Australia's ROC Says Oil Assets Too Expensive
PERTH, Jul 13, 2005 (Dow Jones Commodities News via Comtex)
Despite a recent pick up in merger activity, ROC Oil Co. (ROC.AU) believes that mid-sized Australian oil producers are too expensive to get on the radar screens of cash-rich overseas rivals.
"None of the Australian oil assets are attractive to the U.S. and U.K. energy companies," ROC chief executive John Doran told Dow Jones Newswires in an interview.
"The exception may be Australian companies with overseas interests, although there are not many undervalued situations," he said.
Sydney-based ROC "looked at" Northrock Resources Ltd., a Canadian unit of Unocal Corp. (UCL), which Pogo Producing Co. (PPP) this week agreed to acquire for US$1.8 billion in cash.
"We couldn't value it at anything like what it went for," Doran said.
With cash of A$175 million and four oil projects under development, ROC has been mooted by some stockbrokers as a takeover target.
Its shares jumped 7.5% Monday to a record high of A$2.16, capping a 30% rise since the start of June. However, the shares have since eased back and were down four cents to A$2.09 in late morning trade Wednesday.
Like many other small Australian oil companies, ROC has benefited from a renewed surge in oil prices to more than US$60/barrel.
But one Sydney-based dealer attributed part of ROC's recent strength to takeover speculation, driven by interest in ROC's geographically diverse interests in offshore fields.
These include a 3.3% stake in Woodside Petroleum's (WPL.AU) US$625 million Chinguetti oil project offshore Mauritania that is due to come on stream next year.
But Doran said that the recent share price jump was probably a delayed reaction to news last week of two North Sea oil project approvals for ROC.
"Maybe the market was a little slow to react to that announcement," he said.
"They will be nice little earners that take us to four fields under development, all of which are due to come on next year," he said.
"But on the corporate front it is absolutely quiet," he said.
Despite recent energy deals, such as the Pogo transaction and CNOOC's US$18.5 billion offer for U.S.-based energy group Unocal, Australia has not featured strongly in takeover activity.
Aside from a small merger deal now underway between Perth-based companies Arc Energy (ARQ.AU) and Voyager Energy (VOY.AU), it has been 12 months since the last significant oil takeover when Indonesia's PT Medco Energi Internasional (MEDC.JK) paid A$350 million for Novus Petroleum.
This may be because asset prices are too high following strong oil price-driven share market gains, Doran believes.
ROC said last week that its part-owned Blane and Enoch fields in the North Sea are expected to be developed for A$391 million and A$178 million respectively.
Production from both fields is scheduled to start in late 2006 at rates of 14,000 barrels of oil per day for Blane and 12,000 bopd for Enoch. Roc owns 12.5% of Blane and 12% of Enoch.
ROC is also operator and 37.5% owner of the A$220 million Cliff Head development offshore Western Australia.
ROC's total share of production will be between 6,000-8,000 barrels of oil per day once Cliff Head and Chinguetti come on stream in the first quarter of next year, Doran said.
ROC is also earning 20% of the BHP Billiton's (BHP) Jacala prospect, offshore Western Australia, which has a target size of around one billion barrels of oil.
Jacala is due to be drilled in October, Doran said.
Copyright (c) 2005 Dow Jones & Company, Inc.
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