The acquisition, which involved the company buying 100% of the shares in Apache China Corp (ACCC), gives the Sydney-based company a 24.5% operated interest in the production sharing contract over the Zhao Dong Block in Bohai Bay.

Roc said this morning that the block was part of a prolific producing petroleum province that offered considerable upside potential.

Gross production from the two producing fields in the block was about 30,000 barrels of oil per day (bopd) and remaining gross proved and probable reserves (2P) were roughly 61 million bbl of oil.

The acquisition will double Roc’s net 2P oil reserves to 30MMbbl. Production will also more than double from about 4500bopd to about 12,000bopd.

Roc operates more than 40,000bopd in joint ventures in offshore China and Western Australia.

“In a China context, this makes Roc the third-largest foreign operator of oil production in that country,” managing director John Doran said.

“Leaving aside all the usual platitudes about the transformational impact of this purchase, perhaps the key point for shareholders and potential investors to note is that this deal is a direct consequence of Roc’s strategic emphasis on its operating capacity both in Australia and overseas, together with a strong and extensive network of international contacts.”

Currently debt-free, Roc will finance the purchase with a 12-month loan from the Commonwealth Bank of Australia. After completion, the company will have a debt-to-total assets ratio of about 0.5 and a debt-to-market capitalisation ratio of about 0.4.

Roc Oil has also arranged Brent oil price swaps for 1.31MMbbl of oil for the period of July 1, 2008 to June 30, 2011 at a weighted average price of $US72.16 per barrel. These swaps, together with the oil price swaps previously reported, represent about 23% of Roc’s forecast total 2P oil production for the period of July 1, 2006 to June 30, 2011.