10 Oct 2014 07:00
Rose Petroleum plc (AIM: ROSE)
("Rose" or the "Company")
Completion of strategic acquisition
Strategic acquisition of producing wells, midstream gathering system, gas processing plant and tap into 26" pipeline in the Company's Mancos development area, Grand County, Utah U.S.A
Rose Petroleum plc (AIM: Rose), the AIM-listed natural resources company, is pleased to announce that its wholly-owned U.S. subsidiary, Rose Petroleum (Utah) LLC ("Rose Utah") has acquired 100% of the assets of a privately owned oil and gas operating company, SEP - Cisco Dome, LLC and various other associated entities ("SEP") (the "Acquisition"). The assets are located within the Uinta Basin adjoining Rose Utah's Mancos project where Rose Utah already owns rights to approximately 118,000 gross acres.
Acquisition highlights
· midstream assets
o approximately 76 miles of gathering lines
o gas compression station and gas processing plant currently operating at a 30% utilisation rate
o tap into 26" natural gas pipeline
· upstream assets
o 52 wells - 17 producing and 35 shut-in
o average working interest of 99.3256%
o average net revenue interest 75.0733%
o approximately 11,000 gross acres of leasehold
o conventional production and shallower Mancos Shale resources
o currently producing approximately 14 million cubic feet of gas ("MMCFG") and 110 barrels of oil and natural gas liquids per month
· current net income over US$40,000 per month
· purchase price: US$1.5m in cash
Rose's CEO, Matthew Idiens, commented: "We are extremely pleased to be able to update shareholders on this important acquisition which we view as a significant step in the process of establishing Rose as one of the leading operators in the area. This acquisition gives Rose Utah significant leverage within this area of operations as it now owns the only midstream gas gathering system and gas processing plant in that portion of the area. It also now owns the rights to a tap into the main gas transportation line in the area.
Idiens added: "We are delighted to have acquired what is a strategic asset to Rose at a favourable price from SEP who viewed it as non-core to their own operations. We look forward to informing the market of the increase in Mancos Resource figures in the coming months once our Ryder Scott Certified Resource Assessment Report has been updated with these new Mancos properties."
Background
Under the terms of the Acquisition, Rose Utah has acquired 100% of the assets of SEP which include approximately 76 miles of gathering lines, a gas compression station and gas processing plant and a tap into a 26" natural gas pipeline for US$1.5m in cash.
In addition to the mid-stream assets, Rose Utah also acquired 17 producing wells and 35 shut-in wells. These wells are currently producing approximately 14 MMCFG and 110 barrels of oil and natural gas liquids per month. Existing production is from conventional reservoirs below the Mancos Shale Formation, which is Rose's primary zone of interest. As a result, all the wells, both producing and shut-in, pass through the Mancos Shale which will enable Rose to potentially utilise these vertical well bores to exploit the Mancos Shale horizontally, as well as the deeper conventional reservoirs which are present within 300 feet of the base of the Mancos.
The Acquisition includes over 11,000 gross acres, held by production from the 17 wells, of Mancos and deeper oil and gas rights. Rose has engaged Ryder Scott Company ("RSC") to up-date its Certified Resource Assessment Report, which was published in May, by adding these new Mancos Prospective Resources. RSC's mid-case gross Unrisked Recoverable Prospective Resource Estimates for Rose's existing leasehold (excluding the newly acquired assets) presently stand at 486.5 MMBO (million barrels of oil) and 2.9 TCFG (trillion cubic feet of gas). Rose has also engaged RSC to prepare a Certified Reserve Report on the deeper conventional production once Rose has completed its detailed field study of these reservoirs which will include Proved Producing, Proven Developed Non-Producing, Proven Undeveloped and Probable Reserves for the conventional reservoirs.
Up-side potential
Aside from the obvious up-side potential in the additional 11,000 acres of Mancos rights, Rose considers that there are significant opportunities to increase production on these leases from the conventional reservoirs in the form of work overs, recompletions, development drilling and improvements in production operations including through the installation of plunger lifts which can increase individual well production in the field by up to three times and which have a short payback period. Additionally, Rose considers that improvements can be made at the gas processing plant to yield additional natural gas liquids.
Rose Utah's CEO, John Blair, commented: "This acquisition not only gives us all-important production and additional Mancos assets, but importantly it also gives us control of the local mid-stream gas system and, in turn, significant leverage for future acquisitions in the area. The acquisition also has the added benefit of providing us with the ability to control the transportation and processing of gas associated with our Mancos oil production."
John Blair, BSc Geology, Chief Executive Officer Rose Petroleum (Utah) LLC, who meets the criteria of a qualified person under the AIM Rules for Companies - Note for Mining and Oil & Gas Companies, has reviewed and approved the technical information contained within this announcement. Rose Petroleum (Utah) LLC, as operator of the project, is responsible for the contents of this press release.
For further information, please contact:
Rose Petroleum Plc +44 (0) 20 7225 4590
Matthew Idiens
CEO
Allenby Capital (Nominated Adviser & Broker) +44 (0) 20 3328 5656Jeremy Porter / Alex Price
Lionsgate Communications (Public Relations) +44 (0) 20 3697 1209 Jonathan Charles / Lynn Carratt
About Rose Petroleum
Rose Petroleum plc (AIM Ticker: ROSE) is focusing on developing its oil & gas portfolio, while seeking to create value from its mining portfolio.
In March 2014, Rose signed a farm-in agreement under which its newly formed subsidiary, Rose Petroleum (Utah) LLC, can earn 75% of certain oil, gas and hydrocarbon leases covering approximately 230,000 net acres in Grand and Emery Counties, Utah, USA, within the Paradox and Uinta basins.
In May 2014, Rose published the results of its reserve report prepared by Ryder Scott Company on the Mancos and Paradox Oil & Gas Projects. Unrisked Prospective (Recoverable) Hydrocarbon Resources on a Best Case (P50 equivalent) basis for the collective total Mancos Shale and Paradox Formation combined was 1,452.86 MMBO (million barrels of oil) and 4,791.85 BCFG (billion cubic feet of gas).
The Company also has three additional licences in Germany, two licences in Baden-Württemberg covering approximately 635,000 acres (2,560 square kilometres) and the third licence covering 657,000 acres (2,640 square kilometres) located in the Weiden Basin (northeast Bavaria).
In June 2014, the Company successfully raised £6.5m by way of an oversubscribed conditional placing and subscription to develop the Mancos and Paradox assets in Eastern Utah.
Management intends to build on these projects to establish a balanced international asset portfolio.
For further information please consult the Company's website: www.rosepetroleum.com
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