ROSE – Updated profile – Cantor Fitzgerald calculates the risked net asset valuation for Rose at 125p per share

Rose Petroleum plc (Symbol: ROSE) is an AIM listed oil and gas company focused on the exploration and development of approximately 80,000 acres in the Paradox Basin, Utah, U.S.A., where it is earning into a 75% working interest.

The Paradox acreage constitutes a project of considerable scale and prospectivity. According to the resource report prepared by Ryder Scott Company in 2014, there are potential resources of 1.1 billion barrels of oil and 2.2 trillion cubic feet of gas on the acreage. A Competent Person’s Report by Gaffney Cline & Associates (published June 2018) on the acreage covered by the recently completed 3D seismic acquisition (approximately 17,250 acres of the total circa. 80,000 acres held) and focused solely on the single Cane Creek reservoir (Clastic 21) of the multiple prospective reservoirs within the Paradox Formation has now determined gross contingent resources (2C) of 15.61 million barrels of oil and 31.23 billion cubic feet of gas with a NPV net to Rose of $122.4 million.

Rose has identified approximately 60 potential well locations on both its existing and new acreage within the area covered by the 3D seismic survey that was completed in 2017.  As stated above, this area contains contingent resources (2C) of 20.8 million barrels of oil equivalent in the Clastic 21 reservoir alone. The Paradox Basin formation is made up of approximately 24 clastic zones, of which Clastic 21 is the primary producing zone of the basin to date. Additional potential clastic reservoir zones also exist, both above and below the Clastic 21. These were also assessed as prospective in the Competent Persons Report and add further potential both within the 3D seismic covered area (which represents only 15,000 acres – or 17,250 “held at surface” – of the 80,000 acres over which Rose has a working interest) and the area outside, providing the opportunity to significantly increase resource numbers on the Paradox project in the future.

Rose has assembled a highly experienced subsurface and surface operational team with extensive experience and a successful track record in the Paradox Basin. The team designed, managed and implemented a nine-well drilling programme in the Paradox Basin directly to the south of Rose’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.

The operational team has now largely completed the subsurface assessment, well location selection and basic well design and engineering for Rose’s first proposed horizontal well, the GV 22-1, within the Company’s Paradox acreage.

On 1 November Rose announced that the U.S. Bureau of Land Management (“BLM”) had approved the Application for Permit to Drill for the GV 22-1 well. The APD is valid for an initial two years.

The GV 22-1 well is within the new leases acquired in March 2018 and is covered by the Company’s 3D seismic acquisition completed in December 2017, adjoining existing leases within the Gunnison Valley Unit.

The Company has now agreed an updated operational plan with the Utah Bureau of Land Management (“BLM”), and the benefits of this agreed plan are that the current GVU boundary will now be extended to include the acreage acquired in April 2018, in which the GVU 22-1 well is located. The GVU 22-1 well is considered a top ranked well location, based on the 3D seismic interpretation and its proximity to the producing 28-11 well.

Following on from the agreed plan, Rose and its partner Rockies Standard Oil Company (“RSOC”) have been in discussions with various drilling companies regarding the securing of an appropriate rig so that the GVU 22-1 can be spudded at the earliest opportunity. At the current time, it appears that a suitable rig will now be available in Q1 2019, in line with the now agreed operational plan. The Company is targeting securing the necessary drill programme funding ahead of then.

The Company has engaged Schlumberger to review the seismic attribute analysis, further validate and edit the seismic interpretation, and model the structural geometry, the distributions and orientations of natural fractures based on a geomechanical analysis within the GVU 22-1 structure. This work is expected to be completed shortly.  The modelling efforts will provide expected fracture orientations and distributions within the constraints of the available data in the GVU 22-1 location and within the wider 3D seismic area. In addition, Schlumberger and Rose will utilise the completed work to refine the well path design to optimise the fracture networks to maximise the performance of the well. The fracture systems encountered will be a major factor in the commercial success of the well.

