Rose Petroleum plc (AIM: ROSE), the North America-focused oil and gas company, is pleased to announce the results of the Competent Person’s Report (“CPR”) by Gaffney Cline & Associates (“GCA”) on the Rose acreage within the Paradox Basin, Utah covered by the recently completed 3D seismic acquisition.
Rose engaged GCA to provide a CPR for the acreage held and covered by the 3D seismic acquisition completed in late 2017 (covering approx. 17,250 acres of the total circa. 80,000 acres held). The CPR focused solely on the single reservoir the Cane Creek reservoir (the “CCR” or “Clastic 21”) of the multiple prospective reservoirs within the Paradox Formation.
Rose is pleased to report the results of the GCA report as summarised below:
This Contingent Resource, subcategorised as Development Pending, is a significant step change in the Clastic 21 project definition that started with the acquisition of the 3D seismic. The new data has enabled detailed reservoir mapping, reservoir characterisation, field analogue assessment, well engineering and draft field development planning to be completed, leading to the first project valuation for this acreage. Further to this, the assessment has also identified the initial appraisal well locations that are planned to test the range in field potential, as described within the GCA report.
The significance of the report is that is shows an upgrade from Prospective to Contingent Resources for Clastic 21 within the specified area. This is due to the ability to tie the 3D seismic data into the producing well 28-11 and map the maximum extent of the producing field within this area. The initial appraisal wells are designed to test the viability of the fracture network and to potentially prove the extent and commerciality of the field.
Rose currently has a total net acreage position of circa 80,000 acres. Within this acreage the management believe there is additional prospectivity covering up to 37,000 acres in which Clastic 21 is likely to be present. Additional shallower clastic reservoir prospectivity also exists within the greater 80,000 acres and presents further upside as reiterated by the un-risked Prospective Resources reported by Ryder Scott Company in May 2014. Rose’s assessment of this exploration potential will be updated in the near future with an additional CPR.
Matthew Idiens, CEO, commented: “We are hugely encouraged by the reclassification of Contingent Resources within the 3D seismic acquisition area, reporting, net to Rose, a 2C Contingent Resource of 9.25 million barrels of oil and 18.50 Bscf of Gas and an unrisked pre-tax NPV10 of US$122 million. These metrics highlight the substantial scale and prospectivity of the Paradox project. The NPV estimate clearly demonstrates the significant upside potential compared to the Company’s current valuation and this covers only a small portion of the total acreage position.”
“This assessment very much justifies our appraisal plans, which will be the first combination of horizontal drilling steered by the 3D seismic data on Rose acreage. A similar approach has proven successful in the development of the Cane Creek Field analogue directly south of our acreage. We are working hard to evaluate the remaining Clastic 21 potential outside the 3D area and shallower prospective zones both within the 3D area and beyond, which represent further upside opportunities within Rose’s existing acreage footprint.”
“The farm-in process continues and is now supported by the CPR independently validating the geological and economic strength of the Project.”
The previous CPR by Ryder Scott Company, reported in May 2014, covered all the Company’s acreage at that time and included up to 15 separate reservoirs (clastics) and reported Unrisked Prospective (Recoverable) Hydrocarbon Resources on a Best Case (P50 equivalent) of:
· 966.37 MMBO (966 million barrels of oil) and
· 1,888.46 BCFG (1.88 trillion cubic feet of gas).
The Executive Summary from the CPR is set out further below. The CPR was prepared using definitions contained within the Petroleum Resources Management System (PRMS), which was approved by the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers in March 2007.
Rose Petroleum is in the process of earning a 75% Working Interest (WI) in circa 80,000 acres in the northwestern part of the Paradox Basin, Utah as a result of the Earn-In agreement signed on March 13th, 2014, with Rockies Standard Oil Company (RSOC). The earn-in will be completed by the drilling of a single appraisal well which is planned for later this year.
This CPR covers solely, a single reservoir, within the Paradox Formation. The single reservoir evaluated for the purpose of this report is the Cane Creek Reservoir Cycle (CCRC or Clastic 21) and only within the extent of the leased 3D area (approx. 17,250 acres of circa 80,000 acres held). Other reservoirs prospective potential within the Paradox Formation are not covered in this report.
Within Rose Petroleum’s expected acreage, reservoir potential exists in the Cane Creek Reservoir Cycle of the Paradox Formation. This is an oil source rock containing interbedded tight reservoir cycles that forms a hybrid unconventional play; it has been productive at the nearby Cane Creek Field, and at the 28‑11 well just outside the Rose Petroleum acreage. Two other wells, one inside the acreage, logged oil pay but failed to flow when tested. Productivity of the reservoir is believed to be linked to the presence of natural fractures, which in turn are believed to occur in areas on high curvature, which can be mapped from a very well defined 3D seismic framework.
Rose Petroleum is now planning an up to three-well appraisal plan to assess the productivity of the naturally fractured reservoir and to test the predictive model of fracture locations. If the appraisal results are positive, a field development comprising up to 60 horizontal wells would be implemented.
Rose Petroleum has performed extensive analysis and modelling work, which GCA has reviewed and generally found to be of good quality. Based on its review, GCA has made its own independent estimates of the Contingent Resources attributable to the proposed development plan as at 30th April, 2018, as shown in Table 1.
Table 2 summarises the unrisked pre- and post-tax NPVs of future cash flow from Contingent Resources at a discount rate of 10%. This evaluation is based on GCA’s 2Q 2018 WTI and Henry Hub price scenario (see Section 5.2).
See tables and full announcement at https://investegate.co.uk/rose-petroleum-plc–rose-/rns/cpr—maiden-contingent-resource-and-npv-estimate/201806220700052125S/