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http://today.reuters.com/investing/financeArticle.aspx?type=mergersNews&storyID=2006-06-27T032207Z_01_SYD5602_RTRIDST_0_ENERGY-AUSTRALIA-ROC-UPDATE-2.XML

SYDNEY, June 27 (Reuters) - Australian oil producer Roc Oil Ltd. (ROC.AX: Quote, Profile, Research) said on Tuesday it would buy the Chinese assets of Apache Corp. (APA.N: Quote, Profile, Research) for A$354 million ($260 million) in cash, sending its shares higher.

Using a 12-month loan provided by the Commonwealth Bank of Australia (CBA.AX: Quote, Profile, Research), Roc will buy Apache's Chinese subsidiary and become operator of its Zhao Dong block in the Bohai Bay, offshore eastern China, with a 24.5 percent interest.

In the Zhao Dong block, PetroChina Co. Ltd. (0857.HK: Quote, Profile, Research) (PTR.N: Quote, Profile, Research) holds a 51 percent stake and New XCL-China LLC has the remaining 24.5 percent interest -- which sources have told Reuters has also been put up for sale.

Roc's shares opened up 2.6 percent and were last traded 3.4 percent higher at A$3.93, outperforming the ASX/200 energy sub-index <.AXEJ> which rose 1.85 percent.

Sources told Reuters earlier this month that Apache was considering selling its stake in Zhao Dong to reinforce investment elsewhere.

The Zhao Dong block contains two producing fields with output of around 30,000 barrels of oil per day (bpd) and part of a third field which is due online by 2008.

Proved and probable remaining reserves are approximately 61 million barrels of oil, of which Roc would acquire 15 million barrels, doubling its existing reserves.

"The transaction is a great example of the efficiency of the industry food chain," said Roc's Chief Executive John Doran. "For Apache, with its 2 billion barrels of proved reserves, the asset may have become less material."

"For Roc, a much smaller company, the transaction will provide a substantial boost to its reserve and production trajectory."

The acquisition increases Roc's oil production by more than 150 percent to 12,000 bpd, and means the company now operates around 40,000 bpd offshore Australia and China.

Roc, which is currently debt free, will have a debt to total asset ratio in the order of 50 percent and debt to market capitalisation ratio in the order of 40 percent upon completion of the deal in the second half of this year, the statement said.

Roc is the operator of the Cliff Head oilfield off Western Australia, which began production earlier this year, and of acreage in the Chinese Beibu Gulf where it discovered oil in May.