13th Jan 2015 08:56
LONDON (Alliance News) - Rose Petroleum PLC Tuesday said it has achieved a highly competitive breakeven cost of below USD20 per barrel across its oil and gas assets in Utah and said it is committed to bringing the projects into production despite the current low oil price.
The Mancos and Paradox plays in Utah have a resource base of 1.8 billion barrels of oil and 6.45 trillion cubic feet of gas. Good infrastructure, low entry cost and low well costs have allowed the company to achieve a breakeven cost of below USD20 per barrel, Rose Petroleum said in a statement.
"Our low breakeven costs of below USD20 per barrel of oil equivalent for both licence areas ensures that the fundamentals remain positive as we look to bring these assets into production in spite of the current low oil price environment," said Chief Executive Matthew Idiens.
"In tandem with the advances in the Mancos and Paradox projects, we have recently moved into the production phase at our additional gold and silver asset in Mexico which will generate cash flow for the business," he added.
The Mina Charay project in Mexico has extracted 400 tonnes of ore since production started in December, which will be transported to the San Dieguito de Arriba mill in the State of Nayarit. The operator of the mill will process 350 tonnes in January in a pilot run programme to optimise recovery rates.
The Mina Charay mine, in which Rose holds a 40% stake, is extracting ore at a grade of 10 grammes of gold per tonne and 60 grammes of silver per tonne. The mill is expected to run at full capacity by the end of the first quarter, when it will process around 100 tonnes of ore a day, it said in a statement.
The company has said the production cash cost at the mine is USD699 per ounce based on a price of USD1,200 per ounce with a minimum mine life of three years. The mine is set to generate cashflow which will be used to develop the Tango area in Mexico, which is targeting copper and molybdenum.
"We will be keeping a close eye on how market conditions develop and are looking to conserve cash and increase operational efficiencies as far as we can to ensure that we are optimally positioned to deliver on our strategy to create value for shareholders," said Idiens.
In addition, the company's Cisco Dome gas field is generating revenue since the company acquired it in October for a total consideration of USD1.5 million in cash. The field has 17 producing wells and 35 shut-in wells. A competent persons report is expected to be carried out in the next few months which will add proven reserves to the company's resource estimates, said Rose.
Rose shares were down 3.1% to 1.65 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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