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Rose Petroleum updates on Rocky Mountain and Utah Paradox projects

Rose reported 'key milestones' as it continues to work to close its Rocky Mountain acquisition, meanwhile, in Utah it has secured an extension for its core Paradox acreage.

Rose Petroleum PLC - Rose Petroleum updates on Rocky Mountain and Utah Paradox projects

Rose Petroleum PLC (LON:ROSE) on Monday released a pair of investor updates as it continues to work on the composition of its asset portfolio in the United States.

The explorer, in Utah, has received regulatory approval to extend its lease over the Paradox project, securing some 11,300 acres in the core project area for two more years.

In the Rocky Mountain region, which is now Rose’s main focus, the company said it has achieved key milestones in the acquisition process.

Rose, back in November, signed a letter of intent with Captiva Energy Holdings (CEH) setting out the terms for the acquisition of the McCoy lease - a 317 acre area in the Denver-Julesburg Basin - in Colorado and it is now working to close that deal.

The initial transaction sees Rose take an 8.5% of McCoy (10% of CEH’s 89.5% stake) before earning up to 80% of CEH’s stake.

READ: Rose Petroleum to acquire stake in Denver shale play

Today, Rose noted that CEH had inked an amendment to the McCoy lease to allow the drilling of extended horizontal wells and CEH has separately elected to support Great Western Operating Company which has applied for a drill permit for a campaign across its 1,280 acre portfolio, which includes McCoy.

Chief executive Colin Harrington said: "These are exciting times for the company as we look to complete the acquisition and move closer to our goal of becoming an oil producer in the near term.

“We are very pleased to report on CEH's successful conclusion of lease amendment negotiations, and we welcome the opportunity to benefit from the expertise and investment that Great Western will bring as operator of the DSU.”

He added: “We are confident of robust economic returns from these two-mile lateral horizontal wells, and upon completion of the Acquisition we look forward to participating in the proposed drilling programme as working interest owners alongside CEH and Great Western.”

Harrington noted that Rose continues to move towards completing the acquisition and securing the funding necessary to participate in “this transformational opportunity”.

Paradox extension

In total, Rose has a 19,900 acre contiguous position at Paradox, in Utah, and, the majority of that land was the subject of a 2018 seismic data capture.

It will now have an immediate 75% interest in the extended acreage, without the ‘earn-in’ structure that was previously in place. There aren’t any acquisition costs, and, the company noted that following the relinquishment of non-core acreage, lease payments have reduced.

The restructured Paradox project acreage is estimated to host some 9mln barrels of oil equivalent contingent recoverable resources.

"With the project JV agreement successfully renegotiated, the project land position now restructured and an increase in term now secured, we are in a strong position to recommence our farm-in process,” Harrington said.

Harrington also noted that the changes also make the project more attractive to potential funding partners.

He added: "While the company's immediate focus is to acquire near-term production in more mature Rocky Mountain Basins, the upside that can be delivered from our Paradox project makes it a highly attractive investment opportunity and ensures the project will remain a central part of company's future focus and activity.”

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