Update on Operations

RNS Number:5873H
Roc Oil Company Limited
20 January 2005


                  Attention ASX Company Announcements Platform
                           Lodgement of Open Briefing



Roc Oil Company Limited
Level 14
Market St
Sydney NSW 2000



Date of lodgement: 20-Jan-2005
Title: Open Briefing. Roc Oil. Update on Operations

Record of interview:

corporatefile.com.au
ROC Oil Company Limited announced two important deals immediately before and
after Christmas. ROC entered into agreements for the sale of 100% of its
wholly-owned subsidiary which owns the Saltfleetby Gas Field and it entered
into an agreement whereby it will be entitled to acquire up to 26% direct
equity in the Ardmore Oil Field and surrounding acreage in the UK North Sea.
Firstly, can you outline the completion process for the Saltfleetby deal?

CEO John Doran
The closing process for Saltfleetby has progressed exceptionally well. We
expect the deal to be closed within days. That's pretty quick for a
Sydney-based company completing a transaction of this size with an
international Joint Venture consisting of a very large German gas company and
a Russian company that is one of the biggest gas companies in the world.

corporatefile.com.au
In the Saltfleetby announcement you estimated that ROC would book an after tax
profit from the sale of around $72 million in 2005. Given the completion
schedule you've outlined, do you expect any change to that profit number 
particularly in relation to IFRS?

CEO John Doran
The sale of Saltfleetby will be booked as part of ROC's 2005 results.
Naturally, when we announced the transaction in December 2004, we had to
express the anticipated profit in terms of the then prevailing 2004 accounting
standards. We haven't yet had a chance to work through the detailed
implications of the transition to international accounting standards in 2005.
Therefore, it is too early to come up with a new anticipated profit figure in
a 2005 context. However, what we can say, with a large degree of confidence,
is that the previously quoted A$72 million estimated post tax profit on the
sale is not expected to go down!

corporatefile.com.au
After completing the sale of Saltfleetby, what do you plan to do with ROC's
expected cash balance of around $180 million?

CEO John Doran
It's hard to talk about ROC having a strong balance sheet, or a significant
amount of net cash, because we live and operate in the world of multi-national
oil companies which are so much bigger and financially stronger. However,
compared to many of its peers, ROC does have a solid financial base. It also
has a large number of exploration, appraisal, pre-development and development
projects underway which will require funding. Since the sale of Saltfleetby -
and prior to the option we might exercise over the Ardmore Field in the North
Sea - we don't have any significant production revenue at this exact moment in
time - which always tends to concentrate the corporate mind.

Fortunately, ROC's Senior Management Team, as well as its Board and Advisors,
have all been through enough industry cycles to know that the best thing you
can do at a time like this is to deploy your financial resources very
judiciously.This is why we would not be inclined to put any substantial portion
of the money generated by the recent sale of ROC's UK gas field, or the
Company's April 2004 Rights Issue, into, for example, a high cost new venture
that was pure exploration.

corporatefile.com.au
Ardmore is undergoing a continuous drilling and workover programme which will
unfold during 2005. When announcing that deal, you stated that the results of
the programme will determine whether or not the deal is a good one for ROC.
Can you give an update on what's happening with Ardmore?

CEO John Doran
In summary: so far, so good; but it is still early days. At the moment it is
nice to have an option rather than an equity stake but, if all goes well, we
will switch into an equity position in a few months time.

Apart from some typical North Sea weather downtime, which is within the bounds
assumed by our commercial evaluation, production at Ardmore is behaving well:
around 8,000 BOPD. The oil price is also behaving well with Brent crude
recently trading around US$45/BBL. The production is in line with expectations
while the actual oil price is well above our assumed price scenario. Subject to
the usual operational caveats, the Ardmore Joint Venture will bring a third
well on to production in February if a workover planned for later this month
is successful. Immediately after that workover, the Joint Venture will be
looking to drill a fourth well, which, it is hoped, will bump the field's
production to above 12,000 BOPD, within the next three or four months. That
would be just over 3,000 BOPD net to ROC if we exercise our full 26% option
entitlement and that would be effectively backdated to December 2004.

corporatefile.com.au
The joint venture partners involved in the Mauritanian drilling program have
released a lot of information to ASX over the last few months. What is ROC's
view on the drilling results and the progress you've made over the last few
months?

