CEO COMMENTS
ROC
continues to live in a split level world. Several quarterly financial metrics
are at all time highs while the seven exploration and appraisal wells drilled
during the Quarter were all dry or not clearly commercial. The 25% decline in
the share price during the Quarter suggest that, perhaps, predictably, the
share market presently attaches more importance to the well results than to
the Company's overall production and revenue performance. Therefore, the fact
that the records set in the previous quarter regarding sales revenue and
realised oil price and in 4Q 2006 with regard to sales volumes, were all
broken during the Quarter, does not lessen the Company's need to score a few
goals on the drilling front - and with active drilling programmes underway in
Angola and Mauritania that possibility certainly exists.
KEY ACTIVITIES
1.
CONSOLIDATED REVENUE & PRODUCTION
1.1 Total working
interest production of 1 MMBOE (10,961 BOEPD), 98% oil; down 8% compared to
1.08 MMBOE (11,771 BOEPD) in the previous quarter.
1.2 Record sales
volumes of 1.12 MMBOE; up 7% compared to the previous record of 1.05 MMBOE
set in 4Q 2006.
1.3 Record total sales
revenue of US$101.7 million; up 16% compared to the record of US$88 million
set in the previous quarter.
1.4 Record average
realised oil price in the Quarter of US$91.17/BBL; up 6% from the record of
US$86.39/BBL set in the previous quarter.
2.
PRODUCTION ASSETS
2.1
Cliff Head Oil Field, WA-31-L, Offshore Western Australia (ROC: 37.5% &
Operator)
Gross oil
production averaged 8,035 BOPD (ROC: 3,013 BOPD); down 15% on the previous
quarter due to expected field decline. During the Quarter planning was
commenced for conduct of well workovers to replace two electric submersible
pumps with larger pumps which will improve well productivity.
2.2 Zhao Dong C&D Oil Fields, Bohai
Bay, Offshore China (ROC: 24.5% & Operator)
Gross oil production averaged 19,025 BOPD
(ROC: 4,661 BOPD), 2% lower than the previous quarter. Evaluation of
sub-surface reservoir and well performance and preparations for workovers to
support the 2008 drilling programme continued throughout the Quarter.
2.3 Enoch Oil and Gas Field, North Sea
(ROC: 12.0%)
Gross production averaged 7,146 BOPD and 4.2
MMSCFD (ROC: 858 BOPD and 0.5 MMSCFD); down 13% compared to the previous
quarter. The Enoch producing well was successfully put on gas lift early in
January 2008.
2.4 Blane Oil Field, North Sea (ROC:
12.5%)
Gross oil production averaged 15,226 BOPD
(ROC: 1,903 BOPD); down 1% compared to the previous quarter. The Ula gas
compression upgrade project, which will provide a dedicated gas supply for
gas lift for Blane's producing wells continued. Drilling of the planned water
injection well to provide pressure support to the two active producing wells
commenced on 4 March 2008. The well is due to be completed by the end of
April 2008 (see section 7 - Post Quarter Events).
2.5 Chinguetti Oil Field, PSC Area B,
Offshore Mauritania (ROC: 3.25%)
Gross oil production averaged 10,968 BOPD
(ROC: 356 BOPD); down 11% on the previous quarter due to natural field
decline. The programme for three well interventions and two new infill wells,
due to commence in 2Q 2008, is expected to deliver an increase in production
during 2H 2008.
3. DEVELOPMENT ASSETS
3.1 Zhao Dong C&D Oil Fields, Bohai
Bay, Offshore China (ROC: 24.5% & Operator)
During the Quarter, work progressed on the
rig upgrades and modifications and the winter maintenance tasks were
completed. Upgrade work on the offshore drilling and production platforms as
part of the Incremental Development Plan continued. Fabrication of the
template for pile driving for the additional drilling platform and pile
fabrication was completed. A number of slot recoveries and well recompletions
on the existing drilling platform were achieved prior to the start of the
2008 12 well development drilling programme in the C&D Oil Fields, which
commenced on 20 March 2008. Initially five wells will be batch drilled before
completion of the wells and commencement of production from those wells.
3.2 Zhao Dong C4 Oil Field, Bohai Bay,
Offshore China (ROC: 11.575% unitised & Operator)
Work in relation to construction and
fabrication of facilities for development of the C4 Oil Field continued.
Installation of the C4 conductor pod (CP2) was successfully completed ahead
of schedule on 26 March 2008 - a major milestone for the project. Work
associated with the construction of the platform terminal and the fabrication
and coating of pipe for the pipelines continued.
