ROC OIL COMPANY LIMITED
ROC - 2008 Half Year Results - Mr Bruce Clement, Acting CEO and Anthony Neilson, CFO
Mon, 25 Aug 2008 11:00AM
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Mr Bruce Clement
Mon, 25 Aug 2008
11:00AM Australia/NSW
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ROC OIL COMPANY LIMITED (ROC)
ASX code: ROC,ROC
Website: http://www.rocoil.com.au/
Industry: Energy,Exploration & Production
Principal Activities:
Oil and natural gas exploration and production
Address:
, 1 Market Street, Level 14,
SYDNEY
NSW
Phone: (02) 8356 2000
Fax: (02) 9380 2066
Executives & Directors
Mr Andrew J Love , Chairman, Non Exec. Director
Mr William G Jephcott , Deputy Chairman, Non Exec. Director
Mr Bruce Clement , CEO, Executive Director, Chief Op. Officer
Mr Dennis Paterson , Executive Director
Mr Sidney J Jansma Jr , Non Exec. Director
Mr Robert Leon , Non Exec. Director
Ms Sheree Ford , Company Secretary
Ms Leanne Nolan , Assist.Co. Secretary
Company Podcasts
Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
ROC OIL COMPANY LIMITED (ROC) Events
Australia/NSW
ROC OIL COMPANY LIMITED (ROC)
| Cleansing Statement | Fri, 3 Jul 2009 |
| Appendix 3B | Wed, 1 Jul 2009 |
| Trading Halt | Fri, 26 Jun 2009 |
| ROC Announces Equity Capital Raising | Fri, 26 Jun 2009 |
| ROC Successfully Completes A$68.8 Million Share Placement | Fri, 26 Jun 2009 |
| Basker-Manta-Gummy (BMG) - 2009 Drilling Programme Update | Tue, 23 Jun 2009 |
| ATO Issues Class Ruling on AZA Transaction | Tue, 23 Jun 2009 |
| Latest Investor Presentation - June 2009 | Thu, 18 Jun 2009 |
| BPT: Weekly Drilling Report | Wed, 17 Jun 2009 |
| Basker-Manta-Gummy - 2009 Drilling Programme | Tue, 16 Jun 2009 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
BRUCE CLEMENT, ACTING CEO AND ANTHONY NEILSON, CFO, ROC OIL COMPANY LIMITED (ROC)
“2008 Half Year Results”
http://www.brr.com.au/event/49785
MONDAY, AUGUST 25, 2008, 11:00 AM
ROC Thank you. Good morning, everyone. For those of you who haven’t got into one of these before, what we will do is run through the presentation on the
10 Web site that was put up this morning. It is a long presentation, but I'll focus on the financial results at the front end and then really focus probably then on the ends on transaction, the merger takeover that we have going there just to give you an update on where we are there, and just touch on a couple of the asset updates as we get to the end of the presentation. So what I’ll do is I’ll
15 start with running through the presentation as it is, and I’ll start with Slide 3, which is the Operational Highlights. Here, the key message here is, production is pretty much online with our forecast, 10,000 -- just over 10,000 barrels of oil equivalent per day. We’re aiming to achieve 10,000 for the full-year with a step-up in the fourth quarter from Zhao Dong when we bring on
20 the new C4 field in the extended rich area during the fourth quarter. Development work primarily in Zhao Dong on that Incremental Development project on the C&D Fields including drilling there and also the C4 development where the pipeline facilities have been installed, and subsequently at the end of the quarter, the pipeline is now being hooked up at
25 both ends ready for commissioning. We completed development drilling on -- I’m sorry, water injection well on the Blane Oil Field and Chinguetti well work over and commenced drilling the first of two additional infill wells on that field and probably it will be hooked up in the next few days. On the exploration and appraisal front, we drilled six explorations wells with the discovery in
30 onshore Angola at Coco-1. We talked about that in separate releases, but we do plan further evaluation work, possibly including testing of that well in the early 2009 timeframe because it takes some time to get a spread on site and equipment into Angola. We also drilled three appraisal wells in Perth Basin and Mauritania, and we acquired two 3D seismic surveys in Mauritania and
35 the Perth Basin. The HSE performance was good again. The Total Recordable Incident Rate was good compared to the Australian industries, approximately half of what we’re seeing in Australia, and it’s still under the international standards for that. So moving over to Slide 4 coming to the financial results. I guess the key numbers here obviously sales revenue of
40 180 million. That was up substantially on the prior year primarily, as a result of the oil price improvement as you would realise. The $102.55 we have reached for the first half at a 6% discount to Brent across our spread of crude. And I’ve got a slide a little later to show you how those prices range. That generated a trading profit of 101 million, but we recorded a net loss after tax
45 of 121 million for the first half. And the two big numbers in there to acknowledge are the exploration expense of 65.3 million and the hedging expense of 142.4 million before tax, both of those numbers. And over that 142, we have around 120 million, these unrealised loss in relation to our hedge books as a result of the increase in the forward curve from December when it was -- and the spot was in the 95, I think, dollar range through to the middle of -- or the end of June when we’re up in the 140s at the spot right price for Brent. So a big part of that net loss is the hedging expense. We had -- when we take out a couple of those items being the hedging loss and also
