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RockRose Energy plc - Trading Update

RNS Number : 4007L
RockRose Energy plc
30 April 2020
 

 

FOR IMMEDIATE RELEASE                                                                                                                     30 April 2020

 

ROCKROSE ENERGY PLC

("RockRose")

Trading Update

 

RockRose Energy plc ("RockRose" or "the Company"), issues the following update ahead of its Annual General Meeting which is being held via webcast at 10am today. Details of how shareholders can join the Group's AGM can be found in the Notice of AGM under the heading of General Meetings at https://rockroseenergy.com/investors/reports-presentations/

Highlights

·      Group production in line with expectations year-to-date.

·      Capital expenditure budget for 2020 cut by 40% since mid-March.

·      Total expenditure in 2020 now expected to be over $100 million lower than originally budgeted.

·      RockRose-operated West Brae infill wells completed safely and within budget.

·      Completed the acquisition of 100% of the Cotton gas discovery.

 

Operational

·      Group production year-to-date in 2020 has averaged 20,800 boepd, in line with expectations. UK output has averaged 14,900 boepd and Netherlands output has averaged 5,900 boepd.

·      As operator of the West Brae oil field with a 40% working interest, RockRose has completed the drilling of two infill wells safely and within budget.

·      The first of those wells, designated WPGZ, was brought onstream in March and currently is producing approximately 4,000 bopd (~1,600 bopd net to RockRose).

·      The second West Brae infill well, designated WPOZ, encountered the target horizon deeper than prognosed and it is water wet at this location. After interpreting the data from the well and in view of the current low commodity price environment, the partnership elected not to drill a horizontal section to a secondary target location and the well has been suspended.

·      The Seven Borealis pipelay and heavy lift vessel is mobilising to the Shell-operated Arran gas / condensate field and is expected to commence laying the 55km pipeline to the Shearwater platform shortly.

·      This pipeline will connect the two Arran drill centres/subsea manifolds to the Shearwater facilities for processing and export and is a key milestone in the development. RockRose has a 30.4% interest in the 31 MMboe Arran field, which is forecast to come onstream in the second half of 2021.

·      Completion of the acquisition of 100% of the Cotton gas discovery located in the Southern North Sea. Technically recoverable resources are estimated to be up to 16 MMboe. RockRose will undertake a detailed subsurface evaluation of the asset before deciding in the first half of 2021 whether or not to proceed with the development.

 

COVID-19

·    RockRose continues to manage its operations carefully in response to COVID-19 and production has not been affected by the pandemic.

·      We are working collaboratively with the OGA and the HSE, with industry bodies OGUK and Step Change, and with our joint venture partners to implement appropriate actions to mitigate the potential spread of the virus.

 

Financial

·      Since mid-March and in conjunction with its partners, RockRose has taken action to reduce its capital expenditure in 2020 by $80 million or 40% from its January 2020 guidance of $200 million. These deferrals are not expected to have a material impact on reserves.

·      Action to defer abandonment expenditure and cut operating expenditure is expected to result in a further reduction in 2020 cash costs of ~$20 million.

·      Approximately 20% of anticipated 2020 production hedged, comprising 455,000 bbl at $65.70/bbl and 63 million therms at €0.53/therm. Additional gas volumes have been hedged above current market prices in 2021 and 2022.

·      Net cash of $339 million at the end of the first quarter. Using end-2019 exchange rates, the figure would have been $351 million.

 

Outlook

·      RockRose was designed to operate in the harsh environment of sub-$50 oil and the Company's robust balance sheet means it is well-placed to cope with the current downturn in oil and gas prices.

·      Management has taken action to reduce expenditure by more than $100 million in 2020. As a result, RockRose now expects to participate in three wells this year rather than seven.

·      The deferral of certain activity combined with the WPOZ well result means that the Company now expects average production in 2020 to be about 20,000 boepd rather than 21,000 boepd.

 

Andrew Austin, Executive Chairman of RockRose Energy, commented today:

"Following a successful 2019, I am very pleased with the continued progress made by RockRose in the first quarter of 2020. Of course, the COVID-19 pandemic combined with low oil and gas prices have created a difficult environment and this is likely to persist for some months. However, the Company continues to deliver operationally and is well-placed to face these twin challenges thanks to its strong balance sheet and to the actions taken to reduce expenditure."

 

 

Enquiries:

 

 

Rockrose Energy plc

+44 (0)20 3826 4800

 

 

Financial Advisor:

Hannam & Partners (Advisory) LLP

Giles Fitzpatrick / Andrew Chubb

 

+44 (0)20 7907 8500

 

 

Brokers:

Whitman Howard

Hugh Rich / Nick Lovering

 

+44 (0)20 7659 1261 / 1224

 

 

Financial PR:

Celicourt

Mark Antelme / Philip Dennis / Ollie Mills

 

 

+44 (0)20 8434 2643

 

For further information, please visit the Company's website at www.rockroseenergy.com

 


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Quick facts: RockRose Energy PLC

Price: 1130

Market: LSE
Market Cap: £148.19 m
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