TIDMROSE
RNS Number : 4108C
Rose Petroleum PLC
10 February 2020
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ("MAR"). With the publication of this announcement,
this information is now considered to be in the public domain.
Rose Petroleum plc
("Rose" or the "Company")
Update on restructuring of the Paradox project
Rose Petroleum plc (AIM: ROSE), the Rocky Mountain-focused oil
and gas company, is pleased to provide an update on the
restructuring of its project in the Paradox Basin, Utah, U.S. (the
"project") further to its announcement on 14 October 2019.
Highlights:
-- Rose has been granted regulatory approval by the U.S. Bureau
of Land Management (the "BLM") for two year lease extensions on
circa 11,300 acres within the core of its project area.
-- The Company now holds a focused and contiguous land position
of circa 19,900 acres with extended lease terms (as set out in note
1 below)(1) , the majority of which is covered by Rose's
proprietary 3D seismic survey which was completed in 2018.
-- Rose gains an immediate 75% working interest in and
operatorship of the extended acreage, rather than the earn-in
structure through which the leases were formerly held.
-- There are no acquisition costs related to the extended
acreage, and Rose will continue to make lease payments on the
extended acreage. Overall lease payments have been substantially
reduced via the restructuring now that non-core acreage has been
relinquished.
-- The restructured project has estimated net 2C Contingent
Recoverable Resources of circa 9 million barrels of oil equivalent
("mmboe") solely within the Cane Creek reservoir(2) with further
exploration potential to be found in 5 shallower reservoir
intervals.
Colin Harrington, Chief Executive Officer, stated:
"With the project JV agreement successfully renegotiated, the
project land position now restructured and an increase in term now
secured, we are in a strong position to recommence our farm-in
process.
"The restructured project, combined with the increased focus
that partners like the U.S. Department of Energy are bringing to
the Paradox Basin, will make the project more attractive to
potential funding partners.
"While the Company's immediate focus is to acquire near-term
production in more mature Rocky Mountain Basins, the upside that
can be delivered from our Paradox project makes it a highly
attractive investment opportunity and ensures the project will
remain a central part of Company's future focus and activity.
"I would like to thank our JV partner Rockies Standard Oil
Company and the BLM for their continued commitment to Rose and the
development of the project."
Restructuring update
Since its update to the market on 14 October 2019, Rose has
worked with Rockies Standard Oil Company ("RSOC") and the
appropriate regulatory bodies to complete the restructuring of the
project.
In the October 2019 announcement, Rose outlined that it would
focus its efforts on the most valuable project acreage. As part of
this process, Rose and RSOC agreed to voluntarily terminate the
original Federal Unit Agreement (the Gunnison Valley Unit ("GVU")).
Subsequently, with the GVU Agreement terminated and pursuant to
U.S. Federal Oil and Gas Regulation 43 CFR 3107.4, Rose can
announce that a subset of leases, located within the project core
have been extended for a further two years and added back into the
Company's portfolio of leases.
The extension of these leases enables Rose to refocus on a core
acreage position of circa 19,900 acres which contains an estimated
net 2C Contingent Recoverable Resources of circa 9 million barrels
of oil equivalent ("mmboe") associated with 22 drilling targets in
the Cane Creek reservoir. The development of solely this reservoir
could generate an estimated post-tax net present value to Rose of
US$64m (at a 10% discount rate) ("NVP10")(3) , a significant
premium to the Company's current market capitalisation and which
demonstrates the considerable potential of the project. The Company
also recognizes further exploration potential in 5 shallower
reservoir targets which could add further value to the project over
time.
With the project restructuring completed and the land position
now clarified, the Company will recommence the farm-out
process.
Additionally, while the lease extensions are for an initial
period of two years, they can be extended further through the
creation of a new federal unit, the drilling of a new well on the
new unit and establishing production of paying quantities of oil
and gas.
Contacts:
Rose Petroleum plc Tel: +44 (0)20 7225 4599
Colin Harrington (CEO) Tel: +44 (0)20 7225 4599
Chris Eadie (CFO)
Allenby Capital Limited - AIM Nominated
Adviser Tel: +44 (0)20 3328 5656
Jeremy Porter / James Reeve / Liz Kirchner
Turner Pope Investments - Joint Broker Tel: +44 (0)20 3657 0050
Andy Thacker / Zoe Alexander
Cantor Fitzgerald Europe - Financial Tel: +44 (0)20 7894 7686
Adviser and Joint Broker
David Porter
Media enquiries: Tel: +44 (0) 20 3633 1730
Allerton Communications peter.curtain@allertoncomms.co.uk
Peter Curtain
Dr Gregor Maxwell, BSc Hons. Geology and Petroleum Geology, PhD,
Technical Adviser to the board of Rose Petroleum plc, who meets the
criteria of a qualified person under the AIM Note for Mining and
Oil & Gas Companies - June 2009, has reviewed and approved the
technical information contained within this announcement.
Notes
1. This notification confirms Rose's lease position is as follows:
a. A 5,240 gross acre lease position with an 9 year lease term remaining.
b. A 6,120 gross acre lease position with a 2 year extension, valid to October 2021.
c. Potential for the addition of a further 6,511 gross acres
also with a 2 year extension, subject to expected partner
approval.
d. A 1,920 acre lease which is currently suspended but which is
expected to be extended in due course.
2. The 2C Contingent Resource assessment is based upon a
proportional assessment of well count from the original 2C
assessment, has been undertaken by Rose and has not been
independently verified.
3. Oil and Gas Prices for Competent Persons Review ("CPR")
Gaffney Cline & Associates's 2Q 2018 WTI and Henry Hub price
scenario (Table 1) was used for Rose's economic analysis of the
project and included in the project CPR. Based on information
provided to GCA by the Company realised prices are expected to
include a US$10 per barrel discount for crude and a US$0.50/Mscf
discount for natural gas.
Table 1: GCA 2Q 2018 WTI and Henry Hub Price Scenario
Year WTI Price Henry Hub
(US$/Bbl) Price
(US$/Mscf)
2019 59.21 2.79
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2020 62.50 3.12
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2021 63.75 3.39
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2022 65.03 3.62
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2023 66.33 3.81
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END
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