6 June, 2018 – Rose Petroleum plc (AIM: ROSE), the AIM quoted natural resources business, announces its final results for the year ended 31 December 2017.
· Sale of the Group’s ore processing mill in the State of Nayarit, Mexico, to Magellan Gold Corporation (“Magellan”), as part of the strategy to increase the focus on the Paradox Basin.
· The mill sale was completed on 1 December 2017 for a total consideration of US$1.5 million, of which US$1.0 million has been received in cash and US$0.5 million equivalent in Magellan shares.
· In August 2017, after a three year process, the Group announced it had received approvals to shoot its 3D seismic survey in the Paradox Basin, a watershed moment for the Group.
· On 5 October 2017 the 3D seismic survey shoot commenced and was completed on time and within budget.
· The high-quality data obtained highlighted the significant scale and prospectivity of the Group’s Paradox acreage.
· On 22 September 2017, the Company announced that it had raised gross proceeds of US$4.0 million (£3.0 million) in a share placing in order to fund the seismic shoot.
· Cash and cash equivalents at 31 December 2017 were US$2.2 million (2016: US$1.3 million).
· Total investment in the Group’s intangible exploration and evaluation assets at 31 December 2017 was US$12.1 million (2016: US$10.1 million) primarily reflecting investment in the Utah O&G assets.
Post period highlights
· Interpretation of the data from the seismic shoot has identified approximately 60 drill targets on the Group’s Paradox acreage.
· In April 2018, the Group increased its land position in the Paradox Basin by acquiring a 75% working interest in an additional 3,320 gross acres for US$36 per acre, a total consideration of approximately US$120,000, satisfied from existing cash resources.
· The Group has assembled a highly experienced subsurface and surface operations team with extensive experience and a successful track record in the Paradox Basin.
· This team previously designed, managed and implemented a nine-well drilling programme in the Paradox Basin for Fidelity Exploration and Production Inc., directly to the south of the Group’s acreage. Eight of these wells were commercial and production grew from circa 100 barrels of oil per day (BOPD) to over 3,500 BOPD from 2012 to 2014.
· The operations team has now largely completed the subsurface assessment, well location selection and basic well design and engineering for the Group’s first proposed horizontal well, the GVU 29-1.
· In May 2018, the Group completed a £1 million equity fundraise. Proceeds from the fundraise will be used for ongoing activity in the Paradox Basin, working capital and business development.
Outlook for 2018
· The Application for Permit to Drill (“APD”) process for the GVU 29-1 is well underway and it is expected the APD will be granted in Q3 2018.
· The Group is on track with its plans to drill its first Paradox well later this year.
· It is currently expected that the total cost of the well (including completion, testing and tie-in costs) will be in the range of US$7-8 million, which is well below the previous budgeted forecast of up to US$10 million.
· The next key step will be completion of the funding process for the first Paradox wells – the virtual data room is now established. The Board is very pleased by the interest shown in the project to date, following exhibiting at NAPE 2018 in Houston earlier in the year.
· The Group is awaiting the updated Competent Person’s Report (“CPR”) which will provide an updated resource estimate for the Group’s Paradox acreage within the 3D seismic shoot area. It is expected that the updated CPR will provide independent verification of the geological and economic strength of the Paradox project.
Matthew Idiens, Chief Executive Officer of Rose Petroleum, said:
“This has been a period of intense activity and sustained progress for the Group and we are now working towards drilling our first well in the Paradox Basin later this year.
“The Group is awaiting the updated Competent Person’s Report and the resource estimate for the Paradox acreage, within the 3D seismic acquisition area, which is expected to provide independent verification of the geological and economic strength of the Paradox project.
“We have assembled a high quality and experienced operations team with a proven track record and activity is now focused on the well design, permitting and funding for the first Paradox wells.
“This is a busy and exciting time for the Group and the Board and management team are more convinced than ever that the Paradox acreage is a highly prospective asset which can deliver strong returns to Shareholders. We hope this will be a landmark year for the Company.”
Full announcement at http://rosepetroleum.com