If ROC chooses to exercise its option, it will be required to fund NWE's 7.5% share of the recently completed Macallan 3D seismic survey up to a maximum net cost of $525,000.

Additionally ROC will be required to make a cash payment of $200,000 prior to drilling the next well in the permit, followed by a final one time payment of $375,000 if a discovery is declared commercial.

The prospect is located in the northernmost part of the offshore Perth Basin, immediately on structural trend from and adjacent to WA-325-P and WA-327-P. ROC operates both these permits with a 37.5% interest in each.

In 2002, the WA-226-P Joint Venture drilled the Morangie-1 exploration well which encountered 25 metres of good oil shows in the reservoir objective, although the shows proved to be residual and the well was plugged and abandoned.

Morangie-1 was not drilled on 3D seismic and that may have been one of the reasons why the WA-226-P Joint Venture decided to acquire a 500sqkm 3D seismic survey prior to drilling the next well, which is expected to be the Fiddich-1 exploration well during 2004.

Although WA-226-P is 250km northwest of the successful Cliff Head, Hovea, Eremia and Jingemia oil field discoveries, it is still considered to be related to a broad regional prospective trend, roughly parallel to the Western Australian coastline over a distance of some 350sqkm.

ROC's chief executive officer, Dr John Doran said: "As a result of the transaction, ROC now has working, or option, interests in 30,700sqkm (7.6 million acres) covered by six contiguous permits in the northern Perth Basin.

"This is a land bank that will become extremely valuable if the area realises even a portion of the prospectivity that is now assigned to it by some industry players, including ROC. In the event that ROC chooses to exercise its WA-226-P option, the transaction will also provide the company with an additional exploration well for its 2004 drilling program."