5 a reversal of the -- an impairment, I’m sorry, the benefit of a reversal of an impairment, we end up with a normalized loss of 13.3 million after tax, and that again includes that exploration expense. We have a net debt of 109 million with a syndicate of banks. We have a debt of 133 million, which is within the limits that we have there and expect to be paid back over the next
10 couple of years. Probably, the most important number is the net operating cash flow, 86.1 million for the half-year. And that is -- continues the good performance from the second half of last year and it’s up substantially on the first half of last year. And, again, this is probably the number to focus on when you come back and look at where ROC's share price is trading. We are
15 at a significantly small multiple of cash flow at the moment. Finally, the last point there, 102.8 million on exploration and development, 72 on exploration and 30 on development, and we will talk a little bit to where that was spent in the next couple of slides. The key financial results summary. Probably the bottom two numbers or bottom three -- two, sorry, second and third last
20 numbers, the ones that you guys primarily focus on as analysts. The amortisation, $27.31 and the production cost of $9.18 per barrel are pretty much in line with what we have been talking about in the last few -- last 12 months, and that’s off the realised price of $102 a barrel. So you can see there’s a very large trading profit margin here. We do have some hedging
25 costs coming through in relation to the hedge book at $70 a barrel to take some of that margin away, but generally, it’s a big trading margin that we’re operating in at the moment. Going over the page to the production profile, you can see now we have -- we actually have six fields in five different jurisdictions producing there with Zhao Dong and C&D combined in this slide.
30 Everything around 10,000 for the first half, this is shown quarterly and the remaining reserves at the half-year of 9.5 million. You can see that getting up towards 50% of the reserves are in Zhao Dong and Cliff Head, Blane and Enoch spread fairly evenly amongst the others. Just on sales volume and stock on Slide 7, you can see there the sales volume were slightly down on
35 the production volumes in the first half and the stock overlift or the underlift position, I should say, is about 0.25 million barrels at the half-year. So we have 0.25 million barrels yet to be sold in stock as we roll into the second half, and we would anticipate having some inventory at the end of the year as shown there. On Slide 8, you'll see the realised pricing. Again, showing the
40 five areas that we're selling in and the pricing. The one -- most of our crude sales is pretty close to our Brent oil price except in Zhao Dong where it’s a heavier crude oil selling more keen to Duri, a slight premium to Duri. And you can see the average that we realized across that period was about a 6% discount to Brent. The next -- Slide 9 just summarises our hedging position. I
45 might not have talked pretty much to this other than it's unchanged. We have about 2.5 million barrels remaining in the hedge book that’s about 13% of our 2P reserves and that’s out of Brent's swap price of $70.10. Just going over the page in 10, Slide 10, you can see the hedge accounting treatment here. And I guess, I won't go into the detail here, the hedge accounting treatment other than we mark to market our hedge book at each six-month period and at the end of each reporting year. We do have a liability at our hedge book of about 174 million as it stands at the end of June. That’s in relation to a forward curve that was priced around 140 something dollars spot price. We
5 have an unrealised derivative loss that’s been booked in the P&L of 120 million before tax. Interestingly, I think that number would have reduced to buy about 53 million if we'd use the forward curve other than today. So you can see, that hedge book in the mark to market nature, the hedge book causes a lot of volatility in the P&L, and that will continue in future reporting
10 periods. I don’t apologize for that, it's just where the orders and the accounting standards take us in terms of being able to not record those derivative book as a hedge, but rather have the mark to market each period. Slide 11 just shows you the debt position. The net debt is -- the end of the period. Slide 12, going over there, shows you where the exploration has
15 been extended and you will see that in the last 3-1/2 years, the last year and a half, the majority of exploration has been in Angola. We are right now drilling our last well of the Seven-Well Exploration Program. Arroz-1, a pre-salt target, and that will be the last well in the program as we currently planned on and it's successful and there's a desire to drill more on that
