Subject to government approval, ROC has acquired an initial 20% interest in the Permits and has been granted a further two options that can be exercised by funding a staged work program. Specifically:
- ROC has agreed to acquire a 20% interest in the Permits and be appointed Operator by funding 100% of A$2 million pre-seismic exploration activity.
- The second stage option to acquire an additional 20% interest in the Permits requires ROC to fund a A$5 million 2D/3D seismic program. Subject to the availability of seismic vessels, ROC and its co-venturers intend to move as quickly as possible to acquire seismic in order to allow the Joint Venture to consider the details of its 2008-2009 drilling strategy.
- If ROC elects to exercise the final option, it will be required to pay 100% of an exploration well in one and/or both Permits up to a cost of A$15 million per well, for an additional 40% interest in the Permit in which the well is located.
On the above basis, if ROC exercised all options it will acquire an 80% interest in the Permits in consideration for funding of A$37 million work program.
The Permits are located approximately 35 km west of Perth in Commonwealth waters and cover 4,540 sq km (Attachment 1). Water depths range from 15 metres to 1500 metres.
The key attractions of the area include:
- Access to both gas and oil infrastructure in the Kwinana-Perth area;
- Several different oil and gas plays are recognized in the area which appear to have all the characteristics necessary to generate and trap oil and/or gas accumulations. Seismic data acquired between 1975 and 2004 indicate the presence of a number of structural leads and prospects which will be covered by the proposed 2D/3D seismic data;
- Hydrocarbon source is not thought to be a major problem because five of the seventeen exploration wells drilled in and around the Permits recorded oil and/or gas shows with one well, immediately to the north, recovering approximately 100 barrels of light oil;
- Wells drilled to date indicate good quality reservoirs to a depth of approximately 3,000 meters; and
- The presence and extent of a competent cap rock was considered to be the main technical challenge in the Permits but a recent extensive review has provided better and more positive insights into this aspect of the petroleum system in this part of the Vlaming Sub-basin.
The Joint Venture
The initial interests in the Area will be:
Roc Oil (WA) Pty Limited (Operator).................. 20% Westralian Petroleum Limited......................... 40% Lempika Pty Limited.................................. 20% Emphazise Pty Limited................................ 20%
Commenting on the farm-in, ROCís Chief Executive Officer, John Doran, stated that:
"The Vlaming Sub-basin sits slap bang in the middle of ROCís core competency. As Operator, the Company led the Joint Venture that discovered and developed the Cliff Head Oil Field, in the environmentally sensitive Perth Basin, some 350 km to the north. One of the hallmarks of the Cliff Head Development was ROCís close liaison with the local community, particularly the crayfishing industry, to ensure that the environmental footprint is minimal and that the Companyís activities recognise and respect all interested parties. Quite bluntly, our Cliff Head experience provides a really good case history as to how well industry-community liaisons can work if all the relevant parties are directly involved from the outset.
ROC has been reviewing the prospectivity of the Permits since early 2006 and therefore, it is particularly pleasing to be able to structure a mutually beneficial arrangement with the farmers without ROC committing to a well until more information is available."
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