ROC acquires option over 26%

Roc Oil Company Limited
30 December 2004


30 December 2004


                         ROC OIL COMPANY LIMITED ('ROC')

                            STOCK EXCHANGE RELEASE

             ROC ACQUIRES OPTION OVER 26% OF PRODUCING OILFIELD IN
                                  UK NORTH SEA

KEY POINTS

• ROC has entered into an agreement with a privately-owned
British oil company, Acorn Oil & Gas Limited ('AOG'), whereby it will be
entitled to acquire up to 26% direct equity in the Ardmore Oil Field and
surrounding acreage in the UK North Sea ('the Assets'). The interest will be
provided by AOG's wholly-owned subsidiary, Acorn North Sea Limited ('ANSL'),
which presently has a 35% interest in the Assets. Within the area of interest
around Ardmore, which is currently producing about 8,000 BOPD, are two small
abandoned oil fields with redevelopment potential; a small undeveloped oil
discovery and several undrilled prospects and leads with a collective unrisked
reserve potential in excess of 60 MMBO.

• The consideration provided by ROC is threefold: payment of
£750,000 to acquire 75% of the a £15MM senior secured debt facility provided to
ANSL; an undertaking to provide senior secured debt to ANSL equivalent to 75% of
that company's future Joint Venture cash calls and a payment of an effective
option exercise fee up to £1.9MM if/when ROC converts the loan into direct
equity in the Assets. If ROC exercises its option to convert its loan to equity
according to the presently envisaged schedule, it will book its net share of
Ardmore's remaining recoverable reserves and associated production revenue
during 2Q 2005.

• In 1975, the Ardmore Oil Field, then known as the Argyll Field,
was the first UK North Sea oil field to be brought onto production. After
producing 73 MMBO and being abandoned in 1992 the field was redeveloped by ANSL
and another privately-owned UK oil company in late-2003. Since then the field
has produced about 4 MMBO. Currently, the field is subject to a continuous
development drilling and workover programme designed to increase gross Joint
Venture production to a high in excess of 12,000 BOPD during 2H2005. As at
January 2004, the field's total initial in-place oil was independently
calculated to approximate to 300 MMBO of which 77 MMBO (26%) has now been
produced.

• Remaining recoverable oil at the Ardmore Field has been
independently estimated to be in the order of 23 MMBO. In ROC's opinion, exactly
how much of this remaining oil will be produced economically will depend upon
the results of the current continuous development drilling and workover
programme which will unfold during 2005.

1. TRANSACTION

ANSL holds a 35% working interest in UK North Sea Blocks 30/24a, b, c and d; 30/
25b and 30/29b and c (collectively 'the Blocks') which contain the Ardmore Oil
Field, two small abandoned oilfield, small undeveloped discoveries and several
undrilled prospects and leads (the 'Assets') (Attachment 1).

ROC and AOG have formed a Loan Syndicate ('the Syndicate') to assist ANSL with
its funding obligations in relation to the Assets including the Ardmore
redevelopment. ROC, AOG and one of AOG's key shareholders, a boutique European
investor specialising in the oil and gas sector, have also executed an agreement
the essence of which is:

• ROC and AOG have bought out, for £1.0MM, a £15MM, Senior
Secured Debt Facility provided to ANSL by a previous lender. As part of this
process, ROC has provided a secured loan to ANSL which has entitled it to 75%
participation in the two-company Syndicate. For all practical purposes, this
£750,000 loan is ROC's cost of entry to the deal.

• ROC has also undertaken to provide ANSL secured loans
equivalent to 75% of that company's share of future Joint Venture cash calls.

• At its discretion, prior to the 14th day of continuous oil flow
from the next well to be drilled on the Ardmore Field, ROC can choose to cease
providing further secured loans to meet ANSL's share of future Joint Venture
cash calls and either exit the project with no further obligation or exercise
its entitlement to convert its share of the Syndicate's loan into direct equity
in the Assets.

• If ROC has not exercised its option to convert to direct equity
prior to the 14th day of continuous oil flow from the next well to be drilled in
the Ardmore Field, the option will lapse. It is currently expected that this
14th day will occur during May 2005.