20 structure. So we will be coming off the level of activity in Angola over the next -- next month or two following the appraisal work on Massambala. So you'll see these numbers come down as we go into 2009. On the development expenditure, you will see these numbers pretty much continuous with Zhao Dong over the next 12 months as we complete the incremental development
25 plan facilities and the C4 facilities there. Obviously, Blane, that water injection well is finished now and you'll see some costs coming through for Mauritania in relation to the drilling over the year at third quarter and possibly into the fourth quarter of those two development wells. Moving on to Slide 14, P&L. At that note, there’s much to add to this -- on this slide. You can
30 see the sales revenue continuing to grow through the last three quarters. The trading profits have grown to $101 million. But again, the exploration expense and that -- and the derivative loss is driving our profit out to tax at the moment. You can see that we have an unrealized gain or unrealized loss in our balance sheet of 119 million now sitting -- and I think that’s an after tax
35 number. Yeah, that’s an after tax number there. And the normalized net profit after tax is 13.3 with the 65 million of exploration expense, you know. I won’t dwell on the balance sheet other than to highlight that derivative liability that’s growing from 58.6 at the end of the year 176.4. The interest bearing debts stayed pretty much the same and total equity is reduced largely by the
40 effect of that hedging derivative going up with the liability. Cash flow, you'll see here that we've generated a cash flow of 86 million for the half year. It goes on the back of 90 in the second half of last year on slightly higher volumes and lower price. We are now paying a little bit of tax in some of our jurisdiction so that that will stay pretty much at that proportion as we go into
45 the second half of this year. And again, that’s a very strong multiple in terms of enterprise value and the share price as it stands which brings me on the Slide 17. We currently calculate our Enterprise Value, the cash flow multiple to be in the order of 2.5 around the $1.11 share price it stands and the net debt we hold. And we are anticipating production to be -- remain in the 10,000 barrels of oil equivalent per day through the 2009 and 2010. In 2009, with the additional C4 production from Zhao Dong and in 2010 as we, later in the year, we plan to bring on the Beibu Gulf development. That’s the end of the material on the financials. What I'd like to talk to now is just briefly come
5 back to ROC and Anzon, the Anzon merger and takeover. You've been aware that we have a scheme of arrangement going to the vote of shareholders in Anzon Energy Limited. That’s the 53% hold or parent of Anzon Australia Limited. That’s going on the 3rd of September, next week, to a vote of shareholders there. If that’s successful, we’ll merge -- ROC will
10 merge with Anzon Energy Limited and hold 53% equity in Anzon. Simultaneous with that, we are -- we have made a takeover offer to Anzon Australia shareholders to acquire the remaining 47% shares in AZA. If we are successful in completing that transaction, we will effectively create a new mid-cap company in Australia with a very much Australia and Chinese production
15 asset base and an exploration portfolio in Africa or Australia or in Asia. We had 47 million barrels of 2P reserves with significant upside potential in that BMG project in the 3P and also in China or in Beibu Gulf then in Zhao Dong in our 3P reserves there. It will have a strong operating cash flow. We’ll have development upside in the near term in BMG and in Beibu Gulf, and we’ll also
20 have what I believe to be a strong management and operating team based largely on the ROC people, but also bringing on board the Anzon Operations Team. Just over to Slide 20, you all have seen last week that Anzon released its updated reserves report. That has been reviewed by RISC as an independent review. That reserves report really concluded that Anzon has 2P
25 remaining reserves that were slightly above the numbers that ROC has reported in the scheme book and the takeover document that we have issued, probably on a value basis of the order of 5% to 10% higher than ROC's numbers. And we are comfortable with these than the reserves that are being put out by Anzon. We believe that they’re more in line with what we
30 think. We see a significant upside in the 3P, but at the 2P level, we believe the numbers that are reported are appropriate. Just finally on the transaction that’s off with Anzon, some of the key dates you should be aware of on Slide 21, the next couple of key dates. We passed the Bidder's Statement going out to Anzon shareholders. We are now coming up to the AEL Shareholder