4. EXPLORATION AND APPRAISAL ASSETS
4.1 WA-286-P, Perth Basin, Offshore
Western Australia (ROC: 37.5% & Operator)
Acquisition of the 546 km2 Diana
3D seismic survey was completed on 12 February 2008. The survey data will
further define the 2007 Frankland and Dunsborough discoveries and nearby
prospects and leads. The Premium "Wilcraft" jack-up rig
completed a three well exploration and appraisal drilling programme
comprising Lilac-1, Frankland-2 and Dunsborough-2.
The Lilac-1 exploration well, drilled to a
Total Depth of 1,455 mBRT, encountered sands with weak gas shows and
fluorescence in the primary reservoir target which proved to be water
bearing. The well was subsequently plugged and abandoned.
Frankland-2, drilled to a Total Depth of
2,330 mBRT, intersected gas in the target sands confirming hydrocarbons in
the eastern region of the Frankland Field. However, the top of the reservoir
at Frankland-2 was encountered deep to prognosis and the reservoir itself was
of poorer quality than that encountered in Frankland-1. The well was
subsequently plugged and abandoned.
At the end of the Quarter, Dunsborough-2 had
drilled to a Total Depth of 1,680 mBRT and a wireline logging programme was
underway (see section 7 - Post Quarter Events).
4.2 WA-351-P, Carnarvon Basin, Offshore
Western Australia (ROC: 20%)
The Operator, BHP Billiton Petroleum Pty
Ltd, continued to review options for acquiring a 3D seismic programme in
2008, which will focus on Triassic gas potential.
4.3 Block 22/12, Beibu Gulf, Offshore
China (ROC: 40% & Operator - Subject to Government participation in
developments for up to 51%)
Following Chinese Government approval of the
Wei 6-12 Oil Fields reserves, pre-development planning work is progressing.
The Overall Development Plan for the Wei 12-8W and Wei 6-12 Oil Fields is
scheduled to be submitted to relevant Chinese authorities mid-year and a
Final Investment Decision is expected during 2H 2008. This project has the
potential to move currently unbooked discovered resources of 4.7 to 5.7 MMBO
net to ROC, into booked 2P reserves and to also further strengthen the
Company's position in China.
On 1 January 2008, ROC commenced a two well
exploration programme in Block 22/12. The first well, Wei 6-12W-1, reached a
Total Depth of 2,333 mBRT without encountering hydrocarbons and was plugged
and abandoned on 28 January 2008. The second exploration well, Wei 6-12E-1,
commenced drilling on 12 February 2008 and was respudded as the sidetrack Wei
6-12E-1A and drilled to a Total Depth of 2,510 mBRT. The well encountered
minor residual oil shows and was plugged and abandoned on 13 March 2008. The
results of the Wei 6-12W-1 and Wei 6-12E-1A exploration wells do not have any
adverse impact on the potential development of the Wei 12-8W and Wei 6-12 Oil
Fields.
4.4 Cabinda South Block, Onshore Angola
(ROC: 60% & Operator)
During the Quarter, ROC's fourth exploration
well in the block, Milho-1, the first test of the pre-salt section, finished
drilling. The well drilled to Total Depth of 3,009 metres encountering a
classic pre-salt sequence characterised by a thick world-class source rock,
with significant oil and gas shows, from which a small amount of oil was
recovered via wireline sampling. The sequence overlies a thick sand interval
with good reservoir quality which exhibited minor oil shows but did not contain
any recoverable hydrocarbons. Milho-1 was plugged and abandoned on 14 March
2008.
Coco-1, ROC's fifth well in its current
seven well programme, commenced drilling on 25 March 2008 and is expected to
reach Total Depth by the end of May 2008 (see section 7 - Post Quarter
Events).
Work continued on the evaluation of the
Massambala-1 heavy oil discovery during the Quarter. As a result of 3D
seismic reprocessing and core analyses, on 31 March 2008, the Cabinda South
Block co-venturers agreed to drill up to six shallow Massambala appraisal
wells during 2H 2008 and planning for this programme is underway.
4.5 Offshore Mauritania (ROC: 2 - 5.49%)
A 402 km2 3D seismic survey in
Block 1 commenced on 23 March 2008.
During the Quarter, the Atwood "Hunter"
drilling rig drilled the Khop-1 exploration well in PSC Area C, Block 6, to a
Total Depth of 4,265 mBRT. The well was subsequently plugged and abandoned on
30 March 2008 after encountering thin sands with oil shows that were not
considered to be of commercial consequence. At Quarter end, preparations were
underway to start drilling the Banda NW appraisal well in PSC Area B (see
section 7 - Post Quarter Events).
4.6 Belo Profond Block, Offshore
Madagascar (ROC: 75% & Operator)
During the Quarter, planning for an
aeromagnetic survey due to commence in May 2008 was completed. In parallel
with this work an Environmental Impact Study was completed.
4.7 Blocks H15 & H16 Equatorial
Guinea (ROC: 18.75% & Technical Manager)
The arbitration between Pioneer Natural
Resources (Equatorial Guinea) Limited and the other joint venturers,
including ROC, continued.
