Rose Petroleum plc (ROSE), the AIM quoted natural resources business, is pleased to announce it has now completed the initial structural interpretation of the 3D seismic data it acquired over its Gunnison Valley Unit (GVU) which is part of its larger lease holding in the Paradox Basin, Utah, U.S.A. (Paradox acreage).
The Company is delighted to confirm that key geological structures targeted by 3D seismic have been found to be present across the acquisition area, and following the analysis of the data, multiple drilling targets have been identified.
The structural interpretation, which is an ongoing process, has to date identified 53 well locations in the Cane Creek reservoir zone alone, within the 20 square miles of the GVU lease holding covered by the 3D seismic data. The initial internal resource estimates are consistent with the report prepared by our independent resource analysts, Ryder Scott, in their April 2014 report for the Grand Main leasehold area (85 square miles), which includes the GVU acreage. This report suggests that for the 20 square mile area covered by the 3D, the gross resource potential is as follows:
- Mean unrisked undiscovered Original Hydrocarbon in Place of 450 million barrels of oil equivalent (mmboe), and
- A mean unrisked Prospective Recoverable Resource of 32.5mmboe.
The Chance of Success ("COS") for the Cane Creek reservoir zone was estimated by Ryder Scott at 56%, in their April 2014 report, representing a relatively low risk prospect.
A further 65 square miles of Rose's Grand Main leasehold area and 48 square miles of its Emery Main leasehold area contains additional prospectivity in the Cane Creek reservoir zone and the other Paradox Formation clastic intervals.
Rose's leases are located directly north of the acreage originally held by Fidelity Exploration and Production Co ("Fidelity"), then a subsidiary of MDU Resources Group (NYSE: MDU), and was the lead operator in the development of the Cane Creek Field and adjoining holdings. In 2013, Fidelity produced nearly 1.0 MMBO from the Cane Creek Field from 14 wells. Cumulatively, through January 2017, the field, now owned by Kirkwood Resources, has produced 7.9 MMBO and 5.7 BCFG from 36 wells according to the State of Utah.
Assessment work will now continue to refine the Cane Creek reservoir zone resource potential, high grade first development well locations, and to evaluate additional prospective areas within the Paradox Formation. To elaborate, the Paradox Formation is made up of approximately 24 clastic zones, of which the Cane Creek reservoir zone is the primary producing zone of the basin to date. Additional clastics, above and below the Cane Creek zone, as listed in the Ryder Scott report, are also thought to be prospective. It is these zones, which we will be reviewing in detail within the seismic acquisition area to potentially confirm further resources in addition to those referred to above, which are only within the Cane Creek Reservoir zone.
The Company is now progressing the Application for Permit to Drill (APD) process for the highest priority drill target locations, with a view to drilling the first well on the Paradox acreage in the second half of 2018. The Company is fully funded for these permitting activities.
As previously announced, the Company plans to exhibit the structural interpretation at the upcoming NAPE Summit, in Houston, U.S.A. on 6-9 February at Booth #2367, to focus its efforts to identify partners and investors for its future drilling activities on the Paradox acreage. NAPE is the pre-eminent summit for the oil and gas industry and a prime marketplace for the buying, selling and trading of prospects and producing properties.
Matthew Idiens, CEO, commented: "The initial results from the 3D seismic acquisition are a watershed moment for the Company, with the identification of multiple highly prospective, relatively low risk drill targets with a COS of 56%, on our Paradox Basin acreage. We believe this area represents a highly attractive drilling proposition, supported by excellent quality data that exhibits multiple drilling targets analogous to the structures of previously successful wells, to the south of our acreage.
"The seismic acquisition, which was completed within time and under budget, has delivered on all its key objectives, and the Company is now ready to move forward to the permitting and drilling of the Company's first Paradox wells.
"Negotiations with potential investors and partners to fund the drilling programme are ongoing, and the Board will prioritise options, including joint venture and farm-in arrangements, to ensure that any dilution to existing shareholders is kept to an absolute minimum, while still realising the full value of the project. We will keep the market fully updated on what promises to be a very exciting period ahead for the Company."