Rocksource Awarded 9 Gulf Of Mexico Leases

Tuesday, Sep 22, 2009

Rocksource ASA announces that the company, through its subsidiary Rocksource Gulf of Mexico Corporation (RGOM), has been awarded nine leases in the Western Gulf of Mexico Lease Sale 210. The leases represent significant additions to the portfolio already acquired by Rocksource under a farm-in agreement announced in August, and underline the company’s ambitions in the Gulf of Mexico (GoM).

The leases awarded contain both previously discovered oil (the Trident field) and significant exploration potential. Rocksource estimates that the awarded leases will add exploration potential of approximately 70 million barrels of oil equivalents (mmboe) net risked resources. In addition, the awards include the Trident discovery, which the previous operator (Unocal/Chevron) estimated to contain in excess of 100 million barrels of discovered resources. Rocksource will release its own resource estimate upon further evaluation.

The leases awarded are in the Western Gulf of Mexico, in the Alaminos Canyon and East Breaks area.

CEO Trygve Pedersen commented: “We are very pleased to announce these additions to our Gulf of Mexico portfolio. Following these awards we have established a significant presence in the Gulf within a short time frame. We are now in a position to high grade a portfolio of low risk, short to medium term drilling opportunities in the Gulf of Mexico. In addition, with the award of the Trident field, we have been given the opportunity to complete further technical review of the discovery to get a better understanding of its commercial potential.”

Located on Alaminos Canyon, Trident was discovered in July 2001 by Unocal. Three wells were drilled on the acreage, all of which encountered hydrocarbons, but the project was never sanctioned for development. Unocal merged with Chevron in 2005, and in 2008 the operator Chevron returned the leases at the expiry of the primary lease term.

RGOM will act as lease Operator and will have 100% equity in the new leases. Total cost for the nine lease awards is approximately USD 3.8 million. The leases have a ten year lease period, and no further work programme commitments. Rocksource will now test the prospectivity, and delineate the discovered resources using its proprietary electromagnetic (EM) technology to develop a high graded portfolio from which short to medium term drilling candidates will be selected. The high equity level gives commercial flexibility for optimising the forward plan for exploration.

The leases have formally been awarded to Rocksource’s GoM partner, Focus Exploration LLC (Focus), but will be transferred to RGOM following the approval of RGOM as a lease holder by the United States Minerals Management Service (MMS). A formal approval is expected shortly.

The agreement between Focus and RGOM also includes further leases that were bid for in the Western Gulf of Mexico Lease Sale 210. Focus is the apparent high bidder, but the final decision for award or not from the MMS is still pending.

Rocksource’s entry into the GoM was announced in August 2009, following a strategic decision to extend the company’s ‘EM led’ exploration strategy. Through an agreement with Focus, Rocksource gained access to a portfolio of eight leases of which several contained EM positive prospects. Following today’s announcement Rocksource’s number of leases in the GoM has increased to 17. The strategic rationale behind the GoM portfolio build-up is to accelerate the growth of the company and to diversify the company’s offshore portfolio with an aim to mature short to medium term drilling and production opportunities in one of the world’s major petroleum provinces.

Rocksource’s overall exploration portfolio includes positions in Norway, UK, West Africa, India and GoM. The company’s net risked resources are estimated at approximately 850 mmboe. Rocksource expects to embark on its drilling programme shortly, and aims to test more than half of its current exploration potential over the next 2-3 years.

Source: Rocksource