Since the last Stock Exchange Release on 17 May 2006, the Wei-6-12S-1 exploration well in Block 22/12 in the Beibu Gulf, offshore China, has drilled 6 inch hole to a revised Total Depth of 2,650 meters below rotary table, within the Liushagang Formation, the hydrocarbon generative source interval which underlies the main Weizhou reservoir section. The current operation is preparing for the first of at least three production tests.
The production testing program is designed to provide the Joint Venture with the maximum amount of technical data for possible field development rather than maximum oil flow rates. Consistent with standard industry practice, the deepest zone will be tested first and the shallowest zone tested last. Specifically:
Immediately following the completion of the production testing program and subject to the results obtained, the Joint Venture intends to drill one or two sidetrack wells from the current well location. These sidetrack wells will have two main aims: to core the relevant parts of the different reservoirs; and/or to identify more accurately the location of some of the hydrocarbon-water contacts which may exist down dip from the current well.
The Joint Venture's overall appraisal strategy is to ensure that upon completion of the appraisal program sufficient data will have been collected to allow the commercial potential of the discovery to be evaluated quickly and thoroughly. If the appraisal results support a commercial development the Joint Venture would immediately commence Feasibility Studies, Front End Engineering and Design and submit an Overall Development Plan to the relevant government authorities in China. As this outcome is unlikely to be determined by the results of any single production test, ROC anticipates that its next Stock Exchange Release, relating to the Wei-6-12S-1 well, will be made in mid-June 2006, when the testing program is expected to be completed.
Commenting on the appraisal program, Dr John Doran, ROC's Chief Executive Officer, stated that:
"Often there is a considerable gap between making an offshore discovery and gathering the appraisal data which is crucial for commercial evaluation. Fortunately, with the Wei-6-12S-1 discovery, ROC and its co-venturers have the opportunity to acquire this information, including production test data, before releasing the rig from its present location. Consequently, when the program is complete the Joint Venture will be well placed to make a timely and informed decision regarding the field's commercial potential."
The Block 22/12 Joint Venture is comprised of Roc Oil (China) Company as operator with 40%; Horizon Oil Limited with 30%; Petsec Energy Ltd with 25%; and Oil Australia Pty Ltd with 5%. The China National Offshore Oil Company ("CNOOC") is entitled to participate up to a 51% funding equity level in any commercial development within Block 22/12.
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