5. CORPORATE
On 25 January 2008, ROC advised that its
remaining company-wide proved and probable (2P) reserves as at 31 December
2007 were 21.4 MMBOE, all of which are being produced or developed. There was
a reduction of 2.1 MMBOE relating to ROC's 2P net reserves in the C&D Oil
Fields, in the Zhao Dong Block, offshore China. There were no other material
revisions to ROC's 2P reserves.
On 7 March 2008, the Government approved
surrender of the WA-325-P and WA-327-P permits in the offshore Perth Basin,
Western Australia, effective 23 July 2007.
6. FINANCIAL
At Quarter-end ROC had approximately US$40.1
million in cash, down US$1.3 million (3.1%) on the previous quarter; debt of
US$128.4 million, down US$4.9 million (4%) on the previous quarter and net
debt of US$88.3 million, down US$3.6 million ( 3.9%) on the previous quarter.
6.1
Production
|
1Q 2008
|
4Q 2007
|
YTD
|
% Change (4Q07 to 1Q08)
|
|
Oil Production (BBLS)
|
|
|
|
|
|
Cliff Head
|
274,192
|
326,383
|
274,192
|
(16%)
|
|
Zhao Dong C&D Fields
|
424,159
|
438,340
|
424,159
|
(3%)
|
|
Chinguetti
|
32,438
|
36,814
|
32,438
|
(12%)
|
|
Blane
|
173,198
|
176,183
|
173,198
|
(2%)
|
|
Enoch
|
78,040
|
85,679
|
78,040
|
(9%)
|
|
Other
|
311
|
340
|
311
|
(9%)
|
|
Total Oil Production
|
982,338
|
1,063,739
|
982,338
|
(8%)
|
|
Gas Production (MSCF)
|
|
|
|
|
|
Enoch
|
46,316
|
73,655
|
46,316
|
(37%)
|
|
NGL Production (BOE)
Blane
|
7,360
|
6,890
|
7,360
|
7%
|
|
Total BOE
|
997,417
|
1,082,905
|
997,917
|
(8%)
|
|
BOEPD
|
10,961
|
11,771
|
10,961
|
(7%)
|
Note: Production quoted is ROC's working
interest share of total production. ROC's net entitlement production for the
period was 945,591 BOE (4Q 2007:1,015,719 BOE; YTD: 945,591 BOE) after taking
out governments' share of profit oil.
|
1Q 2008
|
4Q 2007
|
YTD
|
% Change (4Q07 to 1Q08)
|
|
Oil Production (BBLS)
|
|
|
|
|
|
Cliff Head
|
274,192
|
326,383
|
274,192
|
(16%)
|
|
Zhao Dong C&D Fields
|
424,159
|
438,340
|
424,159
|
(3%)
|
|
Chinguetti
|
32,438
|
36,814
|
32,438
|
(12%)
|
|
Blane
|
173,198
|
176,183
|
173,198
|
(2%)
|
|
Enoch
|
78,040
|
85,679
|
78,040
|
(9%)
|
|
Other
|
311
|
340
|
311
|
(9%)
|
|
Total Oil Production
|
982,338
|
1,063,739
|
982,338
|
(8%)
|
|
Gas Production (MSCF)
|
|
|
|
|
|
Enoch
|
46,316
|
73,655
|
46,316
|
(37%)
|
|
NGL Production (BOE)
Blane
|
7,360
|
6,890
|
7,360
|
7%
|
|
Total BOE
|
997,417
|
1,082,905
|
997,917
|
(8%)
|
|
BOEPD
|
10,961
|
11,771
|
10,961
|
(7%)
|
Note: Production quoted is ROC's working
interest share of total production. ROC's net entitlement production for the
period was 945,591 BOE (4Q 2007:1,015,719 BOE; YTD: 945,591 BOE) after taking
out governments' share of profit oil.
6.2 Sales
|
1Q 2008
|
4Q 2007
|
YTD
|
|
Oil Sales (BBLS)
|
BOE
|
US$'000
|
BOE
|
US$'000
|
BOE
|
US$'000
|
|
Cliff Head
|
273,484
|
26,597
|
327,776
|
33,413
|
274,192
|
26,597
|
|
Zhao Dong C&D Fields
|
508,326
|
42,940
|
306,054
|
28,078
|
508,326
|
42,940
|
|
Chinguetti
|
26,321
|
2,386
|
27,356
|
2,791
|
26,321
|
2,386
|
|
Enoch
|
75,425
|
7,294
|
89,182
|
9,403
|
75,425
|
7,294
|
|
Blane
|
220,659
|
21,452
|
125,122
|
13,971
|
220,659
|
21,452
|
|
Other
|
311
|
30
|
340
|
42
|
311
|
30
|
|
Total Oil Sales
|
1,104,526
|
100,699
|
875,830
|
87,698
|
1,104,526
|
100,699
|
|
Gas Sales (MSCF)
|
|
|
|
|
|
|
|
Enoch
|
46,316
|
269
|
73,655
|
282
|
46,316
|
269
|
|
NGL Sales (BOE)
|
9,913
|
691
|
-
|
-
|
9,913
|
691
|
|
Total Sales (BOE)
|
1,122,159
|
101,659
|
888,106
|
87,980
|
1,122,159
|
101,659
|
6.3 Stock
ROC's net entitlement crude stock position
decreased by 176,567 BBLS during the period so that at the end of the Quarter
ROC was in an underlift position of 67,004 BBLS compared to a 243,571 BBLS
underlift position at the end of the previous quarter.
