In a separate transaction, Roc has also acquired an option to purchase an overriding royalty, which attaches to the 15% working interest being acquired from Lacula. In consideration for the grant of the option, Roc will pay the private parties in North America, who own the royalty, US$100,000 within 14 days of the Production Sharing Agreement being triggered. In the event that Roc decides to exercise its option to effectively extinguish the overriding royalty, it may do so through the payment of a further US$250,000 within six months of commercial production commencing in the Block.
The Block covers 1,080 sq km/267,000 acres approximately 450 km north of Luanda, the national capital of Angola. During the last 40 years, the offshore area immediately to the west and to the north of the Block has been the scene of spectacularly successful exploration which has resulted in the discovery of more than 4 billion barrels of oil. As a consequence of these exploration results, offshore Cabinda became Angola's main oil producing area prior to the recent development of the deepwater oil fields further offshore. Several of the large, near shore, oil fields are associated with structural trends that are believed to run southeastwards towards the Block. Geologically, the Block is part of the Lower Congo Basin, one of West Africa's most prolific oil producing provinces. However, for a variety of historical and non-technical reasons, the Block has not been subject to any exploration since 1972 when it was relinquished by Gulf Oil Company.
Roc had previously acquired a 45% interest in and operatorship of the Block from Total in October 2001. Therefore, the acquisition of this additional 15% interest represents a consolidation of Roc's interest to 60%.
Roc's co-venturers in the Block are Force Petroleum (20%), a privately owned company, and Sonangol (20%), the National Oil Company of the Republic of Angola, which is carried through the exploration stage by the non-government parties. The PSA has already been agreed between the non-government and Government parties. It will become effective when Roc, Force and the relevant Government Authorities agree that it is appropriate to resume on-the-ground exploration activities in the Block. Roc is hopeful, but cannot guarantee, that this will happen within the next 12-18 months. Prior to the PSA being triggered, Roc will continue to review all available technical data and undertake geological studies in preparation for the re-commencement of exploration operations.
Commenting on the transactions referred to above, Roc's Chief Executive Officer, Dr John Doran, stated that: "The transactions represent a neat consolidation of Roc's interests in an area which the Company views as being quite unique. Roc first tried to acquire the 15% interest, which it has now acquired from Lacula, in early 1998. In this sense, the transaction highlights the fact that although Roc likes to think of itself as being quick, nimble and pro-active, when the occasion demands, it can also be quite patient and dogged. Now that the working interests in the exploration stage of the Joint Venture are held by just two companies, Roc and its excellent co-venturer Force, Roc looks forward to triggering the PSA at an appropriate time in the future. When that happens, Roc will apply modern seismic and drilling technology to an area which has not been subject to any exploration work for more than 30 years despite its obvious regional prospectivity".
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