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Rose Petroleum advancing Paradox assets to drilling after year of “substantial progress’

"This has been a period of intense activity and sustained progress for the group and we are now working towards drilling our first well in the Paradox Basin later this year,” said Matthew Idiens, Rose chief executive

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The GVU-29-1 well is expected later this year

Rose Petroleum PLC (LON:ROSE) described its past financial year as a period of “substantial progress’ as it works towards drilling its first well in Utah’s Paradox basin.

The explorer’s maiden well programme is due to take place before the end of 2018.

In Wednesday’s financial results statement, for the twelve months ended December 31, the company highlighted last year’s portfolio reorganisation which included the sale of ore processing facilities in Mexico – which brought in US$1mln of cash.

It also raised US$4mln of new equity through a September share placing.

WATCH: Rose Petroleum moving closer to drilling at Paradox Basin

During the period, the company also secured approvals for a 3D seismic shoot and subsequently, in October, executed the programme on-time and on-budget.

That data capture process was significant because, according to Rose, it highlighted the scale and prospectivity of the Paradox acreage.

"This has been a period of intense activity and sustained progress for the group and we are now working towards drilling our first well in the Paradox Basin later this year,” said Matthew Idiens, Rose chief executive.

He added: “This is a busy and exciting time for the group and the board and management team are more convinced than ever that the Paradox acreage is a highly prospective asset which can deliver strong returns to shareholders.

“We hope this will be a landmark year for the company."

Financial results

Rose ended the 2017 financial year with US$2.2mln of cash and equivalents, and the explorer reported a net loss of US$2.5mln on US$0.3mln of revenue from the discontinued Mexican gold operations.

The company noted a significant reduction in operating and development spending for the Paradox project through the year. Albeit, it also noted that its total investment in its exploration and evaluation assets had amounted to US$12.1mln, primarily representing the investments into the Utah assets.

Looking into the current period, Rose highlighted that some 60 potential well locations have been identified via the Paradox seismic data and that, in April, it expanded its footprint in the basin.

Preparations for drilling

Preparations the first horizontal well, GVU-29-1, such as the subsurface assessment, well location selection and basic well design and engineering are now largely complete.

It expects to secure a drill permit for the well by the third quarter, with the drilling anticipated to follow before the end of the year. The well is expected to cost between US$7mln and US$8mln, below previous estimates which were pitched at US$10mln.

Efforts to conclude the funding process for the well are continuing. A virtual data-room is now established and the company said it is very pleased by the interest shown in the project to date.

A pending competent persons report is due to deliver an updated resources estimate, taking into account the new 3D seismic and analysis, and Rose said it is expected to give independent verification of the geological and economic strength of the Paradox project.

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