CEO John Doran
ROC's view of what is happening in Mauritania hasn't changed in the last many
months. The area is developing into an important new petroleum province offshore
Northwest Africa - but it is still very early days. We still have a huge amount
to learn about the detailed nature of the various oil and gas plays - and, in
this regard, every new well helps.

Development of the Chinguetti Field is progressing and first oil in still
expected in early 2006. It's worth reminding ourselves that this is a deep water
development in a remote part of Northwest Africa where, until very recently,
there was no industry infrastructure. Consequently, the development of
Chinguetti is a significant project for Woodside as operator.

Clearly, the Tiof Field is large. However, with six wells drilled into the
reservoir and, for a variety of valid operational reasons, none tested, I think
we would all like to flow oil and recover some oil samples to help us determine
the best way to develop this substantial resource. A testing programme is
scheduled to happen soon.

The Tevet discovery gave us a 1 in 4 success rate from the exploration wells
drilled in late 2004. That is less than our previous strike rate, which was 100%
for the Miocene Channel play. Of course, if you are batting at a 100% success
rate there's only one way it can go - sooner or later, it will change for the
worse and you will inevitably drill some dry exploration holes. In our case, it
just so happened that those wells were the ones that were drilled most recently.
Elsewhere in the petroleum world a 1 in 4 exploration success rate would be
considered a good result.

We should also remember that ROC has interests throughout offshore Mauritania,
not just in the Woodside-operated area. Although the other offshore sub-basins
are at an even earlier point on the exploration learning curve than the
Woodside-operated area, there is no reason why, given time, they shouldn't also
enjoy a similar measure of success.

Perhaps, the biggest danger that faced the market in relation to Mauritania last
year was an understandable over exuberance fuelled by expectations that were
unrealistically high and running well ahead of industry statistics - but, then,
I guess, that's just a normal situation in an area where the drilling results
have been so good.

corporatefile.com.au
In Equatorial Guinea, ROC has a 15% free carry through the next well. Can you
update your exploration activities there?

CEO John Doran
Because of other priorities, a 20% participant gave notice of its intention to
walk away from this deep water permit towards the end of last year. Next month
that equity will be distributed, on a pro rata basis, between the remaining
participants: Pioneer, Atlas and ROC. As a result, ROC's equity will increase
from 15% to 18.75%. ROC's original 15% will still be free-carried through the
next well which is scheduled to be drilled during 2005 while the 3.75%
additional equity will be funded by ROC which will also operate the well.

corporatefile.com.au
In late October 2004, ROC agreed to trigger the Production Sharing Agreement
relating to the Cabinda South Block, onshore Angola. At that time you expected
work to start on the ground during the first half of 2005. What's the latest 
with your work in Angola?

CEO John Doran
As stated in previous announcements, the acquisition of a 20% additional
interest in the Cabinda South Block was always subject to Government approval.
As of last month, the timeframe for receipt of that approval lapsed. On this
basis, we now think it is unlikely that ROC will acquire that additional
interest. Separately, ROC stills plans to farmout about 20% of its interest in
the Block. We are also still on track to start a 3D seismic survey in May 2005.

corporatefile.com.au
Are you pursuing any other opportunities in West Africa which have reached an
interesting stage?

CEO John Doran
We are continually looking at new opportunities within all four core regions:
UK, Africa, Australia/New Zealand and China. We certainly like West Africa. We
would love to find a suitable new project in that region that met all our
investment criteria. Therefore, the short answer is: yes, we are actively
looking at new opportunities offshore West Africa. However, quite frankly, I
would have given you the same answer at any stage during the last several years.
Very few of the opportunities that appear on a company's new venture radar
screen ever come to fruition, it's always a case of looking at many and,
perhaps, ending up with one or two.

