Rose Petroleum plc

Operations Update

9-March-2015

Rose is pleased to provide an operational update on activities within its US onshore oil and gas division

Rose Petroleum plc, the AIM-listed (Ticker: ROSE) natural resources company, is pleased to provide an operational update on activities within its US onshore oil and gas division which is made up of a 75% working interest in over 250,000 gross acres in the highly prospective Uinta  and Paradox Basins in Utah. 
 
Highlights
State 1-34 Mancos Well, Uinta Basin, Utah
  • Completion rig now mobilised to verify the commerciality of the potential conventional hydrocarbon discovery identified below the Mancos Shale formation 
  • Preliminary side wall core analyses have been received from Weatherford confirming expectations regarding lithology and porosity
  • Production tests on multiple intervals will follow and, subject to successful testing, the Company plans to hook-up to a production facility to commence production
  • The analytical work on the whole cores recovered from the primary Mancos Shale formation is expected to be completed in Q2 2015 
    • Data will be used to orient the direction of a horizontal lateral well in the Mancos and to optimise fracture stimulation design of the horizontal wellbore
 
Paradox activity update
  • Permitting process underway for Rose’s 61 square mile 3-D seismic programme to identify a first well location. Shooting is expected to commence in H2 2015, subject to permits.
  • Fidelity, which owns the Cane Creek Field south of Rose’s Paradox leasehold, has completed a further producing well demonstrating the area’s strong potential - this brings the total number of new producing wells drilled by Fidelity since 2012 to 23 wells with 20 additional wells currently permitted to be drilled.
    • The Cane Creek Unit #28-3 well was completed in the Paradox Clastics at a sustained rate of 600 BOPD through the month of January 2015
  • CCI Paradox Upstream, a division of energy merchant company Castleton Commodities International, has completed two high volume gas producing wells in the wet gas window in the southern end of the field
    • Combined the two wells have produced over 4.5 MMCFG/D since November of 2014 and CCI currently has plans to drill a third well in the same vicinity
 
Matthew Idiens, Group CEO, commented: 
The next few months are a key time in the development of the Company as we commence the completion of multiple intervals in the conventional reservoir, targeting production in Q2 2015. Concurrently, we continue with the analysis of the whole core from the Mancos Shale, and the development of this unconventional target remains our key priority given the significant potential that it presents. 
 
“While the current oil and gas climate presents challenges to the sector, our projected low breakeven cost of below US$20 per barrel of oil equivalent from the unconventional Mancos Shale, makes our assets commercial and attractive at both current and lower oil prices.  This differentiates us from our peers. Additionally, regional activity in the Paradox continues to highlight the upside available within our oil and gas division and we are progressing the 3D seismic permitting process.”  
 
State 1-34 well, conventional reservoir
The Company is pleased to report that the completion rig has been mobilised on schedule in line with the Group’s strategy to generate production from its conventional targets as it awaits the results of the Mancos core analyses.  This rig will run production tests on multiple intervals within the conventional target including:
  • the Chinle Formation (from 2,968 to 2,978’)
  • the Salt Wash Formation (from 1855 to 1859’; 1794 to 1802’; 1762 to 1776’; and 1692 to 1700’) 
  • the Brushy Basin Formation (from 1494 to 1518’; 1439 to 1447’)
  • the Dakota Formation (from 1246 to 1257’)
 
Subject to successful testing of these formations, the Company anticipates commencing production during Q2 2015. 
 
Preliminary side wall core analysis confirms the dominate lithology of the conventional reservoirs to be quartz (80 to 95%) with relatively minor parts of clay (2 to 10%) and carbonaceous material (1 to 10%).  The majority of porosity is secondary porosity from the leaching of silica and calcite with lesser volumes of micro porosity and primary porosity.   Based on the preliminary results of the side wall cores, Rose remains optimistic about the potential of the conventional reservoirs in the well.
 
The primary purpose of the well, other than production from the conventional targets, is to gather data from the Mancos Shale. Based on the mud logs and open hole logs, the preliminary results for the Mancos are encouraging.  Ryder Scott Company calculated mid-case gross Unrisked Recoverable Prospective Resource Estimates for Rose's Mancos assets of 709 million barrels of oil ("MMBO") and 4.26 trillion cubic feet of gas (“TCFG”) and risk adjusted recoverable reserves of 212.7 MMBO and 1.28 TCFG.  With this level of recoverable reserve potential and the positive initial data from the State 1-34 well, the Mancos Shale is the Company's initial primary focus while the Paradox 3-D is underway.   
 
The analytical work on the whole cores is expected to be completed in Q2 2015 and will be used to orient the direction of a horizontal lateral well in the Mancos and to optimise fracture stimulation design of the horizontal wellbore.
 
Paradox activity update
The Company is pleased to note that activity continues even during lower commodity prices in the Paradox Basin in southeastern Utah.  Rose continues the permitting process of its 61 square mile 3-D seismic programme which it hopes to begin shooting in H2 2015, subject to permits.  Upon completion of the 3-D acquisition and interpretation, Rose will select the location for its first Paradox well with anticipated spud in 2016.
 
Recent notable activity includes:
 
Fidelity
Directly south of Rose’s Paradox leasehold, in December of 2014 Fidelity completed the Cane Creek Unit #28-3 well out of the Paradox Clastics at a sustained rate of 600 BOPD through the month of January 2015. This brings the total number of new producing wells drilled by Fidelity since 2012 to 23 wells with 20 additional wells currently permitted to be drilled.
 
CCI Paradox Upstream – Denver, Colorado
In the gas window on the southern end of the Paradox Clastic area, CCI Paradox Upstream, a division of Castleton Commodities International, an energy merchant company (formerly Louis Dreyfus Highbridge Energy) has completed two high volume gas wells.  The two wells have combined for over 4.5 MMCFG/D since November of 2014. CCI currently has plans to drill a third well in the same vicinity.
 
CCI owns 150,000 net acres in the area, as well as gas processing facilities, 262 miles of gathering system and 180 oil and gas wells.  The assets were acquired from Patara Oil and Gas LLC in early 2013, who in turn acquired the assets from EnCana in 2010.
 
For more information on CCI and its parent company please go to http://www.cci.com/.
 

John Blair (BSc Geology and MSc Geophysics), Director of Oil & Gas 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.