Rocky Mountain-focused oil and gas company, Rose Petroleum (ROSE) , announced on Monday its signing of a Letter of Intent regarding the proposed acquisition of assets in the prolific DJ Basin Niobrara in Colorado.
The firm entered into the LOI with Captiva Energy Holding, a U.S. based industry partner with a proven track record of successful horizontal development in the immediate area.
The LOI proposed an initial 10% of CEH’s 89.5% net working interest in the 317-acre McCoy lease located in the Basin.
Rose stated that the acquisition proposes a near term, low risk development opportunity as a “robust, accretive project” alongside reported strong well economics.
The acquisition not only marks the beginning of a partner relationship with CEH, it offers Rose access to prime acreage within the Basin with optionality to increase its working interest significantly.
The firm will have an option to acquire, at its sole discretion, up to a further 80% of CEH's 89.5% working interest in the McCoy lease.
"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,” commented Colin Harrington, Chief Executive of Rose.
He added, “We believe the McCoy lease will be an excellent addition to the Rose portfolio and will both complement and balance our newly restructured Paradox Basin appraisal asset.”
CEH and Rose are working with partners to implement a DSU on which the Initial Drilling Programme is expected to commence in mid-2020, with Rose estimating a potential to drill up to 26 wells.
An estimation was made that the total CAPEX for the 12 well programme will be circa $72m, or circa US$6m per well, with the expected Estimated Ultimate Recovery from each of the wells will be circa 850,000 barrels of oil equivalent (0.85mmboe).
Rose will also carry CEH to an equivalent 11.1% of Rose's CAPEX on the first 20 wells drilled on the McCoy lease (the "Carry").
Alongside this morning's news, the company also announced a £1.25 million raise, before expenses, addressing it as an important step in advancing the firm’s strategy to build “a balanced portfolio” in the U.S. Rocky Mountain region.
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