The GV 22-1 will be a horizontal well which Rose’s management consider has a potential Estimated Ultimate Recovery (“EUR”) of 894,000 barrels of oil equivalent (“BOE”), consistent with the Gaffney Cline Competent Person’s report. The potential of the GV 22-1 well is supported by its close analogy to highly productive structures (>1mmboe EUR) within the nearby Cane Creek Field (12 miles south) and locally by its close proximity to the producing 28-11 well (approx. 1 mile). This well produces from the porous and permeable fracture network within Clastic 21 and can be tied to the proposed 22-1 location within the 3D seismic data set. The 28-11 is a vertical well that was drilled by Delta Petroleum in 2006 without the benefit of 3D seismic. It has produced 141,000 barrels of oil equivalent (“BOE”), and represents a key piece of evidence for the presence of hydrocarbons and of a greater fracture network across the area covered by the 3D seismic. These factors give the Board a high degree of confidence in the potential of the GV 22-1 well, and it was for these reasons that the Company decided to prioritise the GV 22-1 location as Rose’s first well.

Having acquired a significant footprint in the Basin, permitted and shot the 3D seismic, processed and interpreted the data with very positive results, the company is close to delivering on its key corporate objective of spudding its first Paradox well.

Based on the operational team‘s time/cost estimates for the initial well, 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 US$8-10 million. Rose would also expect this to be even lower during the development phase as operations increase.

Presently capitalised at £2.8 million at the current share price of 1.975p, total investment in intangible exploration and evaluation assets was US$12.5 million at 30 June 2018.  Cash and cash equivalents at 30 June 2018 were US$2.0 million. Cantor Fitzgerald Europe have been appointed as financial adviser / joint broker to the Company and, with the updated Competent Persons Report now providing independent verification of the geological and economic strength of the Paradox project, their primary task is to assist the Company in assessing the funding options for the drilling of Rose’s first wells. Cantor Fitzgerald has initiated equity research coverage of Rose with the release of a research report on the Company. The report includes a Buy recommendation, with a target share price of 9.0p based on the assumptions set out in the report.  Cantor Fitzgerald’s risked net asset valuation for Rose is 125p per share.

ROSE – “so that the GVU 22-1 can be spudded at the earliest opportunity…it appears that a suitable rig will now be available in Q1 2019, in line with the now agreed operational plan”

Further to the operational update announced on 1 November 2018, Rose Petroleum plc (AIM: ROSE), the AIM quoted natural resources business, is pleased to provide an update on operations for the Gunnison Valley Unit (GVU) in the Paradox Basin, Utah, U.S.A.

Operations Update

The Company has now agreed an updated operational plan with the Utah Bureau of Land Management (“BLM”), and the benefits of this agreed plan are that the current GVU boundary will now be extended to include the acreage acquired in April 2018, in which the GVU 22-1 well is located. The GVU 22-1 well is considered a top ranked well location, based on the 3D seismic interpretation and its proximity to the producing 28-11 well.

Following on from the agreed plan, Rose and its partner Rockies Standard Oil Company (“RSOC”) have been in discussions with various drilling companies regarding the securing of an appropriate rig so that the GVU 22-1 can be spudded at the earliest opportunity. At the current time, it appears that a suitable rig will now be available in Q1 2019, in line with the now agreed operational plan. The Company is targeting securing the necessary drill programme funding ahead of then.

The Company has engaged Schlumberger to review the seismic attribute analysis, further validate and edit the seismic interpretation, and model the structural geometry, the distributions and orientations of natural fractures based on a geomechanical analysis within the GVU 22-1 structure. This work is expected to be completed shortly.  The modelling efforts will provide expected fracture orientations and distributions within the constraints of the available data in the GVU 22-1 location and within the wider 3D seismic area. In addition, Schlumberger and Rose will utilise the completed work to refine the well path design to optimise the fracture networks to maximise the performance of the well. The fracture systems encountered will be a major factor in the commercial success of the well.

Matthew Idiens, CEO, commented: “We appreciate the pragmatic approach taken by the BLM and are pleased that we have been able to jointly agree a revised operations plan that is for the overall benefit of all parties.

I am pleased that we now have a formal plan that allows us to drill our highest-ranked target first, which is key to the development of the project. Having clarity over operations and the BLM approval enables us to refocus on the well financing and farm-in process.

We look forward to announcing the conclusions of the Schlumberger work when possible and look forward to working with them on the GVU 22-1 well path optimisation.”

