves to be just a few percent better than that which is
currently assumed, the 2007 reserves revision would be more than offset.
The first few
wells in the 2007 programme generally underperformed expectations and this is
necessarily reflected in the year end 2P reserves revision. However, these
first few wells were just the start of an aggressive drilling programme that
will see more than 100 wells drilled between 2007 and 2011. These early 2007
wells provided vital subsurface insights which were progressively fed into
the data base as the drilling programme unfolded through the year. Results
from the last four wells drilled towards the end of 2007 were generally
better than expected. This uptick in performance in the latter part of 2007
certainly doesn't mean that we have mastered the intricacies of Zhao Dong,
but it could be viewed as indicating that we are getting to grips with the
challenge.
The bottom
line is that it is far too early to be dogmatic as to the precise amount of
oil that will ultimately be produced from the Zhao Dong fields. As such, the
most recent reserve review is perhaps best regarded as a snap frozen product
of the information available at this moment in time which is really just the
small tip of a huge database that will be assembled over the next several
years."