viewZephyr Energy PLC

Rose Petroleum to acquire stake in Denver shale play

"This proposed acquisition, and associated option, is the first in a series of expected deals designed to build value"

Rose Petroleum PLC -
The DJ Basin has had 4,000 wells drilled so far

Rose Petroleum PLC (LON:ROSE) has signed a Letter of Intent (LoI) to acquire a 9% interest in shale assets in the prolific DJ Basin in Colorado.

There is also an option to increase the working interest to around 80%. 

Rose said the acquisition will provide near-term, low-risk horizontal development drilling exposure in the prolific Niobrara shale play and on acreage contiguous to other major DJ Basin operators.

The LOI is with Captiva Energy, a company owned by Origin Creek Energy one of Rose’s major shareholders and whose owners are its chief executive Colin Harrington and chairman Rick Grant.

Captiva currently has an 89.5% working interest in the 317Km McCoylease.

A 12-well horizontal drilling programme has been proposed for McCoy, with Rose’s share of the costs to be funded partly by a £1.25mln fundraise at 1.2p per share.

In a statement, Harrington said: "The DJ Basin is a world-class, liquids-rich resource play with over 4,000 horizontal wells drilled to date. This proposed acquisition, and associated option, is the first in a series of expected deals designed to build value via attractively priced, low-risk assets which can deliver production in the short term.”

Rose estimates that the total capex for the 12-well programme will be circa US$72mln, or US$6mln per well, and the expected estimated ultimate recovery from each of the wells will be around 850,000 barrels of oil equivalent (0.85mmboe).

Capita spending based on Rose’s initial acquisition of 10% of CEH's working interest is currently estimated to be US$1.6mln, with up to a further US$12.6mln should the option be exercised in full.

In addition, Rose will also carry CEH to an equivalent 11.1% of capital spending on the first 20 wells drilled on the lease.

Reserves and production data will be made public when a Competent Person's Report is published.

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Price: 0.675 GBX

Market: LSE
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