TRP – Cameroon Drilling Contract – proposed NJOM-3 well

Tower Resources plc (the “Company” or “Tower” (TRP.L, TRP LN)), the AIM listed oil and gas company with its focus on Africa, is pleased to announce that its wholly owned subsidiary, Tower Resources Cameroon S.A, has signed a contract with Vantage Drilling International (“Vantage”) for the Topaz Driller jack-up rig (“Topaz Driller”) to provide drilling operations for the NJOM-3 well which is planned for Tower’s 100% owned and operated Thali licence, offshore Cameroon, in Q2 2019.

The Topaz Driller is a Baker Marine Pacific Class 375 jack-up, which was recently mobilised to Cameroon by NewAge as operator for the Etinde license for two appraisal wells and is currently employed in Gabon.    

As announced on 1 November 2018, the terms of the contract are confidential, however, the economics are consistent with Tower’s current drilling cost estimates.

The NJOM-3 well will be targeting gross mean contingent (2C) resources of 18 million barrels across the Njonji-1 and Njonji-2 fault blocks located in the south of the Thali licence with an EMV10 of US$118 million, as identified by the recent Oilfield International Limited (“OIL”) Reserves Report announced on the 1 November 2018. Furthermore, the NJOM-3 well is expected to de-risk an additional 20 million barrels of gross mean prospective resources across Njonji South and Njonji South-West. 

The objectives of the NJOM-3 well are to test the thickness of reservoirs already identified by NJOM-1 and also to test for other reservoirs which may be present at the new location. It will also provide key flow-rate data for the Njonji reservoirs from a drill stem test (“DST”), which would allow reclassification of contingent resources into 2P reserves as well as providing critical reservoir characterisation data for the potential field development strategy.   

Jeremy Asher, Chairman and CEO commented:

“We are very pleased to have secured the Topaz Driller, the same rig which our well management team at Bedrock Drilling used to drill the two recent Etinde wells. We see the NJOM-3 well, in Q2 2019, as just the beginning of our drilling activity on the Thali license, as we explained in our Corporate Presentation of last month. The rig timing remains consistent with that schedule, including its target of first oil by the end of 2019.”

SOU – Eastern Morocco: Commencement of Drilling at TE-10

Sound Energy, the Moroccan focused upstream gas company, is pleased to confirm that the drilling at TE-10, the second well of a planned three exploration well campaign in Eastern Morocco, has commenced.

The TE-10 well will test the North East Lakbir prospect in the Company’s Greater Tendrara permit and is located approximately 25 kilometres to the northeast of the recently awarded Tendrara production concession.

The well is designed to test both a material TAGI stratigraphic trap and a smaller TAGI structural closure.  The North East Lakbir stratigraphic trap has updated mid case potential on a gross (100%) basis of 2.7 Tcf GOIP (4.5 Tcf GOIP upside case and a 1.5 Tcf GOIP low case) with a Sound Energy internally estimated chance of success of 14%. TE-10 lies within the stratigraphic trap, located on a smaller structural closure which has a mid case potential, on a gross (100%) basis, of 128 Bcf gas originally in place (“GOIP”) (210 Bcf GOIP upside case and a 75 Bcf low GOIP case) with a Sound Energy internally estimated chance of success of 26%.

The well is expected to be drilling to a total depth at approximately 2,200m and is expected to take between 30 to 40 days. 

Further announcements will be made, as appropriate, in due course.

EDR UJO – Biscathorpe Drilling Update

Union Jack Oil plc (AIM: UJO), a UK focused onshore hydrocarbon production, development and exploration company is pleased to announce a positive update in respect of the drilling timetable and expectations of the Biscathorpe-2 appraisal well in PEDL253 in which Union Jack has a 22% licence interest. The information contained within this announcement is derived from information and a presentation given by Egdon Resources plc (“Egdon” or the “Operator”) at its Annual General Meeting on Thursday 6 December 2018.

Points of note are:

·     Following completion of site construction – expected in early December 2018 – a conductor rig will be mobilised to set surface casing.

·     Drilling rig expected to be mobilised in early January 2019 with well completion expected in mid-February 2019.

