the roc survival kit, page-22

As at 31/12/07 ROC had 21.4 mmboe net 2P Reserves. Production during 1st Half 08 was 1.9 mmboe leaving an estimated 19.5 mmboe resrve as at 30 June 2008.

The cpmpanies remaining hedges as at 30 June 2008 was:

Year....Volume

2008.....567,497
2009.....851,998
2010.....686,994
2011.....455,997

Total ...2,562,486 @ $70.10 per barrell.

The reserves under hedge represents 13.14% of total 2P Reserves as at 30 June 2008.

Note 6.5 of ROC's June Quarterly Report states that the mark to market valuation of these hedges will result in a total liability of $176.4M with an additional $120M unrealised loss been charged in the income statement to 30 June 2008.

I expect the $120M charge relates to the increase in liability of the outstanding 2.6mmboe hedge as a result of the price of oil rising from around US$90 a barrel as at 31 dec 07 to around US$140 a barrel as at 30 June 2008.

The total liability of $176.4 M relates to the difference of about $69 a barrel from oil prices as at 30 June compared to when the hedge was original taken out in 2006.

However, it should be pointed out that this represents only 13% of ROC's reserves and future production. It is recognising 100% of the loss of the 2.6 mmboe hedges now and leaving 100% of the extra revenue on the 19.4 mmboe future production for future income periods. A very conservative stance.

Unfortunately, at todays date with oil at US$114 a barrel, the hedge liability has already reduced substantally.

It a bit like recognising an expense for an airfare this week because you may win the lottery next week and have to fly to another city to collect your winnings.

Regards

SP