• If ROC decides to convert its share of the Syndicate's loan to
direct equity ownership in the Blocks the level of that interest will be
calculated according to the contribution ROC has made to the Syndicate at that
point of time. If, at the time the option is exercised, ROC's contribution to
the Syndicate's loan funds is less than 75% of total Syndicate loans to ANSL,
ROC is entitled, but not obliged, to increase its contribution to the
Syndicate's funds by up to £1.9MM, plus the value of the cash calls required at
that time, to achieve the 75% level of contribution so that it has the ability
to capture up to 26% equity interest in the Blocks.

The practical effect of the transaction is: ROC has invested £0.75MM (equivalent
to A$1.86 MM/US$1.44MM at current exchange rates) by way of a secured senior
ranking loan; undertaken to pay 26% of future Joint Venture cash calls and to
pay what is, in effect, an option exercise fee of up to £1.9MM, to purchase the
right to acquire a direct interest, up to 26%, in a producing North Sea oil
field and surrounding exploration, appraisal and potential development acreage.

2. THE ARDMORE REDEVELOPMENT

In 1975, the Ardmore Oil Field, then known as the Argyll Field, was the first UK
North Sea oil field to be brought on to production. After producing 73 MMB of
37degrees API oil over 17 years, Ardmore was abandoned in 1992 with a relatively
modest water-cut of 70%, partly due to lack of gas lift facilities and other
facilities' constraints. The field's original development was undertaken without
the benefits of 3D seismic which has since been acquired and reprocessed.

In early 2002, the Blocks were awarded to the current licensees. A Field
Development Plan was approved in late 2002. First oil flowed from the
redeveloped field in September 2003. The field is operated by Tuscan Energy
(Scotland) Limited, a privately-owned UK oil company that holds 65% of the
Assets. Oil production from the redeveloped field is via facilities on the
dedicated jack-up drilling rig Rowan Gorilla VII. By September 2004 the
redeveloped field had produced approximately 4 MMBO of oil. Currently the field
is producing a total of about 8,000 BOPD from two wells.

Original in-place oil reserves at Ardmore have been independently estimated to
be approximately 300 MMBO of which a total of 77 MMBO (26%) has been produced
during the field's two development phases.

An independent estimate suggests that up to 23 MMBO may be recovered by the
Joint Venture. However, at this point in time, ROC has chosen not to predict
exactly how much of Ardmore's remaining oil in-place will ultimately be
classified as recoverable proved and probable reserves. As the continuous
development drilling and workover programme proceeds through 2005 the Company
fully expects that the relevant reserve figures will become a lot clearer.

In January 2005, the Joint Venture plans to workover a third well, which was
drilled as part of the redevelopment programme, with the intention of bringing
it back on to production at a rate in excess of 2,000 BOPD. The Joint Venture is
also expected to drill a fourth redevelopment well which it is hoped will
further increase the field's production by more than 7,000 BOPD by May 2005 to a
high in excess of 12,000 BOPD. Two additional development wells are also being
contemplated for back-to-back drilling from May 2005.

3. IMPACT ON ROC

In total, ROC expects that by the time it is required to decide whether or not
it should exercise its option to convert to direct equity, probably in May 2005,
it will have provided ANSL with secured loans of approximately £4.5MM against
Joint Venture cash calls. If ROC chooses to exercise its option in full, a
further amount, up to a total of £1.9MM, will be loaned by ROC to AOG. The
secured loans provided by ROC will be sourced from internal funds.

Until ROC chooses to convert its loans to equity it will not book any reserves
nor take into account any production from Ardmore. Over the next several months
this will not disadvantage ROC because the active drilling and workover
programme will require the equity participants to reinvest cash flow and to also
invest additional capital to redevelop the field.

It has been agreed that ROC will be an active participant in the Ardmore
redevelopment, notwithstanding the fact that its current involvement is via a
secured loan arrangement rather than equity. Through this arrangement ROC will
be well positioned with respect to the wave of new independents entering the UK
North Sea as that province matures and large multinationals struggle with the
challenges of materiality as new field discoveries tend to be smaller and
established field production rates decline.

3. THE POTENTIAL OF THE AREA AROUND THE ARDMORE FIELD

The potential of the area immediately around the Ardmore Field is intriguing
(Attachment 1).

The presence of the Rowan Gorilla VII jack-up drilling rig with its dedicated
production facilities servicing the Ardmore Field is potentially a very
important part of the region's infrastructure. Not only does the rig offer
potential access to production facilities but there are a number of likely drill
targets can be reached from the rig.

