roc in a hard place, page-7

Extract from PSA's AGM:

"Petsec Energy owns a 25% working interest in five oil fields covered by development areas in Block 22/12, Beibu Gulf, China, representing 10.6 to 31 million barrels of oil. Three of these fields, 6-12, 6-12 South and 12-8 West hold 27.2 to 52 million barrels of recoverable oil and have been subject to a feasibility study conducted by CNOOC and the JV which supports the lodgement of an overall development plan (ODP) in June, expected approval in September, a final investment decision in the second half of 2009, with a start of development in the fourth quarter of 2009 and first production in early 2011.

The fields had been declared commercial in February 2007, and studies using a floating production storage and offloading vessel (FPSO) were progressed as CNOOC (China National Offshore Oil Corporation) stated it had no excess capacity in its nearby 12-1-1 processing platform. In September 2008, due to the number of exploration successes CNOOC had enjoyed to the north west of our block, CNOOC proposed that the development of a shared processing platform and pipeline to Weizhou Island may be the best economic outcome for all parties. CNOOC in concert with the JV commenced a feasibility study which was completed last month.

Even though oil prices have collapsed, so too have costs of steel, construction and services. The estimated capex of US$200 million in February 2007 to construct two well head platforms, drill 11 wells and connect by pipeline to a processing facility for this development of initial production rates of 14,500 barrels of oil per day, rose to US$450 million by June 2008. Petsec estimates that in the current environment, the development cost is of the order of US$150 to US$200 million, which should accommodate an economic development at oil prices of US$40/bbl.

It is our expectation that CNOOC will participate to its full 51% right of back-in interest which would reduce Petsec Energy’s net interest to 12.25%. The Company would receive its past expenditure of some US$28 million out of 62.5% of CNOOC’s future cashflow."

ROC has a 40% interest in this block reducable to 20%. Consequently, ROC's share of development costs should amount to US$30 to US$40 million if the above estimates remain accurate.

Repeat the above quoted timetable:

lodgement of an overall development plan (ODP) in June, expected approval in September, a final investment decision in the second half of 2009, with a start of development in the fourth quarter of 2009 and first production in early 2011.

Question: jbmurc What makes you think the capiyal raising will be anytime soon? I would have thought that ROC would defer such a raising until the share price is higher,

Regards

SP