The AIM oil firm agreed in March to pay US$2mln upfront, and committed to spend US$17mln on drilling, to acquire a 75% interest – 59.25% net revenue interest – in 230,000 acres split across the Cane Creek property in the Paradox shale and the Mancos shale project.
Based on the findings of today’s reports, the acquisition could prove shrewd to say the least.
Consultant Ryder Scott estimates the group’s interests in the Mancos and Paradox shale plays could contain 1.45bn barrels of oil and 4.79tln cubic feet (tcf) of gas.
Breaking the numbers down, Paradox is estimated to have 966mln barrels of prospective oil resources and 1.88 tcf of gas. While the figures for Mancos are 486mln barrels and 2.9 tcf of gas.
The numbers have yet to be proven up by drilling, but nonetheless, they reflect a great deal of potential.
"We are pleased to be able to release these independent numbers from Ryder Scott from which it is clear that the Project offers significant production potential,” said chief executive Matthew Idiens.
“The resource is presently categorised as Prospective Resources which, as stated by the report, is based on the current lack of drilling directly on Rose's Leases.
“However, given that multiple wells in the surrounding area to Rose's Leases have produced oil and gas to surface from various Paradox Clastics, as have several shallow unstimulated vertical open hole wells in the Mancos shale, we believe that the Project is extremely exciting and has the potential to dramatically change the outlook for Rose."
Separately another consultant, Christie Ward Schultz, assessed Rose’s interests in the Paradox shale (via the Cane Creek project) with a US$1.47bn net asset valuation for a 30 year life-of-field, whilst for Mancos this is estimated at US$941mln.
Over a 10-year period, the valuations for Paradox and Mancos come in at US$660mln and US$503mln respectively.
The consultant estimates Cane Creek’s ‘finding and development’ costs at US$19.50 per oil equivalent barrel, whilst for Mancos this is estimated at US$16.91. Cane Creek is estimated to have a rate of return of around 125%, and for Mancos it is 96.31%.
Idiens added: “With both basins being actively developed the infrastructure available to us is excellent with road, rail, pipeline, power, etc. are all readily available.”
“The Leases are also in an ideal location being only about an hour's drive to Grand Junction, which is the region's Oil & Gas services hub offering drill rigs, fraccing equipment, etc. Basically, we could not be better set."