There are two abandoned oilfields within the Blocks. The Dalmore Field, formerly
known as Duncan, and the Innes Field, which are, respectively, 5 km west and 15
km north of Ardmore. The former was abandoned in 1992 after producing 17 MMBO of
38degrees oil from the Jurassic Fulmar Sandstone while the latter was abandoned
in 1991 after production had ceased two years earlier when a storm damaged the
facilities after Innes had produced a total of 6 MMBO of 42degrees API oil from
the Permian Rotliegend. There may be potential for undrained parts of the
Dalmore Field to yield 5 to 10 MMBO. The potential of the Innes Field lies in
the fact that it was producing oil without water when it was abandoned.

There is also a single well oil discovery, Iris, about 10 km southwest of
Ardmore which merits review.

There are also several undrilled prospects and leads within the Blocks including
Ida, Epsilon, Kryptonite and West Innes (Attachment 1). In total, the
independent estimate of the unrisked exploration potential of the Blocks is in
excess of 60 MMBO

There may also be the possibility of third party business if other operators in
the region wish to access the Ardmore facilities, which is within tie-back
distance of most of the key prospects in the region. Interestingly, almost all
the acreage around the Blocks has been licensed during the last two years as a
result of a new wave of independent oil companies entering the North Sea.

CEO's Comments

Commenting on the Ardmore transaction, ROC's Chief Executive Officer, Dr John
Doran stated that:

   • 'In different circumstances it would be tempting to present this deal in
    terms of dollars (or, in this case, cents) per barrel paid to acquire
    producing and partly developed reserves but, in the present context of
    Ardmore, it would be premature to present the transaction in that light.


   • This is an unusual deal that may initially seem to be a little complex.
    In reality, all that has happened is that, because of ROC's extensive
    industry network, flat management structure and strong balance sheet, it has
    been able to move quickly on a short-fused production acquisition deal which
    offered terms that are not often encountered in a world of US$40/BBL oil
    prices. Whether or not it turns out to be a good move will only become
    apparent as the development drilling and workover programme unfolds during
    2005.


   • If the development drilling and workover results are positive, ROC will
    convert its loan to direct equity in the Blocks and book its share of
    Ardmore reserves and take the production revenue to account in 2Q 2005. Such
    an outcome would provide ROC with a well timed production and reserve
    'bridge' between the recent sale of the Saltfleetby Gas Field and the
    expected start-up of production in early 2006 from ROC's oilfields offshore
    Mauritania and Western Australia. Until it chooses to exercise its option,
    ROC is very comfortable with its involvement in the Ardmore Project as a
    Senior Secured Lender that is also an active project participant.


   • ROC first identified the opportunity, in early December 2004 and the
    binding agreement was executed earlier today. You can only achieve that type
    of progress in that type of timeframe when you are dealing with like-minded
    people with a joint ability to focus constructively on getting the
    transaction done. ROC looks forward to working with the people at AOG, both
    on Ardmore and also on any other appropriate transaction which may arise.


   • The transaction also illustrates the benefits of keeping a watching
    brief and an open mind with regard to parts of your portfolio which may, at
    one stage, have been considered peripheral but which, with a change of
    industry climate, can become more central to the Company's strategy. This
    change in perception is due to the UK North Sea becoming an arena of
    activity that is much more appealing to ROC now than it was five years ago
    when the Company first acquired interests in the region. Then the area was
    dominated by larger multinationals with high cost structures and,
    understandably, no real interest in developing small/modest fields within
    the timeframes that smaller independents require. Now, things are quite
    different following the influx of smaller companies with more urgent
    development agendas and, of necessity, a higher degree of cost
    consciousness.




For further information please contact:
Dr John Doran
Chief Executive Officer

                                                           Dr John Doran on
                                                       Tel: [phone]
                                                       Fax: [phone]
                                               E-mail: [e-mail]
                                                    Or visit ROC's website:
                                                          www.rocoil.com.au
                                                                           
                                                              Dr Kevin Hird
                                       General Manager Business Development
                                                  Tel:  [phone]
                                                  Fax:  [phone]
                                                Email:  [e-mail]
                                                                           
                                                               Nick Lambert
                                       Bell Pottinger Corporate & Financial
                                                  Tel:  [phone]
                                                                           
                                                                            


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