Rose Petroleum plc

Publication of Economic Analysis

23-May-2014

Publication of Economic Analysis

Rose Petroleum plc (AIM Ticker: ROSE) is pleased to announce the results of an economic analysis on Rose’s Mancos and Paradox Oil and Gas Projects, Utah, USA (the “Project”) prepared by Christie Ward Schultz, an Independent Consultant Petroleum Engineer. The Company, through its wholly-owned subsidiary Rose Petroleum (Utah) LLC (“Rose Utah”) holds a 75% working interest (59.25% net revenue interest) in certain oil, gas and hydrocarbon leases in Grand and Emery Counties, Utah covering 230,000 acres (the “Leases”).

HIGHLIGHTS

  • Life of Field (30 years) Net Present Value (NPV) (10%):
    • Cane Creek - Paradox Basin (gross) US$ 1,473,247,200 (US$1.47 Billion)
    • Mancos – Uinta Basin (gross) US$ 941,192,100 (US$941 million)
  • Cane Creek (10%) Rate of return (ROR) 125%
  • Mancos (10%) ROR 96.31%
  • Cane Creek Net Finding and Development Costs US$19.50/boe (barrels of oil equivalent)
  • Mancos Net Finding and Development Costs US$16.91/boe
  • 10 years NPV (10%)
    • Cane Creek – Paradox Basin (gross) US$ 660,956,105 (US$660 million)
    • Mancos – Uinta Basin (gross) US$ 503,979,082 (US$503 million)

Matthew Idiens, CEO, said: “Along with the Ryder Scott’s reserves report released today, we commissioned Christie Ward Schultz to produce an economic analysis of both individual Well and various Project development scenarios based on analogous Mancos and Cane Creek Production and Well costs from the surrounding area. The highlights above show the potential size of the Project and the models have been created using conservative assumptions on development role out and costs. 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.”

Key assumptions used by Christie Ward Schultz in preparing the economic analysis

Price:

  • Oil - US$85/b, Flat
  • Gas - US$3.50/mcfg (dry), Flat
  • NGL - 40% oil bbl

OPEX:

  • Fixed - US$5,000/well/month
  • Artificial lift - US$2,000/well/month
  • Processing & compression - US$0.40/mcfg
  • Trucking - US$4/bbl
  • Water disposal - US$2/bbl
  • Utah severance tax: 5% oil, 5% gas, 4% NGL
  • Ownership: 75% Working Interest, 59.25% Net Revenue Interest

Mancos:

  • Capital: US$3m (drilling, completion, and equipment)
  • 3,000 ft (TVD) Total Vertical Depth; 5,000 ft lateral length
  • Oil Well with 2000 (scf/bbl) GOR (Gas/Oil Ratio)
  • IP: 175 bopd (228 boepd)
  • EUR: 169 mbo; 225 mboe
  • Initial decline: 40%
  • B-Factor: 0.4
  • Final decline: 10%

Cane Creek:

  • Capital: US$8m (drilling, completion, and equipment)
  • 10,000ft TVD; 5,000ft lateral length
  • Oil Well with 500 (scf/bbl) GOR
  • Gas: 1200 – 1400 mmbtu
  • NGL yield: 15 bbl/MM
  • IP: 460 bopd (492 boepd)
  • EUR: 500 mbo; 535 mboe
  • Flat production first 9 months (since 2012, wells have been nearly flat for the first 18 months)
  • Initial decline: 60%
  • B-Factor: 0.95
  • Final decline: 10%

John Blair (BSc Geology and MSc Geophysics), Head of New Ventures for Rose Petroleum plc, who meets the criteria of a qualified person under the AIM Rules - Note for Mining and Oil & Gas Companies, has reviewed and approved the technical information contained within this announcement.

Christie Ward Schultz is US based and holds a BSc in Petroleum Engineering, Texas Tech University. She has over 14 years of experience in the oil exploration and production industry.