35 Meeting to vote on that scheme of arrangement. If that’s successful, then we’ll go through the court hearing process for approval immediately following that. And then once we have AEL merged with ROC, we will then be looking to the takeover and that takeover will close -- takeover offer closes on the 6th of October, and we’re scheduled to close on the 6th of October. Just going
40 over then to Slide 22 and 23. On 22 we have the combined assets of the two companies if the takeover is successful adding to ROC's production assets in the North Sea and Mauritania, China or in Australia, we’ll add the BMG Project in Bass Strait. We'll also add some exploration upside in Bass Strait and in New Zealand together with our African exploration portfolio and
45 opportunities in Australia we have in Perth Basin. Slide 23 shows what the merged production profile is forecasted to look like. It shows some ranges for the base case ROC, and then adding on top of that, the Anzon production profile going on top of that. And you can see that in the period after 2010, immediately after BMG coming on, we would anticipate the production will be up around the 20,000 barrels of oil equivalent per day which is about twice what ROC is doing today. So it will add substantially to our production in the near term, but double it by the year 2011 if the development procedure is planned. And importantly, that will be a really strong cash flow generator and
5 a significant growth opportunity for the company going into that period. Slide 24 and 25 show -- first the 24 shows the map over the BMG Project. There were the fields in the Basker Manta Gummy. It also shows up in the top right and northeast corner of the Chimaera prospect. On that slide, it shows some blue -- in blue some wells that are planned to be drilled over the next 12
10 months with the drilling program that Anzon has announced, starting later this year, early next year. And you can see there’s a Chimaera well in there. There are additional development wells in Basker and in Manta, and a deeper well that we’ll drill into the Golden Beach or the Gummy gas field. The Slide 25 shows the existing development, how it’s producing today with Basker 6
15 hooked in. And Slide 26 goes over and shows in a more schematic view the proposed final development. And it’s -- the new FPSO has been announced or the heads of agreement or the letter of intent, I should say, has been signed in relation to that new FPSO and the rig coming in is coming in to start drilling development wells later this year or early 2009. You can see here that
20 the FPSO will be stand-alone other than a gas pipeline to shore hooked into the eastern pipeline up in the New South Wales, the gas pipeline there, and be separate from the Patricia Baleen facilities. And in fact, all of the gas processing and gas compression will be on board the FPSO. They’ll be minimal footprint onshore as it comes into the pipeline. That development will
25 be a significant project for ROC over the next two years. It’s very important to get it done and get it up and producing, delivering production rates -- oil production rates up to 20,000 barrels a day gross and up to about 100 million cubic feet a day of gas production. Now on Slide 27, just coming down to what's happening in the future, the near future in terms of drilling, you can
30 see we combined the two here to show the Anzon development drilling going in here with BMG starting up in the fourth quarter. In addition to that we show Arroz being drilled through to the end of the third quarter. We have the Massambala appraisal wells starting up in the third quarter and rolling into the fourth quarter in Angola, as well as obviously, those two development wells in
35 Mauritania. And in China, I think it’s important to know that the Zhao Dong project, we will have continuous development drilling there outside of the winter period. As you can see, across the winter period, we take a break. We'll be continuously drilling there for three or four years to come to drill up all of the targets that we have planned in that development project. Just
40 quickly going back and touching on ROC's assets not including the Anzon-BMG Project, just to give you an update on what's going on. Cliff Head is producing -- produced about 7300 barrels a day in the first half. It’s continuing to produce close to 7000 barrels a day as we move into the second half. It’s producing at the upside -- upper end of our expectation in
45 terms of the reserves and going very well operationally. No LTIs and no environmental incidence in the operations there. We do have some workovers planned there to -- in fact, their due to happen now in the second half of the year to replace a couple of the pumps. They were endeavoring to replace pumps with larger pumps in two of the wells to increase the rates from those wells. In China, wherein, as I said, in Zhao Dong in the north and in the Beibu Gulf in a joint venture there in a 40% in the 22/12 block. Just over on Slide 30, up in Zhao Dong, production was around 18,000 barrels a day for the first half of the year average. During June, we brought on the first