Just by way of example, last month ROC joined an offshore West Africa Acreage
Application Group as a minority equity participant and designated Technical
Manager/Operator. At the moment we do not know if the Application Group will be
successful in acquiring any acreage. Even if the Group is offered a block all
that will signal is the start of a negotiation process which is likely to be
very lengthy. Until such negotiations are completed ROC does not have any
commitment. However, in the context of your question this situation does
illustrate the fact that ROC routinely reviews, and under the right
circumstances would seek to acquire, new acreage offshore West Africa.

corporatefile.com.au
Your China acreage has given you some encouraging exploration results although
the highly viscous nature of the oil means a development is problematic. What's
your current view on the potential of this acreage and what are your current 
objectives?

CEO John Doran
We continue to like the potential of China's energy business. With regard to
ROC's Block 22/12 in the Beibu Gulf, we've been on a bit of a rollercoaster for
most of the last 12 months. Currently, we are at an inflection point on that
switchback ride where we are cautiously optimistic that one of the small fields
will be a serious candidate for development in conjunction with a cluster of
developments in an adjacent area. If this development proceeds it may have a
knock-on effect that will bring on a string of other small oil accumulations -
both discovered and hoped for - which, collectively, could be significant to
ROC. The key will be getting the first development across the line. There is no
assurance that that will happen - but if it doesn't it won't be for lack of
trying by all parties. We will have a much better idea during the next several
months.

As for the Block's exploration potential: it looks quite encouraging and
although individual prospects are small to modest in size, collectively, they
too could prove to be material to ROC. Therefore, for ROC in China, 2005 is
expected to be a year of development studies and possibly one exploration well,
subject to rig availability.

corporatefile.com.au
Can you update the current timetable for Cliff Head Oil Field including when
you expect the Final Investment Decision? Are there any significant hurdles
to overcome?

CEO John Doran
For some time now the Final Investment Decision ("FID") for Cliff Head has been
scheduled for end-January 2005. Currently, the Joint Venture is considering
whether or not FID should be delayed to late February so that the results of the
next well, CH-5, can be incorporated into the development planning. If the Joint
Venture decides to postpone the FID until after CH-5 we do not expect that there
will be any extra consequential project delay compared to FID at end-January
2005 because the key processes will continue as if FID had been formalised at
end-January. However, the most reliable date for first oil is now 1Q2006 because
the previous stretch target of end-2005 is looking increasingly ambitious.

In recent weeks we have received tenders for the various contracts. We are still
going through the tender evaluation process. So far it looks like the capex
numbers, including a A$20 million contingency, will be about 25% above the most
recent prediction made several months ago which was almost A$200 million. This
potential increase in capital cost is unwelcome but it is not surprising given
the buoyant international and Australian market for resource industry
contractors which, in Western Australia, is at a 20 year high.

Fortunately, the oil price has also headed off in the same upward direction as
the capex costs - which is not entirely coincidental. The net effect is that,
although the capex figures are now threatening to be rather ugly compared to
expectations in October 2004, the project remains within ROC's funding ability
and the field's economic viability remains essentially intact - provided that
there are no further significant capex increases, oil prices stay at, or above,
US$30/BBL and recoverable proved and probable reserve estimates continue to
hover in the 18 to 21 MMBO, or greater, range.

In the context of the new capex figures, the next well to be drilled at Cliff
Head, CH-5, will take on a greater significance with regard to mitigating risk
than was originally envisaged when it was proposed last year. Subject to receipt
of the rig on schedule at the beginning of February, CH-5 will drill into the
East Ridge part of the field and is expected to be through the reservoir by
mid-February 2005.

corporatefile.com.au
Thank you John.


For further information on ROC please visit www.rocoil.com.au or call John Doran
on (02) 8356 2000.

To read other Open Briefings, or to receive future Open Briefings by email,
please visit www.corporatefile.com.au


                                                                 Dr Kevin Hird
                                          General Manager Business Development
                                                     Tel:  +44 (0)207 586 7935
                                                     Fax:  +44 (0)207 722 3919
                                                   Email:  khird@rocoil.com.au
                                                                              
                                                                  Nick Lambert
                                          Bell Pottinger Corporate & Financial
                                                     Tel:  +44 (0)207 861 3232



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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