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Oil & Gas Update
Rose Petroleum plc, the AIM-listed (AIM: ROSE) natural resources company, has provided an update on its activities onshore US.
Earlier this year Rose announced that it had commenced the process of permitting six well locations in the Mancos Formation in the Uinta Basin, Utah. However, in consideration of the oil price environment, the Board is focused on delivering a campaign that seeks to maximise value for shareholders, while evaluating cost saving initiatives. Although Rose’s Mancos properties benefit from a low breakeven price, exploration in the current environment has a high risk attached to it and therefore, the Board considered it prudent to modify its drilling plans until commodity prices have rebounded.
Rose is therefore focusing on one permit initially, within the Cisco Dome area. The initial location selected was amended due to unforeseen archeological elements and for the avoidance of a wildlife sensitive area, which created a delay, but the permitting process is now back on track and barring any additional unforeseen issues, the application is expected to be submitted within 60 days. Rose and its contractors are currently finalising the archeology, paleontology, and biological studies required to file the permit with the Bureau of Land Management and the State of Utah Oil & Gas Management (“DOGM”) in order to drill the Federal 1-15 20-21 horizontal well at the new location. In addition, Rose, the BLM and the archeology contractors are soon having an on-site meeting to confirm that the revised location will meet all regulatory requirements for permitting.
The location of Federal 1-15 horizontal well was driven by an in-house geological study of over 75 wells consisting of Rose operated wells and wells developed by third parties and relocated to maximize the potential for success. The Directors of Rose believe its location in the Cisco field will allow for oil sales soon after the well has been brought on-line and gas sales shortly thereafter, due to the existing infrastructure within the area.
With regards to the Paradox Project, the Company is making progress with the permitting for a 3-D seismic programme for the project area covering 61 sq. miles. The permit application is expected to be submitted imminently following an extensive pre-application process as would be expected with an application covering an area such as this. Once the permit is granted the Company has 12 months to complete the 3-D seismic programme, which should assist in the de-risking of the Paradox Project and allow for additional funding options to then be evaluated.
Additionally the Board is assessing opportunities to introduce productive assets to Rose’s portfolio. The current environment provides significant opportunity to acquire quality assets with stable income which are non-core to other companies and accordingly, the Company has engaged both Jefferies International Limited (“Jefferies”) and Wellford Capital Markets to assist in the evaluation and funding of assets which may fit this criteria.
Matthew Idiens, Group CEO, commented: “This current oil environment creates both a risk and an opportunity for Rose and having assessed our positioning, we believe that a solid production asset, economic at current price levels, would clearly be highly beneficial. Accordingly, we have engaged Jefferies and Wellford to help with our search for funding of an asset of this kind, while also focusing on our costs to buffer our exposure to the macro-environment. We have also refined our drill programme and will focus first on developing a well on our Cisco Dome acreage, which benefits from existing gas infrastructure. We believe this initiative will better deliver value for shareholders, particularly at current oil prices, from which we can roll out further initiatives across our licence. With production in place from both this well and potentially, a new asset, we would be in a much stronger position to develop our current exploration portfolio, which benefits from a low breakeven price.”