5 of the development wells there for this year and brought the rate back up to just on 20,000 barrels a day. As we’ve shown in previous slides, this field is on continuous decline and we are continuing drilling on it and plan to do so over the next three or four years to -- we endeavor to maintain that rate at 20,000 barrels a day. We’re also bringing on -- and Slide 31 shows a good
10 schematic of this. The new C4 facilities, the development work is well -- is progressing well on that, which provides us with a capacity to drill both intothe C4 field and what we call the extended reach area in the Zhao Dong block that is beyond the reach of the existing platform. You can see in that schematic, we’ve put in those two platforms that are about 4.5 kilometers
15 from the existing facilities. We’ve now laid the pipeline and tied it in at both ends and commissioning work will be in progress over the next few weeks with the aim of bringing that pipeline on and commencing production in the fourth quarter of this year from C4 and the extended reach area. We’ve actually drilled eight wells or parts of eight wells that drove the top poles of
20 the number of wells in the reservoir section on a couple of those wells now, or the aim is to have those wells online and available when we start producing the fourth quarter. The host platform facilities at Zhao Dong are being expanded there. We’ve installed all the piling for two platforms and additional drilling platform to go out in the fourth quarter or late in the third quarter to
25 provide us with additional well slots to drill over the next few years, and then a smaller production to add to the capacity there primarily in relation to water handling to bring the platform capacity up and allow us to produce greater volumes of fluid through the facilities. That platform is due to go in probably at the end of the end of the first quarter, early second quarter next year.
30 Going on to Slide 32, in Block 22/12, this project is moving ahead. We are aiming to have the 6-12 South development approved together with the 12-8 West development approved by the Chinese government at the end of this quarter with a view to having the FID in place with the joint venture by year-end to have a development commence here in 2009 aiming for first oil in --
35 towards the end of 2010. Not shown here, but this has the potential to bring onto ROC's books an additional 5 million barrels of oil as 2P reserves once those projects are approved for development. Down on Enoch, this is a -- on Slide 33, continues to produce well the upper end of expectation, although we’ve got a 12% interest in it, it’s doing very well. Second half the year is
40 focused on maintaining that production, although we’ll add that there is a shutdown, a scheduled shutdown that it’s actually happening right the same for three weeks in the third quarter of the year that we will see rough production. But the field is producing well on pretty much at the upper end of our expectation. On the Blane Field, again, same story here. We’ve had
45 good production on Blane, although we did have some shutdowns in the first half due to industrial dispute and downtime activities. Last year, this was 1835 barrels of oil a day for the first half of the year pretty much as forecast or was slightly above our forecast and operating to the expectation. The water injection well has been drilled there and has been now brought online. Going then over to exploration and talk a little bit about Cabinda in Angola, we’ve -- we are now drilling our seventh well -- exploration well in the program. Six wells are drilled to date, three post-salt and three pre-salt. The Coco well in the pre-salt has -- was a discovery well for us. We were unable to test that
5 well on a DST across two zones we attempted to test, but down hole constraints. Effectively, we had -- we went to screening for sand and the sand killed the lower test. With the fractured carbonate, we put a lot of drilling mud into the upper test and that came back to us and killed the oil as well. So what we’re planning to do here is look to test that oil probably in the 2009
10 timeframe given that we have to get equipment into the country and get organized for that. So the Arroz well we’re drilling now will be the last well in the program and we’ll shut that rig down after we finished Arroz unless we have success and we want to drill an appraisal well on that. So you will see exploration levels reducing Angola as we’re going to the second half. The
15 other thing -- the other part of the exploration program there is the Massambala appraisal well where we plan to drill up to six wells depending on the results of the initial wells. We probably won't drill all six, but we could drill up to six appraisal wells on that. That’s about 500-meter deep, so it’s not high cost wells, they’re shallow appraisal wells to delineate the field and give
20 us some indication of size ahead of potentially testing that in 2009. Mauritania, I would not dwell on this. We have a 2% to 5.5% interest here. There has been some drilling in -- on the Banda Field. And there was a Khop exploration well also drilled in the first half. The Banda appraisal pretty much concern the mapping of the structures as it’s seen. And in the second half,
