Cliff Head Project Status Update

Cliff Head Field, Perth Basin
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Roc Oil's CEO John Doran says that the Final Investment Decision ("FID") for Cliff Head has been scheduled for end-January 2005. Currently, the Joint Venture is considering whether or not FID should be delayed to late February so that the results of the next well, CH-5, can be incorporated into the development planning. If the Joint Venture decides to postpone the FID until after CH-5 we do not expect that there will be any extra consequential project delay compared to FID at end- January 2005 because the key processes will continue as if FID had been formalized at end- January. However, the most reliable date for first oil is now 1Q2006 because the previous stretch target of end-2005 is looking increasingly ambitious.

In recently weeks we have received tenders for the various contracts. We are still going through the tender evaluation process. So far it looks like the capex numbers, including a A$20 million contingency, will be about 25% above the most recent prediction made several months ago which was almost A$200 million. This potential increase in capital cost is unwelcome but it is not surprising given the buoyant international and Australian market for resource industry contractors which, in Western Australia, is at a 20 year high.

Fortunately, the oil price has also headed off in the same upward direction as the capex costs which is not entirely coincidental. The net effect is that, although the capex figures are now threatening to be rather ugly compared to expectations in October 2004, the project remains within ROC's funding ability and the field's economic viability remains essentially intact provided that there are no further significant capex increases, oil prices stay at, or above, US$30/BBL and recoverable proved and probably reserve estimates continue to hover in the 18 to 21 MMBO, or greater, range.

In the context of the new capex figures, the next well to be drilled at Cliff Head, CH-5, will take on a greater significance with regard to mitigating risk than was originally envisaged when it was proposed last year. Subject to receipt of the rig on schedule at the beginning of February, CH-5 will drill into the East Ridge part of the field and is expected to be through the reservoir by mid- February 2005. "

Participants in WA 286 P are Roc Oil as operator with 37.5%; AWE with 27.5%; Wandoo Petroleum with 24% Voyager Energy with 6% and CIECO E&P with 5%.

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