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Rose Petroleum rings changes as OCE comes on board

Snapshot

  • Substantial acreage in the Paradox Basin in Utah
  • Focus on high priority acreage 
  • These contain 8.3mln barrels of oil equivalent
  • Valuation (NPV) to Rose estimated at US$59mln
Oil rig

Quick facts: Rose Petroleum PLC

Price: 1.45 GBX

AIM:ROSE
Market: AIM
Market Cap: £2.48 m
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Rose Petroleum PLC (LON:ROSE) has been restructuring its board and senior management in recent weeks.

Origin Creek Energy is now a significant shareholder in the company.

OCE, an investor in the US onshore upstream sector, bought in at 1.2p, raising £300,000 for the AIM-quoted company.

Colin Harrington, OCE’s chief executive, took over as Rose’s executive chairman.

Rick Grant previously chief executive of Suez North America and co-founder of OCE has also joined the board as non-exec.

 

How is it doing

In October, Rose unveiled a restructuring of its Paradox basin venture.

A new agreement with joint venture partner Rockies Standard Oil Corporation (RSOC) allows Rose to focus on a potentially highly economic core acreage position of circa 12,920 acres.

This area is host to 21 “high priority” drill targets representing some 8.3mln barrels of oil equivalent contingent resources, valued at around US$59mln net to Rose – which would be a significant premium to the current market value of £2.48mln.

The new agreement also reduces overall costs for maintaining the project and gives “immediate ownership” of the highest potential acres.

Rose gains an immediate 75% working interest ownership and operatorship of key acreage, replacing the earn-in structure in the original agreement with RSOC.

The original obligation to carry RSOC for a 25% working interest on the first well stays in place and commits to carry RSOC for a 25% working interest for the acquisition of specific targeted leases in and around the core acreage area, up to a total cost of US$500,000.

The AIM-quoted firm has terminated its rights for less prospective acreage and has reassigned those rights back to RSOC.

 

What the boss says: Colin Harrington, CEO

“By focusing on highest potential acreage, the company maintains a project of real scale and value while reducing its on-going running costs and extending project term. 

“Most importantly, the company will also gain immediate ownership of core acreage and will become operator across the project.  I believe this restructuring will make the project more attractive to potential investors as we continue with our farm-in process.”

"In the board's view, the high-grading of the project will create a long-term future for the project, one which meets the board's selection criteria and which will positively complement the company's future balanced asset portfolio."

 

Video

 

Inflexion points

  • Drilling of high priority targets underway
  • Take ownership immediately of core acreage
  • Worth an estimate US$59mln

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Watch

Lionel Therond on Rose Petroleum

Lionel Therond talks through Rose Petroleum and the completion of the initial structural interpretation of the 3D seismic data it acquired over its Gunnison Valley Unit (GVU) which is part of its larger lease holding in the Paradox Basin, Utah, U.S.A.

on 26/2/18

2 min read