Red Rock Resources plc ("Red Rock" or the "Company"), the oil and mineral exploration and development company with interests in oil production in Louisiana, manganese production in South Africa, and gold production in South America, announces its unaudited half-yearly results for the six months ended 31 December 2015.
We present the Company's interim report for the six months to 31st December 2015.
The repositioning and restructuring of the company have continued during the period and since. Operating off a low cost base, cost outflows have been minimised, while management has concentrated on developing streams of income, as the company moves from a typical exploration company model to a cash flow-generative model.
In December 2015 a capital reorganisation was carried out and reduced the number of ordinary shares outstanding by consolidating every 25 old shares into one new share. While it is too early to be definitive, the indications so far are that the exercise may be succeeding in its purpose of reducing trading spreads and increasing tradability of the shares.
After a prolonged period of study of potential cash-flow generative oil opportunities in 2014 and 2015, the company acquired a 20% working interest in the Shoats Creek Oil Field in Louisiana in late 2015, initially by an agreement to participate in the drilling of two future wells, Lutcher More 21 and Lutcher More 22. Subsequently an equivalent interest in the Lutcher More 20 (LM 20) well, already drilled and coming into production, was purchased. On 7 March 2016 the coming into full production and first stable production rates from LM 20 (at over 200 barrels per day) were announced, and so as of that date Red Rock became an oil producer.
This investment was stress-tested for a number of different scenarios before it was made. On the basis of $30 a barrel oil, an 18% discount rate (rather than the normal 10% assumption), and first year production figures 40% below operator forecasts, Red Rock modelled a satisfactorily positive net present value. Currently, comparable oil prices are over $40 a barrel, while first year production appears likely to exceed operator forecasts.
The company expects to participate in drilling LM 21 and LM 22 over the course of the Summer, which access the same shallow Frio horizon as the nearby LM 20, and then LM 23 in the Fall. The consortium, with Red Rock participating, also intends to re-enter a well that accesses the deeper but economically important Cockfield horizon with a view to re-establishing production, to extend the held acreage, and to negotiate a natural gas contract in order to sell, rather than flare off, the gas production from these wells. Red Rock will meet its share of costs, and its net programme exposure will peak at around US$393,000 in the third quarter of 2016.
Exactly -the point I have been making for 13 years now but pride and the necessity for absolute control would never allow Andrew Bell to work inclusively as the team at MTR are so accomplished. One man bands with no exploration expertise will never make it -after all we listed as a exploration companies and directors of RGM and RRR since my departure would not know a mine if they fell down one.
Metal Tiger - S I Capital used to be our guys. How glad they must be that they are backing a winner which looks like having one of the most incredible copper discoveries ever in the Kalahari. Terry Grammar - Julian Hanna of Western Areas fame - Simon Lee of Samanatha gold fame - and now MOD Resources with MTR. And SEAM sold them the Thai projects - The way to make money with mining stocks is to back the people who deliver -not individuals who have no exploration expertise like the composition of the RGM and RRR boards. With some support we can assemble a genuine team again with RGM and RRR to 'find mines'. No one person finds and develops mines -it is a team approach and whilst AB tried and credit where credit is due 'one man bands' do not deliver. For instance in Kenya instead of using consultants- like MTR and every other successful company in the exploration space- you have your own guys who are mine finders. One man band companies are never successful. I rest my case - back changes if necessary with Bells support but whatever happens there must be change if either company is to succeed. But will he listen -highly improbable.
The only troll I see is you mate - everyone else discussing this stock has a genuine interest in change. If you own any shares try discussing meaningful changes with serious people who have the interests of all shareholders at heart -not squandering millions of pounds on countless failed ventures.
Shareholders should require Bell and the Directors to formally account for £20m or so of shareholder funds that exited the company via "administrative & Unallocated expenses" since 2010. Virtually every £ raised through dilutive placings quietly left the business through this quiet back door route see RRR annual reports & accounts 2009-2015 for details A full forensic audit is in my opinion a fully justified demand from shareholders...who having been savaged over the last five years have been told by Bell to expect more of the same
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