9th Dec 2015 10:49
LONDON (Alliance News) - Rose Petroleum PLC Wednesday said authorities have requested it to alter its applications for well permits and this could cause a slight delay to drilling on the Mancos formation in the US, while it said it has suspended some of its mining operations as metal prices continue to fall.
At the Uinta basin in the US state of Utah, where Rose is trying to secure well permits to drill the Mancos formation, Rose said the US Bureau of Land Management has requested the company change its applications.
The company was originally planning to drill six wells on the Mancos formation, but due to the deteriorating oil price, Rose decided to focus on gaining one permit for one horizontal well rather than permits for all six.
However, after submitting its application for that single well, the Bureau of Land Management told Rose it needs to submit an environmental assessment covering all six wells rather than submitting separate assessments for each well, which was Rose's preference, it said.
Despite the changes, Rose said the first Mancos well could still be fast-tracked ahead of the other five wells, but said that first well will not be spudded until the second half of 2016 because of the changes - something the company believes may be beneficial in the long term.
"Given the current oil price environment, the board believes that the extended timeline in the permitting process may work in favour of the company. Should the oil price have improved prior to the drilling of the 1-15H, the board believes the six drilling permits will provide the opportunity for a larger scale and more expansive drilling programme," said Rose.
Chief Executive Matthew Idiens said: "We believe that for Rose to be self-funding a single well in the current oil price environment at this time, even with the projected economics of the Mancos, is ill-advised. We have ongoing discussions with third parties to potentially progress the Mancos, and it is clear from these discussions that a multi-permitted well programme is more attractive to potential investors and, given the extended timeline, the programme could well benefit from an uplift in commodity prices."
At the Paradox basin in Utah and Colorado, the contractor hired by Rose has completed the initial field work and plan of operation for the 3D seismic shoot. Currently, the Bureau of Land Management is reviewing the proposed work programme for the basin, and Rose is not expecting to secure the required permit needed to shoot the 3D seismic until the middle of 2016, with shooting itself starting in September.
Sticking with the US, Rose said it is still looking for new opportunities and said it will provide an update on acquisitions in the first quarter of 2016.
Rose Petroleum, which despite its name is a miner as well, also has mining operations in Mexico. The company said it has secured all the permits required to begin exploring its copper and molybdenum porphyry targets at the Tango project. Those permits also will cover drilling the high-grade vein structure at the San Augustin gold mine, which lies nearby.
Rose Petroleum has also decided to suspend operations at its silver and gold project at the Mina Charay mine. Rose said mine production had continued throughout 2015 but said falling metal prices has led to the decision.
Due to its plan to suspend Mina Charay, Rose will focus on the San Augustin mine to provide ore to its mill as it lies closer to the mill than Mina Charay.
Rose has already started processing third party ore at its mill, keeping operations going that will "more than cover" its direct operating costs, whilst also reducing Rose's risk profile as it won't have to spend money on mining and transporting product from the mine to the mill.
Rose shares were trading down 14% to 0.0945 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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