Rocksource will embark on the company's high potential drilling campaign in 2010. Following several important events in key licenses, the company provides a general update on its exploration portfolio and operational plans.

The company's net risked resources have grown rapidly over the last two years, now totalling in excess of 1 billion barrels of oil equivalents (boe), of which approximately 55 per cent of the resource base stems from the Norwegian Continental Shelf (NCS). The portfolio and prioritisation for drilling represent the outcome of a continual high grading process that has seen Rocksource evaluate over 80 prospects with electromagnetic (EM) technology. Twenty-one of these have positive integrated EM results and form a major part of the portfolio (65 per cent of the net risked resources). Theses prospects are the high graded, low risk basis that will form the initial drill schedule.

Rocksource recently gained board approval to accelerate the work programme on PL 559 on the NCS. The company's goal is to sanction a well for drilling in 2011, given partnership approval. In PL 528, Rocksource is working with license partners to evaluate drilling options for late 2011. The estimated drilling schedule for 2011 currently includes up to five EM positive prospects on the NCS, all with a significant value potential to Rocksource and further wells in the Gulf of Mexico.

NCS Rocksource currently expects to participate in up to five NCS wells in 2011 that will be drilled on EM-positive prospects. The current expected 2011 drilling schedule includes wells on PL 416, PL 528, PL 530, PL 535 and PL 559. This campaign will test approximately 1.45 billion boe (260 million boe net risked mean to Rocksource). In the remaining operated licences, PL 515 and PL 506s, the Company is planning to acquire 3D seismic over both areas in May 2010 to further progress the prospect evaluation in these very encouraging licences. Both licenses contains prospectivity that will result in strand alone developments in a success case and both licences could be drilled using Rocksource rig capacity, in the Borgland Dolphin rig consortium, in 2012.

PL 559 (Rocksource Operator, 60%) PL 559 was Rocksource's highest priority application in the APA 2009 license round and is located on the Nordland Ridge, immediately to the east of the 'Norne', 'Urd', 'Falk' and 'Linerle' Fields. Prospectivity within the license consists of three main prospects and several leads. All three prospects have encouraging EM responses. The overall block potential is estimated at 425 million boe mean recoverable resources (Rocksource estimate).

Based on the licence prospectivity, the Board of Directors of Rocksource has decided to accelerate the work programme on the license with the goal of sanctioning a well for drilling in 2011.

The PL 559 license group consists of: Rocksource (Operator, 60%), VNG Norge (30%) and Skagen 44 (10%). The Phase One work programme will now consist of 3D seismic acquisition and G&G studies. A drill or drop decision has to be made within the next two years and this decision will be accelerated if considered appropriate by the licence partnership.

PL 528 (Rocksource 30%) PL 528 is located on the Nyk High in the Vøring Basin (Norwegian Sea), immediately east and northeast of the 'Luva', 'Haklang' and 'Snefrid' discoveries. There are low risk and sizeable prospects within the licence area with the main prospect in the license, 'Ivory', estimated by Rocksource to contain approximately 500 million boe of gas, and the post-EM chance of success is estimated to be 59 per cent. The work programme consisting of a 3D seismic acquisition has been sanctioned and will occur in May 2010. Rocksource is working with license partners to evaluate drilling options for late 2011.

With the 'Gro' appraisal this year, recent Statoil discoveries and Statoil's area-development initiative an early clarification of resources in PL 528 will be important to understand possible area export synergies. A late 2011 drilling date is contingent on partner support and rig availability. The license group consists of Petro-Canada Norge AS (Operator, 40%), Centrica Resources Norge AS (30%) and Rocksource ASA (30%).

PL 416 (Rocksource 35%) Rocksource recently announced a sanctioned well on PL 416, estimated to be drilled in May 2011 with the drilling unit Borgland Dolphin. Rocksource independently estimates the primary target at the 'Breiflabb' prospect to contain mean recoverable resources amounting to 170 million boe. Rocksource estimates a chance of success of 44 per cent. Both risk and volumetric estimates have been high-graded based upon additional information provided by the integrated EM and G&G evaluation.

Block 31/8 lies within the Stord Basin and is located approximately 30 km southwest of the 'Troll' Field. The PL 416 partnership consists of E.ON Ruhrgas Norge AS (Operator, 50%), Rocksource ASA (35%) and Det norske oljeselskap ASA (15%).

PL 530 (Rocksource 20%) Drilling on PL 530, previously estimated to commence in the fourth quarter of 2010, is likely to slip into 2011. The operator GDF Suez is still considering options with regards to rig availability and conclusions have yet to be drawn with regards to drilling rig and estimated spud date.

The license was awarded Rocksource in the Norwegian 20th Round announced in May 2009. Rocksource independently estimates the primary target at the 'Heilo' prospect to contain mean recoverable resources amounting to approximately 250 million boe. Rocksource estimates the chance of success to 65 per cent based upon the integration of positive EM results with all available geological and geophysical data.

