Rose Petroleum has re-negotiated the terms of a shale play in a bid to weather the oil price storm.
A company spokesperson said: “During the strong oil price environment of 2014 and early 2015, the Group entered into agreements under which it was able to earn into a 75% working interest in approximately 263,000 gross acres in Utah. The area of focus of the acreage is on two unconventional oil and gas basins: the Uinta Basin, which targets the Mancos Shale at a maximum depth of approximately 3,200ft, and the Paradox Basin that targets the Paradox Clastics at a maximum depth of approximately 10,500ft.
“Under the terms of the purchase agreements, Rose carries the seller, Rockies Standard Oil Company (RSOC), which retains a 25% working interest in the leasehold, for the first $17million expenditure on the projects, $9.5million in the Uinta Basin and $7.5million in the Paradox Basin.”
In October 2014, it acquired the Cisco Dome Field adjacent to the Mancos acreage, which included 76 miles of a mid-stream gathering system, a gas processing plant, a compressor station and main pipeline tap and meter into Williams’ 26″ natural gas pipeline. The Cisco Dome field also contained over fifty historical conventional wells, all of which are currently shut in.
Today, the firm confirmed it had since entered into an agreement with RSOC to terminate its earn-in rights to the Mancos acreage and dispose of the Cisco Dome field, wells, pipelines, gas tap, gas plant, and all the associated equipment and liabilities.
Chief executive Matthew Idiens said: “The amendment to the earn-in agreement has given us the opportunity to substantially de-risk the Oil and Gas portfolio and we can now focus on the Paradox acreage, with in excess of 1 billion barrels of oil, and which we believe has a greater chance of success than the Mancos. The amendment also means we have eliminated the Group’s P&A liability which became an increasing issue as market conditions declined and gives us the opportunity to further reduce the underlying operational cost base.
“In the current market conditions and taking into account the general outlook, the Board believes this is the best course to follow. We have combined this with implementing dramatic cost cuttings throughout the Group and feel we are now well positioned for both the present and for a future upturn.
“Rose has always retained a diverse portfolio of assets to enable it to adapt rapidly to changing market conditions and we continue to believe that even in these challenging markets there are opportunities to create value for our shareholders.”