Rose Petroleum plc (AIM: ROSE), the Rocky Mountain-focused oil and gas company, is pleased to provide an update on its proposed working interest acquisition in the McCoy lease, a 317-acre leasehold in the Denver-Julesburg Basin ("DJ Basin") in Weld County, Colorado, U.S. (the "McCoy lease" or "McCoy").
On 4 November 2019, the Company announced it had entered into a Letter of Intent ("LOI") with Captiva Energy Holdings II, LLC ("CEH") for the Acquisition of an initial 10% of CEH's 89.5% working interest in the McCoy lease (the "Acquisition"), with an option to acquire up to a further 80% of CEH's working interest in the lease (the "Option").
· Key milestones in the Acquisition process have now been reached, including:
§ CEH has signed a lease amendment with the lessor of the McCoy lease, which allows for the drilling of extended, two-mile lateral horizontal wells across the McCoy lease; and,
§ CEH has elected to support Great Western Operating Company's ("Great Western") pending application for a 1,280-acre Drilling Spacing Unit (the "DSU" or the "Margil DSU") which includes the McCoy lease.
· Under the terms of the Great Western DSU application:
§ two-mile horizontal wells drilled from Great Western's acreage would extend across the McCoy lease
§ McCoy lease working interest owners would participate as working interest owners in the Margil DSU.
· Great Western is one of the DJ Basin's most active upstream operators and will be the majority working interest owner in, and operator of, the Margil DSU.
· Up to twenty-six wells are envisioned to be drilled across the Margil DSU, with 12 wells expected to be drilled in the second half of 2020
· Rose is in substantive discussions with a number of third parties, including potential joint-venture and industry partners, with respect to securing the necessary funding for the Company's participation in the proposed Margil DSU drilling programme.
· The Option for Rose to purchase additional working interest in the McCoy lease (and now the Margil DSU) has been extended to the end of April 2020.
· The Company is also reviewing a number of additional portfolio acquisition opportunities that fit the Company's strict strategic criteria and looks forward to updating the market as opportunities progress.
Colin Harrington, Rose CEO, commented: "These are exciting times for the Company as we look to complete the Acquisition and move closer to our goal of becoming an oil producer in the near term.
We are very pleased to report on CEH's successful conclusion of lease amendment negotiations, and we welcome the opportunity to benefit from the expertise and investment that Great Western will bring as operator of the DSU. CEH and Great Western's progress to date demonstrates the value that strong, basin-focused partners can add.
We are confident of robust economic returns from these two-mile lateral horizontal wells, and upon completion of the Acquisition we look forward to participating in the proposed drilling programme as working interest owners alongside CEH and Great Western.
Rose will continue to update the market on progress as we move towards completing the Acquisition and securing the necessary funding to enable the Company to participate in this transformational opportunity in an optimal way for our shareholders."