The Issue is fully underwritten by Goldman Sachs JBWere Pty Ltd. Patersons Securities Limited will act as co-manager of the Rights Issue. ROC's Board of Directors carefully considered various alternatives for raising funds from the investment community and chose the one which provides virtually all of ROC's shareholders with an equal opportunity to participate in the Offer.
The purpose of the Issue is to assist in funding the development of ROC's assets in Western Australia and Mauritania, the potential development of its fields offshore China and to allow the Company to continue its exploration and appraisal programmes in Mauritania and exploration activities in Equatorial Guinea and Angola.
All shareholders with registered addresses in Australia and New Zealand will be offered 3 New Shares for every 5 existing Ordinary Shares that they hold on 14 April 2004. The New Shares will be issued at $1.40 per Share, a discount of about 26% to ROC's closing market price of $1.90 on Tuesday 30 March 2004 and 18% to the weighted average share price for the preceding three months. The New Shares will rank equally with the existing Ordinary Shares of ROC.
Since ROC became a publicly-listed company in 1999, it has been characterized by a high level of self funded activity which has generated exploration, appraisal and development success. During this time the Company's portfolio has changed markedly, most notably through the addition of new interests in West Africa, China, Australia and New Zealand.
One feature which has remained constant is ROC's adherence to its "sensibly contrary" strategy which seeks to create value through the application of modern technology to assets which have been overlooked and/or undervalued. ROC believes that it is now poised to capitalize on this strategy. Highlights of ROC's track record during the last five years include:
ROC's intention is to apply the majority of the funds raised from the Issue, in conjunction with other sources of funding including existing cash reserves, debt finance and funds from operations, to the following areas:
Potential Development of the Cliff Head Oil Field, offshore Western Australia
ROC owns a 37.5% interest in, and is operator of, the Cliff Head Oil Field, in the Perth Basin, offshore Western Australia. The field was declared commercial-in-principle in October 2003: a "first" for the offshore Perth Basin. A final investment decision ("FID") is expected to be made in the third quarter of 2004. If developed, Cliff Head will establish the offshore Perth Basin as Australia's fourth offshore oil producing area after the Bass Strait, North West Shelf and Timor Sea. First oil production could commence in the fourth quarter of 2005.
Development of this field is expected to provide ROC with additional 2P oil reserves of approximately 8.2 mmbbl. According to Resource Investment Strategy Consultants Pty Ltd (''RISC''), the Independent Expert, whose report is included as an Annexure to the Prospectus, ROC's share of the estimated cost of this development is expected to be to be about $59 million, subject to the completion of Front End Engineering and Design Studies (''FEED''), which are currently underway, approval of the final scope of the project and FID.
Potential Development of Chinguetti Oil Field, offshore Mauritania
ROC owns a 3.693% interest in the Chinguetti Oil Field, offshore Mauritania. The field was declared commercial-in-principle in January 2004, a notable "first" for Mauritania. A FID is expected to be made in the second quarter of 2004. First oil production could commence by the end of 2005. Development of this field is expected to provide ROC with additional 2P oil reserves of approximately 4.5 mmbbl. ROC's share of the estimated cost of this development is expected to be about $24 million. After including funding commitments for the leased Floating Production, Storage and Offloading Vessel (''FPSO''), ROC estimates its share of total funding requirements to be about $32 million.
Appraisal and Potential Development of oil fields in Block 22/12, offshore China
ROC owns a 40% interest in, and is operator of the Block 22/12 Production Sharing Contract, in the Beibu Gulf, offshore China. ROC plans to undertake an exploration and appraisal drilling programme in April and May 2004 in order to determine the commercial potential of one or more oil fields in the area. If a development proceeds, first oil production could commence by mid 2006. The fields are expected to provide ROC with additional 2P oil reserves of about 5.8 mmbbl. ROC's share of the estimated cost of developing the Block 22/12 fields is expected to be about $36 million. After including the planned exploration and appraisal program, ROC estimates its share of the cost for the potential project to be about $42 million.
Exploration and Appraisal in West Africa; specifically Mauritania, Equatorial Guinea and Angola
In addition to the development and appraisal opportunities referred to above, ROC may utilize a portion of the funds raised to explore and appraise its acreage in deep water Mauritania, including the Tiof/Tiof West Oil Field, deep water Equatorial Guinea and onshore Angola. ROC believes that all three areas have the potential to add significant value to ROC's production and development portfolio.
Use of funds raised in the Rights Issue
As noted above, the purpose of the Issue is to raise funds to assist ROC to progress its key development and appraisal projects and pursue its West African exploration initiatives. Based on ROC's current estimates of project expenditure, the Company presently intends to apply the funds raised as follows:
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