20th May 2015 07:57
LONDON (Alliance News) - Rose Petroleum PLC shares fell on Wednesday after it said it intends to raise funds via a large placing and subscription to continue developing its assets in the US, a move that overshadowed a "positive update" on the core analysis results for the State 1-34 well within the Mancos shale in Utah.
Rose Petroleum shares were down 12% to 0.331 pence per share on Wednesday morning.
The proposed placing and subscription is for over 1.04 billion new shares in the company will significantly enlarge the issued share capital of the company from its existing 1.51 billion shares in issue. Rose said the placing and subscription price of 0.3 pence per share is a 14.5% discount to the closing price of 0.35 pence on Monday.
Rose said it intends to raise GBP3.1 million by conducting a conditional placing and subscription to provide funds to develop the company's assets in eastern Utah and to meet general group overheads.
"The directors believe that there is currently an opportunity to raise funds from a small number of institutional and other investors rather than by offering all Shareholders the opportunity to acquire further shares and that this opportunity may not be present in the near future given the current uncertain market conditions," it said.
Rose added that the placing and subscription would provide enough exploration funds for at least the next six months.
Shareholders will vote on the proposed placing and subscription at the annual general meeting on June 17.
In a separate statement on Wednesday, the company said the updated core analysis results for the State 1-34 well in the Uinta basin in Utah "correlate strongly or exceed parameters" used to calculate the existing prospective recoverable resources of 709 million barrels of oil and 4.26 trillion cubic feet of gas, it said in a statement.
"Following extensive analysis of these extremely encouraging core results we are feeling ever more confident of the prospectivity of the Mancos Shale. Most importantly, overall the results match or exceed the key assumptions and estimates used by Ryder Scott in their resource calculations," said Chief executive Matthew Idiens.
Before the end of 2015, the company is planning on drilling its first horizontal well to target the Mancos Emery formation in the area and said the permitting for six new Mancos wells are "ongoing".
"We are now in a position to confidently define our first horizontal well location and with the permitting process underway we are excited about the months ahead as we anticipate spudding our first Mancos Shale well before the year end," said Idiens.
By Joshua Warner; [email protected]; @JoshAlliance
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