Rocksource announces further disclosure on block CY-DWN-2001/1 in India

Reference is made to the most recent updates on Rocksource ASA’s India operations; stock exchange announcements on 20th January and 16th February 2010 respectively.

The Oil and Natural Gas Company of India Ltd (ONGC) and Rocksource ASA (Rocksource or company) have been involved in Joint Venture meetings and discussions over the Phase 1 work programme for the exploration block CY-DWN-2001/1 located in the Cauvery Basin, offshore south eastern India (the “Block”). Technical and Operational Committee meetings were concluded in late March 2010 and no further decision on the third well location was achieved. A final recommendation for the location is expected from the block operator, ONGC, during Q2 2010 to allow a Q4 2010 well spud.

Rocksource intends to sign the Block Production Sharing Contract (PSC) once the Government of India grants a suitable extension to the Phase 1 period and certain other commercial negotiations are concluded with ONGC.

So far two exploration wells have been drilled on the Block, both of which failed to discover commercial hydrocarbons. However, neither well tested the prospect associated with the primary positive electromagnetic (CSEM) anomaly, as interpreted by Rocksource. The Joint Venture parties are currently evaluating options for the third well of the Phase 1 work programme.

The estimated  net cost to Rocksource of the full Phase 1 work programme is USD 20 million. Rocksource is in discussions with ONGC regarding the extent of its liability for costs relating to the first and second exploration wells, which were drilled prior to Government of India approval of the assignment of a participating interest in the Block to Rocksource and without Rocksource’s consent. Should Rocksource and ONGC fail to agree a mutually acceptable course of action relative to such costs, both parties may agree that an amicable exit from the Block, and any associated liabilities, by Rocksource would be appropriate.

Assuming a successful conclusion to the current discussions, Rocksource is looking forward to participating in the remainder of the Phase 1 work programme.  Rocksource believes that there is significant potential in the Block and that application of CSEM technology is critical to identifying and de-risking a significant component of this potential.

Rocksource entered into the Farm-in agreement in September 2008. ONGC is the block operator (45%) with Oil India (20%) and Brazilian state oil company Petrobras (25%) as co-venturers together with Rocksource ASA (10%), on final signature of the PSC.


Oslo, 19.4.2010
Rocksource ASA


Trygve Pedersen
CEO

+47 90 09 77 41