Movements in ROC's stock position will flow
through the Profit & Loss Statement during the period in which the
movement occurs. ROC's stock position will fluctuate from period to period.
6.4 Expenditure Incurred
|
1Q 2008
US$'000
|
4Q 2007
US$'000
|
YTD
US$'000
|
|
Exploration
|
|
|
|
|
Angola
|
13,908
|
20,311
|
13,908
|
|
China
|
13,856
|
3,659
|
13,856
|
|
Mauritania
|
1,270
|
266
|
1,270
|
|
Australia
|
22,459
|
(878)
|
22,459
|
|
UK
|
50
|
(76)
|
50
|
|
Equatorial Guinea
|
111
|
55
|
111
|
|
Madagascar
|
96
|
187
|
96
|
|
Other
|
364
|
270
|
364
|
|
Total Exploration
|
52,114
|
23,794
|
52,114
|
|
|
|
|
|
Development
|
|
|
|
|
Zhao Dong C&D Fields
|
2,725
|
8,262
|
2,725
|
|
Zhao Dong C4
|
810
|
1,812
|
810
|
|
Blane
|
4,110
|
2,160
|
4,110
|
|
Enoch
|
158
|
529
|
158
|
|
Chinguetti
|
383
|
223
|
383
|
|
Total Development
|
8,186
|
12,986
|
8,186
|
|
|
|
|
|
Total Exploration & Development
|
60,300
|
36,780
|
60,300
|
65 Hedging
The Company's remaining hedge positions for
the period from 1 April 2008 to December 2011 are summarised below.
|
Brent Oil Price Swaps
|
|
Volume
|
Weighted Average Brent Price
USD/BBL
|
|
2008
|
858,987
|
71.46
|
|
2009
|
851,998
|
70.01
|
|
2010
|
686,994
|
68.46
|
|
2011
|
455,997
|
66.31
|
|
2,853,976
|
69.48
|
During the Quarter, the cash flow loss as a
result of the settlement of the oil price derivative contracts was US$ 7.4
million.
7. POST QUARTER EVENTS
The Banda Northwest appraisal well in PSC
Area B, offshore Mauritania (ROC: 3.693%), was drilled to Total Depth of
2,703mBRT and sidetracked to a revised Total Depth of 2,934 mBRT. As at 30
April 2008, the current operation was running wireline logs.
The Blane sidetrack water injection well
(ROC: 12.5%) was drilled to Total Depth of 3,622mBRT and was completed. The
forward programme is to complete the tie-in of the wellhead to the water
injection line pre-laid from the Ula platform, some 34 kilometres north east
of the Blane subsea complex.
The Dunsborough-2 appraisal well in
WA-286-P, Perth Basin, offshore Western Australia (ROC: 37.5%) was plugged
and abandoned on 4 April 2008 after interpretation of logs, pressure data and
fluid samples indicated that the extensive oil shows seen in cores were
residual (non-producible).
Drilling of Coco-1 in the Cabinda South
Block, onshore Angola, (ROC: 60%) continues with the expectation that
drilling at the Coco-1 location will be completed during May 2008 after which
two further sub-salt exploration wells will be drilled: Sesamo-1 and Arroz-1.
Drilling operations from the newly installed
C4 (ROC: 11.575%) conductor pod at CP2 commenced on 15 April 2008 with the
driving of nine surface conductor pipes for wells targeted into the C4 Oil
Field and Extended Reach Areas (ROC: 24.5%). All conductor pipe has been
installed and batch drilling of top-holes commenced on 25 April.
8. FURTHER INFORMATION
For further information please contact ROC's
Chief Executive Officer, John Doran, Chief Operating Officer, Bruce Clement,
or General Manager, External Affairs & Investor Relations, Damian Fisher,
on:
Phone: (02) 8356 2000 Email: jdoran@rocoil.com.au
Facsimile: (02) 9380 2066 Web Site: www.rocoil.com.au
Address: Level 14, 1 Market Street, Sydney, NSW 2000, Australia