Final Results for Year Ended Dec 31 2014
Rose is pleased to announce its audited results for the year ended 31 December 2014 together with notice of its Annual General Meeting
- The Group’s key focus continues to be its 75% working interest in over 263,000 gross acres of two very exciting unconventional opportunities in the Uinta and Paradox basins, in Utah, U.S.A.
- Independent consultants, Ryder Scott Company LP have calculated potential resources of 1.8 billion barrels of oil and 6.5 trillion cubic feet of gas across both basins in Mean Un-Risked Recoverable Prospective Resources
- During the year, the Group completed the purchase of the producing Cisco Dome Field with 76 mile mid-stream gathering system, gas processing plant, compressor station and main pipeline tap and meter into Williams 26” natural gas pipeline
- Drilled first well, the State 1-34 well, in the Uinta basin
- The results from core samples taken from the State 1-34 well post year exceed the parameters used by Ryder Scott in their resource estimate calculations which substantiates the resource base
- Six further Mancos wells currently being prepared for permitting to drill – subject to permitting, drilling of first well expected to commence in late 2015
- Commencement of permitting programme for 61sq mile 3-D seismic shoot in the Paradox basin
- Mining commenced on the Mina Charay gold/silver project in Mexico – positive contribution to revenues anticipated in 2015 as mine moves into full production post period
My statement in last year’s Annual Report outlined that your Board had begun to shift the direction and focus of the Group away from mining and towards oil and gas (“O&G”) exploration and production, and that we had built a strong momentum to implement this strategy.
This momentum has continued both throughout the year under review and into 2015, and the Group continues to make sustained progress in spite of the challenging market conditions that continue to impact both the junior end of the market and, more specifically, the O&G industry.
Operational activity has continued on many fronts. The O&G division is operating a very large leasehold acreage in two very exciting unconventional opportunities in Utah which have significant potential resources as calculated by our independent qualified person, Ryder Scott Company LP. We have drilled our first well and we have assembled a very strong management and technical team with extensive experience in the region to move our operations forward. The Mining division commenced operations at the Mina Charay gold and silver project and we are scheduled to commence drilling on the Tango copper and molybdenum project in Q4 2015, after the rainy season has ended. In Q1 2015, we completed the disposal of the Wate Uranium project and this activity is helping move the Group forward to a situation where it can deliver on its key corporate objectives.
During the year we carried out two successful equity placings which raised gross proceeds of £10 million and, in May 2015, we announced that we had raised additional gross proceeds of £3.1 million by way of a conditional placing and subscription which is conditional upon shareholder approval at a forthcoming General Meeting. In the current market environment, this is a considerable achievement and a strong endorsement of the Group’s new strategy. The executive team, led by Matthew Idiens, was pleased by the response they received during the fundraising presentations which is a good indicator of the value that the market places on our O&G properties.
In order to achieve the highest level of success in our Utah projects it was essential to build an experienced operations team, the importance of which cannot be underestimated, and I want to emphasise the significant experience the team has in the U.S. unconventional resources sector including operating in the Bakken, Marcellus, Niobrara and Arkansas-Fayetteville Shale. The team are based at our office in Denver under the strong leadership of Ty Watson. Ty has worked across the vast majority of the premiere basins in the U.S., and, most importantly he has a track record of transforming historic vertical well plays into more efficient horizontal well plays which we anticipate will be of significant value to us in respect of the Mancos Shale opportunity.
Operations in Utah commenced in earnest during the year under review, and although we suffered some setbacks in the completion of the State 16-42 well in the Paradox Basin (where the cement casing of the previous well owner was inadequate), and the conventional target at the State 1-34 well in the Uinta Basin (where we were not able to capitalise on a potential cash generating conventional opportunity as a result of the existence of a fault), the main focus of the Uinta basin is the Mancos Shale and the results from the core have been extremely encouraging and look to be validating the key criteria used by Ryder Scott in their calculation of the resources. We believe that we are very well positioned for future development and growth. Our work to date on the Mancos Shale, the prime operational focus, has yielded a considerable amount of supporting technical information on the opportunity, and this will be our key focus over the next period. We are currently in the process of permitting six well locations and we look forward to commencing drilling on the first of these as soon as we are able.
The prospectivity of our Paradox acreage is very significant but, by virtue of the costs of drilling in this area (circa US$8.5 million per well) and the need to undertake a 3-D seismic survey of the area prior to drilling, the drilling targets at the Mancos remain our initial target. The encouraging results from the core analysis on the Mancos Shale, reiterates the strong potential of the Mancos, which benefits from a low breakeven price considering the excellent infrastructure and low entry price.
As outlined above, we have now commenced mining at the Mina Charay Mine in Mexico, in which we have a 60% profit share arrangement in favour of the Group. The mine is nearing target operational capacity and development is currently advancing towards the high-grade gold and silver drill intercepts in the veins. We anticipate that this project will make a positive contribution to the Group’s revenue in 2015.
During this period of transformation, cash management and internal control have remained key priorities for the Group and I was delighted to welcome Chris Eadie to the Board as Chief Financial Officer in early 2015.
I would like to thank our shareholders and advisers for their continuing support throughout the period and our employees for their continued efforts. I look forward to updating you with our progress throughout the rest of the year.
Rt Hon Earl of Kilmorey PC
3 June 2015