·     Egdon’s AGM presentation includes further details on the Biscathorpe Prospect including the estimated range of Prospective Resources, a cross section and a comparison with the geology of the Reepham field some 20 kilometres south west of Biscathorpe, just to the west of the Fiskerton Airfield producing oil field (Union Jack 20%).

·     At the Reepham oilfield, the Basal Westphalian sandstone reservoir thickens dramatically off a ‘structural high’ over a very short distance and a similar development of the target reservoir is expected at Biscathorpe-2.

·     The geological chance of success at Biscathorpe-2 is 40% and the range of Prospective Resources is tabulated below (as estimated by the Operator).

Volumetric Input / Output

P90

P50

P10

P(Mean)

STOIIP (mmbo)

7.52

29.50

142.00

56.00

Prospective Resources (mmbo)

1.84

7.30

35.30

14.00*

*Net to Union Jack 22% interest 3mmbo

In addition, new slides containing updated information and a photograph of the Biscathorpe-2 drill pad are now available on the Company`s website www.unionjackoil.com titled “Biscathorpe-2 Update”.

David Bramhill, Executive Chairman of Union Jack, commented:

“We welcome the news of the impending drilling at Biscathorpe-2 and are pleased that the Operator continues to progress activities according to schedule.

Biscathorpe is one of the UK’s largest onshore conventional oil prospects with Mean Prospective Resources of 14 million barrels gross and a geological chance of success of 40% in which Union Jack has a meaningful 22% licence interest.

The Company`s economic modelling of the Biscathorpe Prospect highlights its attractiveness and shows a pre-drill value for the success case of circa £24 million net to Union Jack (using the industry standard net present value after tax at a 10% discount rate).

Biscathorpe is one of Union Jack’s near-term, high-impact projects and success here will be transformational for our Company.  We look forward to reporting on drilling activities at Biscathorpe over the coming months.”

ECO – Eco confirms 2019 drilling program, Orinduik Block

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX-V: EOG), the oil and gas exploration company with licences in highly prospective regions in Guyana and Namibia, is pleased to announce its drilling plans for 2019 on the Orinduik Block, offshore Guyana.

Highlights:

·     Initial 2019 drill plan approved by Eco Atlantic, Total E&P Activities Petrolieres (“Total”) and Tullow Guyana B.V. (“Tullow”), (Operator), (the “Partners”)

·     First exploration well on Orinduik to be drilled late May – early June 2019, on the Jethro-Lobe prospect

·     The prospect is an Upper Cretaceous stratigraphically trapped canyon turbidite

·     Net cost of first well estimated at USD$7.6m

·     Partners finalising synergies of at least two wells for 2019 drilling

The Partners on the Orinduik Block, being Eco Atlantic, Total and Tullow (Operator), approved the initial 2019 work plan and budget for the first exploration well on the Orinduik Block on 30 November 2018.  The initial budget is for drilling the ‘Jethro-Lobe’ prospect to be spud by the end of May – early June 2019. This will be the first well out of at least two well campaigns proposed by the Operator in 2019.

The Partners have approved the purchase of the necessary long lead items and are currently considering the proposals offered by drilling and service contractors who have offered a firm drilling window within the Partners’ envisaged timeframe and competitive rates. Eco estimates that the approximate net cost to Eco of the first well, targeting the Jethro Lobe prospect, at up to USD $7.6 million. Eco is fully funded for the 2019 campaign having current cash of over USD $20 million, as announced on 29 November 2018.

The Jethro-Lobe prospect, which will be drilled from a conventional drill ship, is an Upper Cretaceous stratigraphically trapped canyon turbidite in approximately 1,350 meters of water.

Colin Kinley, Chief Operating Officer of Eco Atlantic commented:

“The Jethro-Lobe well is the first well approved by the Partners for 2019. As announced by Tullow, there are a number of high-potential additional drilling candidates that are on the top of the interpretation list. The Partners are currently evaluating the synergies of drilling a second well in this campaign and are assessing rig timing and budget to drill a second candidate. We have a great deal of confidence in the selection of the Jethro-Lobe drill candidate; the Partners are unanimous on the selection of the location, reservoir quality, charge and production characteristics and view this candidate as having a high chance of success and potential for a first discovery.