25 we are focusing now with the rig on development drilling on Chinguetti with two infill wells bring drilled. The first of which is due to be hooked up pretty much in the next few days. We do see, then on Slide 37, continuing high activity levels, particularly on development work in the portfolio and on exploration in Angola. We are reviewing our position in Australia or in the
30 Perth Basin, in particular, in relation to the program. We’ve drilled there earlier this year with Frankland and Dunsborough appraisal wells producing relatively disappointing results. We have the 3D seismic there and we are looking at opportunities around those discovered fields to hopefully expand the resource base and get to a development for sufficient reserves for
35 development. Obviously in Beibu Gulf, that development is important to us and we are looking to get that approval in place by the end of the year. That would add about 5 million barrels to ROC's reserve base. And in Angola, the Arroz as well is important to us as well in terms of exploration potential there. And the outlook in the last slide on Slide 38, we’re aiming to do 10,000
40 barrels of oil equivalent for the year and that will be supplemented in the fourth quarter with the C4 and extended reach areas in Zhao Dong coming on. We do have an exploration program that we will finish with Arroz and the Massambala drilling in the third and probably early in the fourth quarter. Those developments, I mentioned in China, are continuing. There is -- you
45 should expect lower exploration expenditures in the second half and going into the 2009. At this stage, our committed program for the next year is much smaller than this year's program, and the key areas will be really testing of Coco in Angola or in the near term. Looking up, as I said, Beibu Gulf getting there up to development approval and also focusing on the Perth Basin, both up around the Cliff Head or north of Cliff Head area and down in about (Blane) where we will probably be acquiring size. And obviously, the near term focus is to the complete the Anzon transaction, which we see is an important step in ROC's growth and we see as being key asset in the
5 portfolio. So at that point, I might leave it there and come back and ask you if you have any questions on the presentation and take it from there.
BRR Thank you, ladies and gentlemen. We will now begin the question and answer session. As a reminder, if you have a question, please press the star followed by 1 on your touchtone phone. If you would like to withdraw your
10 question, please press star followed by the 2. If you are using speaker equipment you will need to lift the handset before making a selection. The first question comes from Mr. Gordon Ramsey of UBS. Please go ahead, Mr. Ramsey.
UBS Hi, Bruce. Just a quick question on drilling going forward on Slide 27, I’m just
15 trying to work out how many exploration wells you will drill in the second half of this year and in 2009. In Africa, there’s two wells listed. I don’t know if they’re exploration and also two wells -- in the Carnarvon potentially in '09. Are they exploration wells?
ROC In Mauritania, those two Chinguetti wells are development wells. They’re the
20 infill development wells in C19 and C20 to be drilled -- one is nearly finished now and the other one we’re running through into the fourth quarter. We have the Massambala appraisal where we will drill up to six appraisal wells, but they’re only 500 meters deep and really only delineation wells. We will finish the Arroz well in Angola. We’re drilling at the moment. And that is
25 really the exploration drilling plan for this year except in relation to -- I’m sorry…
UBS I’m sorry, with 2009 as well?
ROC I’m sorry, my apologies. In 2009, they’re a -- we’ve got two wells in there, but they’re not firm in Mauritania. That’s for sure. The joint venture hasn’t
30 approved those and they’re -- we’re carrying two as preliminary indication of what will be drilled there. There are more development wells, sorry, in 2009 ini Chinguetti. I was focusing on the second half of this year. So that -- and there will be a well -- there is a well planned to be re drilled in Ecuador or Guinea. We are in the throes of arbitrating with some pioneer in relation to be
35 affirmed obligations for that well. That’s the ELISA well. There is a -- we do have a tentative rig slot available to it, but we need to come to some agreement with Pioneer in terms of that oil or their funding of the well will promote on that well which could be drilled. It’s shown here early in the first quarter, but it may slip during the year depending on how this arbitration, how
40 quickly it goes.
UBS Okay. Just from my viewpoint, I’ll just say it’s a fairly significant reduction in exploration drilling activity second half of this year and next year. And I know the focus is on development and keeping the production at 10,000 barrels a day. Is that fair?
