RockRose Energy plc, the independent oil and gas production company, is pleased to announce its Full Year Results for the 12 months to 31 December 2019. As previously communicated, these were delayed as a result of the FCA's request of 21 March 2020 that companies observe a two-week moratorium on the publication of financial statements.
In early 2020, prior to the onset of COVID-19 and the significant market turmoil that has ensued, the Company's 2020 guidance was ~21,000 boepd production, ~$200.0 million of capital expenditure and ~$30.0 million (before tax relief) of abandonment expenditure. However, as commented on previously, the Company is currently reassessing all discretionary expenditure and is pursuing several initiatives to reduce operating costs.
The Company's current expectation is that capital expenditure in 2020 will be reduced by at least $80.0 million, abandonment expenditure by around $5.0 million, and unit operating costs will fall to below $30/boe. The company continues to work with all its joint venture partners to reduce both capital expenditure and opex across our portfolio. Whilst these measures will impact production growth in 2021, they are not expected to have a material impact on the Company's reserves.
2019 STRATEGIC HIGHLIGHTS
- Through the acquisition of Marathon UK's assets, Rockrose doubled reserves and resources and scaled the business.
- A progressive dividend policy was initiated, whereby the Company will seek to pay regular dividends as appropriate, with an interim payment of 60p per share in October 2019. Subject to shareholder approval and as previously indicated, the Company expects to pay a final dividend of 25p per share, bringing the total for 2019 to 85p per share.
- Abandonment half-life (the midpoint date at which half of the company's spending on abandonment has been made) has been extended to 2030 from 2028. The company anticipates full tax relief on all abandonment expenditure at a rate of at least 40% given it is fully covered by tax paid history.
2019 OPERATIONAL HIGHLIGHTS
- Group production for the year to 31 December 2019 was in line with guidance at 13,886 boepd on a working interest basis (19,356 on a pro forma basis). Excluding planned shutdowns, pro forma 2019 output was 20,500 boepd. The Foinaven field was shut down for 34 days longer than anticipated for scheduled maintenance. Overall, production increased by 117% versus the prior year average including a full year contribution from the Dyas acquisition and a six months contribution from the Marathon Oil UK acquisition.
- Operational progress continues as planned across the portfolio. Currently, the Group is drilling the second of two West Brae infill wells. The first of these wells is now on production and is contributing at rates above expectation. The company continues to work to convert 2C resources to 2P reserves while delivering significant production growth and extending field life.
2019 FINANCIAL HIGHLIGHTS
- Reinforced balance sheet position with significant financial resources on hand leaving us well placed to tackle the challenges of 2020. At the year end, total cash was $375.5 million (2018: $121.3 million), of which $59.7 million (2018: $53.3 million) was restricted.
- Pro forma adjusted EBITDA of $162.4 million reflecting the contribution of the Brae Complex and Foinaven field from 1 January 2019. Adjusted EBITDA $97.9 million excluding the six months pre-acquisition results from those assets.
- Hedged ~63 million therms at ~€0.53/ therm in 2020, ~54 million therms at ~€0.41/ therm in 2021, and ~54 million therms at ~€0.45/ therm in 2022.
Commenting, Andrew Austin, Rockrose, Executive Chairman, said:
"The success of last year has left us well placed to meet the twin challenges of COVID-19 and weak commodity prices. The strength of the balance sheet and management action to decrease expenditure provides us with confidence we will emerge from this crisis with our financial health intact and growth prospects undimmed. We remain committed to the principle of being able to thrive throughout the commodity price cycle."