Roc Oil Update Beibu Gulf Operations

Post-drill analyses highlight additional exploration potential and confirm larger in-place oil accumulation in Block 22/12 offshore China.

Analysis of data gathered during 2Q 2004 from the drilling of three wells in Block 22/12 ("the Block") in the Beibu Gulf, offshore China, indicate a cluster of exploration targets in the vicinity of the 6-12-1 oil discovery well in the northern part of the Block. The collective, unrisked, potential for these prospects is estimated to be 40 to 50 MMBO recoverable.

The data also confirm the highly viscous nature of the oil contained in the 12-8 East Field in the southern part of the Block. However, ROC's post-drill analyses further indicate that the total oil in-place in this field and the adjacent 12-8 West Field, is approximately 50% more than the independently calculated pre-drill estimate of 119 MMBO.

On the basis of these new technical insights, and the strong forward oil price curve, ROC and its co-venturers expect to enter into discussions with the relevant Government authorities in China regarding further drilling and pre-development studies in the Block.

Between mid-April and mid-May 2004 ROC operated, on behalf of the Block 22/12 Joint Venture, three exploration and appraisal wells in and around the 12-8 West and 12-8 East oil fields in the southern part of the Block, which is located in the Beibu Gulf, offshore China.

As reported at the time, initial results were disappointing: only one well encountered a significant oil column and that oil proved to be highly viscous. However, intensive post-drill studies conducted during the last several months have indicated that other aspects of the drilling results encourage a more positive view of the petroleum potential of the Block. Specifically:

  • It now appears that the total amount of in-place oil reservoired in the 12-8 West and 12-8 East fields is approximately 50% greater than the 119 MMBO in-place estimate contained in the Independent Expert's Report included in ROC's Prospectus published in association with the Company's Rights Issue announced on 2 April 2004. In light of post well analysis and the recent strengthening of forward curve oil prices, the Joint Venture believes that potential commercial development of the 12-8 East and 12-8 West oil fields clearly merits further investigation, notwithstanding the highly viscous nature of the oil.
  • The results of the 2Q 2004 drilling program also provided, for the first time, information which allows the 3-D seismic data to be calibrated with well data. As a result of integrating this information into the geological model, it now appears that there is a cluster of prospects in the northern part of the Block. These prospects are in the vicinity of the Wei 6-12-1 discovery, which was made by the Joint Venture in March 2002 and which confirmed that the oil in this part of the Block is significantly less viscous than that found in the 12-8 East Field. Based on 3-D seismic, supported by amplitude and AVO anomalies, this cluster of prospects is currently estimated to have an unrisked recoverable reserve potential in the order of 40 to 50 MMBO. The proximity of this cluster of prospects to existing infrastructure encourages the view that this part of the Block warrants further exploration.

  • At a Joint Venture meeting held on Monday, 30 August 2004, the co-venturers agreed to move forward with scheduled discussions with relevant Government authorities in China, which are designed to identify the optimum way of realising the Block's petroleum potential.

    The Block 22/12 Joint Venture consists of:

    Roc Oil (China) Company .........40% and Operator
    Horizon Oil Limited ..................30%
    Petsec Energy Limited .............25%
    Oil Australia Pty Limited ............5%