Not sure of the specific terms for this particular acerage. However, if the terms are the same as for Beibu Gulf, then when PetroChina farms into the acerage they will need to refund the existing partners PetroChina's share of past exploration expenditures with the refund coming out of any developments future cash flows.
Macquarie Equities have made the following comments regarding this new acerage:
" Previous drilling success is encouraging: PetroChina has drilled 12 wells in the 2 blocks, with 8 recording hydrocarbon shows. Importantly three wells recorded commercial discoveries (with the remainder deemed uncommercial). ROC expects to drill 2 appraisal wells in the Zhanghai block over the next 2 years (including one well planned for 3Q11). Drilling of the first appraisal well will add 0.6mmbbls of 2P reserves to Zhao Dong (or 0.2mmbbls net to ROC following PetroChina;s back-in for a 51% interest). While this only represents a ~3% upgrade to ROC?s net Zhao Dong C&D and C4 reserves we expect further reserves additions as other discoveries are appraised."
Regards
SP
ROC Price at posting:
41.0¢ Sentiment: Hold Disclosure: Held
