1 Dec 2014 07:00
Rose Petroleum plc ("Rose", the "Company" or the "Group")
Fundraising of £3.5m by way of a conditional placing and subscription
Development economic update
Project financing discussions
Rose Petroleum plc, the AIM-listed (Ticker: ROSE) natural resources company, is pleased to announce its intention to raise £3.5m by way of a conditional placing and subscription.
Summary of the Placing
· The Company proposes to raise £3.5m (before expenses) by way of a conditional placing by Allenby Capital Limited ("Allenby Capital") and Pareto Securities Limited ("Pareto") and a subscription of, in aggregate, 199,999,987 new ordinary shares of 0.1 pence each ("Ordinary Shares") (the "Placing Shares") at a price of 1.75 pence per share (the "Placing")
· Placing Shares have been conditionally placed with institutional and other investors
· The Placing is subject to, amongst other things, admission of the Placing Shares to trading on AIM ("Admission"), expected to take place on 5 December 2014
· The net proceeds of the Placing will be used to provide funds to develop the Company's Mancos and Paradox assets in eastern Utah and to meet general Group overheads
· The Company also announces that early stage discussions are taking place for potential project level funding into Rose's subsidiary, Rose (Utah), LLC to further accelerate development of the Mancos and Paradox assets
Matthew Idiens, CEO, commented: "I am delighted to announce this opportunistic fundraising at a 17% premium to our last fundraise in early summer. We are particularly pleased that we have been able to carry out the fundraising despite the current turmoil in world oil markets and are gratified by the confidence placed in us by our investors. This fundraising is within our existing share authorities and, given the early stage discussions we are having in relation to potential project level fundraising, we are aiming to minimise dilution for shareholders at this time. The net proceeds of the placing will allow us to continue the development of our Mancos and Paradox assets, where we anticipate spudding our first well in the Uinta basin and commencing work on the completion of the 16-42 shut-in well in the Paradox basin in the coming weeks."
For further information, please contact:
Rose Petroleum Plc +44 (0) 20 3697 1209
Matthew Idiens, CEO
Allenby Capital (Nominated Adviser & Joint Broker) +44 (0) 20 3328 5656Jeremy Porter / Alex Price
Pareto Securities (Joint Broker) +44 (0) 20 7786 4370
Will Slack
Lionsgate Communications (Public Relations) +44 (0) 20 3697 1209 Jonathan Charles / Lynn Carratt
Placing and subscription of 199,999,987 new Ordinary Shares at 1.75 pence (the "Placing Price") per new Ordinary Share
1. Introduction
The Company proposes to raise £3.5 million (before expenses) through the issue of 199,999,987 new Ordinary Shares at 1.75 pence per share. The Placing Price represents a discount of approximately 12.5 per cent. to the closing bid-price of 2 pence per Ordinary Share on 28 November 2014, being the last dealing day immediately prior to the release of this announcement. The Placing price was determined by a book-building process carried out by Allenby Capital and Pareto and having considered the price at which the Ordinary Shares are currently traded, and other market factors, the directors of Rose (the "Directors") have resolved that the Placing Price is appropriate. The Placing Shares will represent approximately 13.24 per cent. of the Company's share capital as enlarged by the Placing ("Enlarged Share Capital").
Pursuant to the terms of a placing agreement, Allenby Capital and Pareto, as agents for the Company, have agreed to use their reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing Agreement is conditional, inter alia, upon Admission becoming effective on or before 8.00 a.m. on 5 December 2014. The Placing Agreement contains provisions entitling Allenby Capital and Pareto to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised the Placing will not proceed. The Placing has not been underwritten by either Allenby Capital or Pareto.
2. Background to and reasons for the Placing
The Directors believe that there is currently an opportunity to raise funds from a small number of institutional and other investors rather than by offering all Shareholders the opportunity to acquire further shares and that this opportunity may not be present in the near future given the current uncertain market conditions. The Directors believe that the additional cost and delay incurred in connection with any such offer would not have been in the best interests of the Company.
The Directors are proposing the Placing to provide the funds to develop the Company's Mancos and Paradox assets in Eastern Utah and to meet general Group overheads.
3. Current trading and prospects
The interim accounts of the Group for the six month period ended 30 June 2014 were announced on 30 September 2014 and contain the Board's view on the current trading and prospects of the Group.
Subject to the successful completion of the Placing and Admission, the Company anticipates announcing the following developments over the next few months:
· spud the first Mancos well (December 2014);
· begin completion of 16-42 Paradox well (December 2014);
· Cisco Dome workovers, recompletions, development wells (periodically throughout next 18 months);
· Ryder Scott proven and probably reserve report for Cisco Dome conventional reservoirs (Q1 2015);
· Paradox completion results (Q1 2015);
· begin permitting additional 3-D surveys (Q1 2015);
· core analysis results of first Mancos Well (Q1/Q2 2015); and
· drill and complete horizontal lateral in first Mancos well (Q2 2015).
4. Development economics update
The Company engaged Todd Hattenbach, an independent oil and gas financial analyst, to prepare an economic analysis on Rose's conventional production from its Cisco Dome Project, Utah, USA, further details of which were announced on 10 October 2014 with a production profile based on the existing producing wells in the field, and the result of this is as follows on a single well basis:
Single well inputs
· Price: US$85/BO and US$3.50/MCFG flat
· OPEX (LOE): US$850/month per well
· CAPEX: US$600,000
Discounted (10%) economic indicators
· NPV: US$3.5m
· ROI: 8.22
· ROR: 3,547%
· pay out: 2 months
· breakeven cost: US$5.08/ BOE
In relation to the economic analysis on Rose's Mancos and Paradox Oil and Gas Projects, Utah, USA prepared by Christie Ward Schultz, an independent consultant petroleum engineer, further details of which were announced on 23 May 2014. Ms Ward Schultz has calculated a break-even cost of below $20 per barrel of oil equivalent.
5. Admission and dealings
Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Placing Shares on AIM will commence on 5 December 2014.
The Placing Shares will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared following Admission.
6. Statement on Director participation and project financing discussions
The Directors are unable to participate in the Placing because the Company is currently in early stage discussions with interested parties in relation to potential project level funding into Rose's subsidiary, Rose (Utah), LLC. The details of the discussions cannot be disclosed at this time, although the Directors are cautiously optimistic about the prospect of these discussions leading to a transaction being concluded which would result in no significant further dilution to Rose's shareholders at the plc level. There can, of course, be no guarantee that those discussions will result in a concluded transaction or indeed any investment without further dilution to Rose's shareholders at the plc level. Further announcements will be made at the appropriate time.
7. Holdings
Following the issue of the Placing Shares, Roy Williams will be interested in 187,710,286 Ordinary Shares representing 12.43 per cent. of the enlarged issued share capital of the Company. Mr Williams' interest includes 139,134,097 shares that he holds in his own name along with 4,000,000 shares held by his wife, Deborah Louise Williams, 32,195,237 shares held by Peaseblossom Limited, a company over which Mr Williams exercises voting control and 12,380,952 shares held by Mustard Estates Limited, a company over which Mr Williams exercises voting control.
8. Total voting rights
The Company announces that following Admission its issued share capital will consists of 1,510,185,120 ordinary shares of 0.1p each with one voting right per share. The Company does not hold any shares in treasury. Therefore the total number of Ordinary Shares and voting rights will therefore be 1,510,185,120.
The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.