45
ROC That’s true. We’ve had a -- we’ve gone through in the last 12 months a very large exploration program in three key areas -- in China, Perth Basin and Angola. We’ve got a lot of results from that. We’ve got a fair bit of seismic we’ve acquired that we need to digest now and come back to what’s our thinking going to be here. We’re not showing anything firm in Australia out in the 2009 period, although we are showing a potential two well program out there. And in particular, the Perth Basin, we do need to evaluate what we’ve got there around the Cliff Head area and also acquire some seismic in
5 planning. So it’s a -- we’ll go through a period really of building or reviewing and reevaluating the data we have and where we’re going. Also, we’re not showing in here the Coco test that we would anticipate doing in 2009 at some stage.
UBS Okay. Just last question. On the reserves at Basker Manta, when would you
10 be booking those? On commitment to the FPSO or won't you actually enter into things like gas contracts for the gas reserves -- gas and condensate?
ROC Gordon, I will answer that specifically at this stage, although we will say that the Anzon view of that is that they can -- those reserves -- the gas reserves now has 2P reserves. And in fact, that’s how they reflect it in their report.
15 That has been reviewed by RISC on the basis that facilities are there and there is a gas market into which they can sell that gas or we’re at a spot market without a gas contract. From our perspective, we would consider those. And certainly the oil reserves is bookable now because there is a development plan, there is a commitment to rig and an LOI that’s just subject
20 to a contract for the FPSO. So the oil is fine. From a gas perspective, I think I'd need to put my head on and go back to my reservoir with my cheap reservoir engineer concerned. That we'd be happy to book those gas reserves -- gas resources of reserves at this point.
UBS Okay. Thank you.
25
BRR The next question comes from (Mr. Ian Ben) of JP Morgan. Please go ahead, Mr. Ben.
JPM Hi, good day. It’s (Dean Wilson). Hi, Bruce and Anthony. Just a quick question on the PRT expense you reported. Can we assume that PRT
30 expanse is all --deferred tax not current or cash component of that PRT expense?
ROC That’s correct, Ben. It is deferred at this point. We still are carrying PRT losses in the group. And I think we're -- based on current oil prices, it will be late in 2009 or early 2010 before we hit any PRT cash liability.
35 JPM Okay. Secondly, on your hedge book, I know there have been no changes to your hedge book over the period. We’re seeing a couple -- your fees indicated that one has support at its component with hedge book and another one that’s announced that it’s intending to. Is ROC of a mind to look to undertake this or you’re just happy to ride out that hedge book?
40 ROC We have been happy to ride out that hedge book as such. And I did note that one of our fees actually may have brought out the hedge book at -- something -- significantly high than the current forward curve. Look, our view on that is to take out the hedge book is hedging in itself because you’re taking a view on the forward price for oil at that point in time. It will be a cash transaction to
45 settle it. We said we put the hedges in place in relation to Zhao Dong. As you may recall we acquired that asset and we were comfortable with it then. And I’m comfortable with what we did because we needed to do it because of the way we were funding that asset. We continually review it and we’ll look to see if there’s something we can do particularly post-Anzon in relation to our hedge book whether we can take it out or not is another question because it is a cash -- there is quite a bit of cash involved in settling that hedge book.
JPM Now, that’s probably -- I tend to agree with you, Bruce. Lastly, I don’t know whether you’re prepared to comment on this, but to the best of your
5 knowledge regarding the development plans of BMG that Anzon indicated, are you aware that this is full JV sort of support of the development as it was proposed by Anzon?
ROC Yes, as I understand this. And I have not specifically spoken to the joint venture partners in that, but as I understand it, it was approved at the joint
10 venture level and there is support for the FPSO and drilling program that’s coming up. And it’s certainly very much value that created that project that led substantially to it.
JPM Okay. Thanks very much, guys.
BRR I would like to advise there are no further questions.
15
ROC Okay. Look, thank you everyone for walking in and listening today. I think we'll probably catch up with a few of you over the next few days. But if you certainly have any questions and you need to follow up, please feel free to call Anthony or myself in relation to the results or Matthew Gerber. I should
20 have introduced Matthew Gerber, he’s with me here today. I apologize at the beginning I didn’t introduced Matthew who's come on board as our Investor Relations man in ROC now. He joined us nearly two weeks ago. Just over two weeks ago so he's fully (okay) with the company. But Matthew is here now, and feel free to contact Matthew or myself or Anthony on the results.
25 Thank you very much. I don’t have anymore, so we will finish there.
INTERVIEW CONCLUDED
Contact brr@brr.com.au for more information
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