PL 530 is located in the Barents Sea on the very southern part of the Bjarmeland Platform/eastern edge of the Hammerfest Basin on trend with the 'Goliat' and 'Tornerose' discoveries to the west and the 'Nucula' discovery to the southeast. The license group consists of GDF Suez E&P Norge AS (Operator, 40%), Discover Petroleum AS (20%), North Energy ASA (20%) and Rocksource ASA (20%).

PL 535 (Rocksource 20%) PL 535 is located on the Norvarg Dome in the central part of the Bjarmeland Platform in the Barents Sea, immediately to the west of the 'Ververis' discovery and northeast of the 'Arenaria' discovery. PL 535 was awarded Rocksource in the Norwegian 20th Round announced in May 2009.

Rocksource independently estimates the primary target at the 'Norvarg' prospect to contain mean recoverable resources amounting to 250 million boe, and the company estimates the post-EM chance of success to 53 per cent. High quality 3D seismic acquisition and processing has recently been completed as part of the licence work programme and these new data will be evaluated with existing EM data to re-assess prospectivity and the final drilling location.

The license group consists of Total E&P Norge AS (Operator, 40%), Det norske oljeselskap ASA (20%), North Energy ASA (20%) and Rocksource ASA (20%).

International; India (Rocksource 10%) Reference is made to the company's Q4 2009 interim report published 17 February. Rocksource intends to sign the CY-DWN-2001/1 block Production Sharing Contract (PSC) once the Government of India grants the Rig Moratorium to the license partnership and other ongoing commercial conditions are agreed to with block operator ONGC.

International; AGC Profond (Rocksource 5%) The partnership in AGC consisting of operator Ophir (83%), L'Enterprise (12%) and Rocksource (5%) is preparing for well operations in 2010 on the AGC Profond PSC. The partnership has agreed on a location for the first well and has a joint goal to drill the well as soon as practically possible. Spud date of the first well is uncertain and dependent upon rig availability.

The 2010 well will target the 'Kora' prospect (previously named 'Cheval North'), which is estimated to contain resources in excess of 400 million boe, of which +100 million boe net to Rocksource* Rocksource estimates the chance of success for the well targeting this prospect to be in the order of 50 per cent based on the combined G&G and EM data and evaluation. The drilling decision was based on the encouraging results from EM data.

• Ophir and Rocksource have agreed a staged farm-in whereby Rocksource can earn up to 25 per cent equity in return for a disproportionate contribution towards the first and second exploration wells (2nd and 3rd Exploration Phases). Exit points exist at the end of each Exploration Phase.

International; Gulf of Mexico (Rocksource 10-100%) In the US Gulf of Mexico, Rocksource Gulf of Mexico (RGOM) has an exploration portfolio consisting of 20 leases, of which 14 are operated by RGOM at 100 per cent equity. These were acquired in the August 2009 Western lease sale. The other seven leases were acquired in a farm-in in August 2009 and RGOM has 30-40 per cent equity in five leases and 10 per cent in the remaining two leases.

Rocksource has tested the prospectivity in twelve of these leases by acquiring EM data over them and is currently executing its proprietary, integrated EM/seismic interpretation over a prioritised few. The company expects to complete its evaluation of at least three prospects very shortly in order to select two prospects to drill late in 2010. Preparations and planning for these wells, including preliminary reviews of drilling rig options, have also been started in anticipation of well spud late in 2010, after the hurricane season. Prior to drilling these prospects it is the intention to farm down partial equity in certain leases in order to reduce the net cost exposure.

Relinquishment As part of the portfolio high grading process Rocksource has also relinquished acreage which did not hold prospectivity that matched the standards for risk and value required to be selected for drilling. Recently, this has included the NCS, PL 480 'Eiktyrne' licence which was interpreted as likely to be sub-commercial after full evaluation and the UKCS, P. 1486 licence which has been reassessed as high risk.

Future licensing rounds While the company's main priority going forward is to firm up its drilling campaign, turning resources to reserves, Rocksource will continue to add resources to its exploration portfolio. As part of this work Rocksource is currently preparing for applications in the APA 2010 as well as for the Norwegian 21st Round, and the company aims to repeat its successful results from the 20th licensing Round.

During the preparations for 21st Round and APA 2010 several prospects have been identified based on conventional seismic and G&G analysis. Together with different AMI (Area of Mutual Interest) partners Rocksource are testing a number of prospects with EM surveys. Rocksource has been given the mandate to operate the EM acquisitions and to process and interpret the EM data on behalf of the AMI partnerships.

More than 10 EM surveys have been acquired to date and the entire EM campaign will be completed by end of April, leaving time for advanced processing and analysis of the data before the application deadlines. Only prospects that are high ranked after the integrated G&G and EM analysis will be applied for. The application deadline for APA 2010 is 15 September with awards expected in January 2011. The 21st Round has yet to be announced but the application deadline is expected to be in November 2010 followed by awards in Q2 2011.

Portfolio Summary The total Rocksource exploration portfolio consists of 1,150 million boe of net risked resources. Rocksource expects to test approximately 600 million boe net risked resources in 2010-2012. Several of the prospects to be drilled represent large volumes that will drive independent development solutions in a success case. All of the prospects high graded for drilling represent attractive opportunities.

Tags: Rocksource ASA