“Our confidence was bolstered even further by the upgraded estimate of the discovered recoverable resource to over 5 billion barrels of oil equivalent on the Stabroek Block, as announced by ExxonMobil and Hess on 3 December 2018. Further evaluation of previous discoveries in addition to the tenth discovery on the block, Pluma-1, contributed to the upgrade. Each successful well drilled on Stabroek lowers Eco’s risk on Orinduik.”

TLOU – Top-hole drilling successfully completed at Lesedi

Tlou Energy Limited, the ASX, AIM and BSE listed company focused on developing gas-to-power projects in southern Africa using coal bed methane (“CBM”) natural gas from its field in Botswana, is pleased to provide an update on drilling operations at the Lesedi CBM Project.

Key Points:

·    Top-hole drilling for both lateral and vertical sections for production pods ‘Lesedi 3’, ‘Lesedi 4’ and top-hole drilling for the optional production pod ‘Lesedi 5’ have been completed successfully;

·    Project is on time and in line with budget;

·    Preparations for drilling the lateral well section of ‘Lesedi 3A and 3B’ and ‘Lesedi 4A and 4B’ have commenced with the program set to continue into early 2019.

Drilling operations update

The Company is pleased to announce that drilling of the top-hole sections for both the vertical and lateral wells at the Lesedi CBM Project has been completed successfully and is in line with budget.  Preparations for drilling of the lateral wells for Lesedi 3 and 4 have commenced with the program set to continue into early 2019  

These wells are being drilled in the area proposed for initial project development and are aimed at confirming the gas flow rate in this area prior to commencement of development operations.

Tlou Managing Director Tony Gilby said “The drilling operations have progressed extremely well, and I would like to thank all our field staff for their excellent work to get to this stage.  I look forward to the drilling of the lateral sections of Lesedi 3 and Lesedi 4 followed by commencement of production testing operations in early 2019.  We will keep the market informed as we continue to progress the program.”

Background to the drilling program

Tlou Energy Limited is drilling pilot production wells at the Lesedi CBM Project (‘Lesedi’) in Botswana.  If successful, these wells will form part of the Company’s initial gas-to-power project which will include installation of transmission lines and grid connection.  The wells are located in close proximity to the Company’s planned central processing facility.

The wells are being drilled as ‘dual lateral pods’, comprising a single vertical production well, intersected by two lateral (or horizontal) wells.  The lateral wells will be drilled through the gassy coal seam, with gas extracted from this coal produced through the vertical production well where it can be gathered and used for power generation. Up to three pods are planned.  Pod one is designated ‘Lesedi 3’ and comprises a vertical production well (‘Lesedi 3P’) and two lateral wells (‘Lesedi 3A’ & ‘Lesedi 3B’).  Pod two is designated ‘Lesedi 4’ and pod three is designated ‘Lesedi 5’. 

Once all six wells for Lesedi 3 and Lesedi 4 have been drilled, these pods will be completed using a separate workover rig and surface production facilities will be installed.  Vertical and lateral sections for Lesedi 5 are optional and will be completed subject to results from Lesedi 3 and 4.  

Following installation of surface production facilities, completed wells will then begin production testing to de-water and lower the pressure in the coal seam to achieve gas flow.  

Other

In October 2018 the Company submitted a response to a 100MW CBM Request for Proposal from the Government of Botswana, as outlined in the market announcement on 10 October 2018.  The Company is awaiting feedback in relation to this and looks forward to providing an update to the market as soon as possible.

In addition, Prospecting Licences PL 035/2000 and PL 037/2000 were renewed during November 2018.  These licences are current until 30 September 2020. 

EOG – “we have commenced planning to drill a well targeting our flagship Inishkea Prospect on LO16/20 in the Slyne Basin in 2020”

Europa Oil & Gas (Holdings) plc, the AIM quoted UK and Ireland-focussed oil and gas exploration and production company, is holding its Annual General Meeting (‘AGM’) later today.  At the meeting, Simon Oddie, Chairman of Europa, will make the following statement:

“Europa holds a multi-stage portfolio of production, development and exploration assets in the UK as well as an industry-leading licence position offshore Ireland, one which is exposed to the same plays being targeted by major operators in the upcoming round of drilling that is due to commence in 2019.

