Rose Petroleum plc (AIM: ROSE), the AIM quoted natural resources business, is pleased to provide an update on operational progress on its project in the Paradox Basin, Utah, U.S.A. (“Paradox Basin”). Following the acquisition of additional acreage earlier this month (the “new acreage”), the Company continues to earn into a 75% working interest in a total of approximately 80,000 acres in the Paradox Basin. Activity on the ground continues apace, and the Company is aiming to drill its first well later this year.
The Company has assembled a highly experienced subsurface and surface operational team with extensive experience and a successful track record in the Paradox Basin. The team designed, managed and implemented a nine-well drilling programme in the Paradox Basin directly to the south of Rose’s acreage. Eight of these wells were commercial and production grew from circa 100 barrels of oil per day (“BOPD”) to over 3,500 BOPD.
The operational team has now largely completed the subsurface assessment, well location selection and basic well design and engineering for the Company’s first proposed horizontal well, the GVU 29-1. The Application for Permit to Drill (“APD”) process for GVU 29-1 is well underway. The Notice of Staking, which is the first requirement for the APD, was lodged and accepted by the Bureau of Land Management (“BLM”) earlier this month and the Company is currently preparing for the onsite inspection of the proposed well location with the BLM, which is due to take place imminently. It is currently expected that the APD will be granted in Q3 2018, which will permit the Company to commence drilling operations soon thereafter.
Following the completion of the first phase of the well design work, the new operational team has also completed time/cost estimates for the initial well. It is currently expected that the total cost of the well (including completion, testing and tie-in costs) will be in the range of US$7-8 million, which is well below our previous budgeted forecast of US$8-10 million. We would also expect this to be even lower during the development phase as operations increase. Discussions with industry and financial partners to fund the drilling programme are underway and, as previously announced, the Board is committed to avoiding dilution to existing shareholders wherever possible.
The Company has now identified approximately 60 potential well locations on both its existing and new acreage within the area covered by the Company’s 3D seismic survey that was completed in 2017. By applying a similar methodology to the Ryder Scott Company’s 2014 Competent Persons Report (“CPR”) and as per SPE-PRMS standards and definitions, Rose’s management estimates that, within the acreage covered by the 3D seismic, there is the potential to be unrisked prospective resources of circa 38 million barrels of oil equivalent (“MMBOE”) in the Cane Creek reservoir (“Clastic 21”) alone. The Paradox Basin formation is made up of approximately 24 clastic zones, of which Clastic 21 is the primary producing zone of the basin to date. Additional potential clastic reservoir zones also exist, both above and below the Clastic 21. These were also assessed as prospective in the CPR and add further potential both within the 3D seismic covered area (which represents only 15,000 acres of the 80,000 acres over which the Company has a working interest) and the area outside.
The prospectivity of Rose’s acreage is underpinned by the existence of the producing 28-11 well which is only 365 metres to the west of the new acreage. The 28-11 was drilled in 2006 by Delta Petroleum and has produced 141,000 BOE from Clastic 21. These factors give management a high degree of confidence in the potential of Rose’s acreage and, as a result, it has been decided to also proceed with the permitting of a second well location in the new acreage, the 22-1 well. The 22-1 would be a horizontal well which Rose’s management consider has an Estimated Ultimate Recovery (“EUR”) of 894,000 barrels of oil equivalent (“BOE”).
Given the recent completion of the 3D seismic survey and the acquisition of the new acreage, the Company is now in the process of updating the CPR to ensure it accurately reflects the current position.
The Company is pleased to announce that it will exhibit and present at the 2018 UK Investor Show (https://www.ukinvestorshow.com) in London on Saturday, 21st April 2018. The Company will be at stand 43 at the conference in the Queen Elizabeth II Centre, Broad Sanctuary, Westminster, London, SW1P 3EE.
Matthew Idiens, CEO, commented: “I am delighted that we’ve been able to assemble such a capable operational team, with an impressive track record of success in the basin. Significant cost savings have already been identified in the well design and further savings are expected.
“We continue to make excellent progress on the ground and are preparing to drill our first appraisal well before the end of 2018, which will be a key milestone for Rose.”
Estimated Ultimate Recovery: Estimated Ultimate Recovery (EUR) is defined as those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from an accumulation, plus those quantities already produced therefrom.
SPE-PRMS: the standards and definitions of the SPE-PRMS as published by the Society of Petroleum Engineers, the American Association of Petroleum Geologists, the World Petroleum Council and the Society of Petroleum Evaluation Engineers in 2007
Unrisked prospective resources: Prospective Resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations
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