“Europa has played an active role in offshore Ireland exploration in recent years and we intend to continue to do so.  With this in mind, considerable progress has been made over the last twelve months towards delivering on our goal to drill our first well offshore Ireland in 2020. Over and above our excellent work in Ireland, however, the last twelve months have demonstrated the importance of having a diversified portfolio of projects, not only in terms of stage of development, but also in terms of jurisdiction.  Here too, progress has been made, specifically with regards to adding a third territory of interest to our portfolio.

“Offshore Ireland, a successful technical work programme focused on identifying and de-risking multiple targets across our licences using state of the art 3D seismic data resulted in a more than 50% increase in gross mean unrisked resources. This substantial step-up is all the more impressive when one considers last year’s AGM Statement made reference to the circa 4 billion barrels of oil and 1.5 TCF of gas that, by that point, we had identified across these same licences.  Today, the numbers stand at 6.4 billion barrels of oil equivalent and 2.5 tcf of GIIP.  It is numbers like these that help to explain why blue-chip operators are investing heavily in exploration projects in the region.

“The technical work we undertook could well have resulted in a substantial downgrade to last year’s eye-catching volumetrics or even kill, at a stroke, the various prospects and plays on our licences.  Instead, not only have all our targets remained intact and the volumetrics increased substantially, but a number of lower grade leads have been reclassified as prospects.  This is a major achievement and one that has caught the attention of the blue-chip operators we are looking to partner with to take these prospects to the next stage: drilling.  As announced on 20 November 2018, we are currently negotiating farm-in agreements with a major international oil and gas company in respect of LO 16/20 in the Slyne Basin and Frontier Exploration Licences (‘FEL’) 1/17 and 3/13 in the South Porcupine Basin which, subject to a successful conclusion, could result in Europa having material interests in up to three high impact wells.

“In tandem with these farm-out negotiations, we have commenced planning to drill a well targeting our flagship Inishkea Prospect on LO16/20 in the Slyne Basin in 2020.  The decision to upgrade Inishkea to flagship status during the year was an easy one: a robust geological model based on a gas play that has been proved up by the nearby producing Corrib field and the Shell 18/20-7 gas discovery well drilled in 2010; close proximity to infrastructure; relatively low drilling costs due to shallow water depths; and the growing importance of gas in Ireland’s energy mix.  Our target drill date for Inishkea is 2020 and shareholders can expect further updates on our plans over the course of the next 12 months.

“While major milestones were chalked up across our Irish portfolio in 2018, the same cannot be said for our UK onshore assets.  Our existing production benefited from rising oil prices, generating revenues of £1.6 million during the last financial year. We are constantly looking to maximise our existing production, and we have a number of initiatives underway focused on achieving just that. However, efforts to scale up output both by bringing the Wressle oil discovery in North Lincolnshire on line and by drilling the conventional Holmwood prospect in the Weald Basin, proved fruitless following unfavourable decisions at the council and governmental levels respectively.  We remain optimistic that Wressle will eventually be brought into production at a gross rate of 500 bopd, even after the disappointing decision by the Council’s planning committee to refuse permission despite a recommendation from its own professional planning officer.  However, following the decision by the Secretary of State for Environment, Food and Rural Affairs not to renew the lease for the drill site at Bury Hill Wood, we took the decision to withdraw our application to extend planning permission to drill Holmwood. We are evaluating PEDL143’s remaining prospectivity ahead of developing a forward plan.

“Our experience onshore UK during 2018 has vindicated the Board’s decision to add a third territory to our portfolio.  Over the course of the year, we have evaluated a number of potential projects in several new jurisdictions and, as announced on 20 November 2018, we are pursuing a new venture opportunity in Morocco to further diversify our asset base.  By next year’s AGM Statement, I am confident Europa will not only have a clear line of sight towards the drilling of at least one potentially transformational well offshore Ireland, but also have a portfolio of assets in at least three jurisdictions, all at various stages of development and all contributing to our growing pipeline of opportunities offering significant re-rating potential.”