Rose Petroleum raises £3m with new and existing investors

Natural resources business Rose Petroleum announced on Friday that it has conditionally raised £3m before expenses through a placing of 75 million new ordinary shares of 0.1p each, at a price of 4p per share, with a range of new and existing investors.

The AIM-traded firm said that of the funds raised, £0.6m remained conditional on the approval of shareholders at a general meeting of resolutions.

It said the net proceeds of the placing would be used to complete the 3D seismic survey on the company's oil and gas exploration acreage in the Paradox Basin, Utah, as well as to commence drill permitting and to provide working capital.

The seismic survey was described by the board as an “essential part” of unlocking the potential of the Paradox Acreage, which would identify the drill locations for the initial drill programme planned for the second half of 2018.

It said it believed the “state-of-the-art” 3D seismic shoot proposed was of “considerably higher quality” than previously shot within the Paradox basin, and was planned to not only identify the potential targets within the Paradox clastics - as defined in the Ryder Scott resources report of April 2014, but was also expected to be able to show potential targets within the Leadville Limestone formation, directly below the clastics.

That offered additional potential for conventional targets, which Rose said had been successfully exploited directly south of the company's acreage in the Salt Wash Field.

As a result of the fundraise, subject to the resolutions being passed at the GM for the second tranche of the placing, the seismic shoot was now fully funded and should be completed by year-end 2017, with processing and interpretation, and the subsequent identification of drill targets completed in early 2018.

Rose said the availability of this data was expected to open up additional channels for financing the drill programme, both at project level and at corporate level, adding that based on historic discussions with third parties, the directors were confident of further financing being available at that time.

Additionally, as it had recently announced, Rose extended the earn-in agreement on the Paradox Acreage to include not only hydrocarbons but also lithium, brines, salts, magnesium and water, or mineral interests.

The 3D seismic data would also be able to be utilised to identify potential lithium targets which Rose said were known to exist in the Paradox basin.

“The board is delighted to have completed this transformational fundraise to fully finance the 3D seismic programme, and thanks new and existing investors for their support, albeit at a discounted valuation,” said Rose CEO Matthew Idiens.

“The fundraise will enable us to commence fulfilling the long-term objective of realising the potential value of the Paradox Acreage.

“We have been waiting a long time to commence the seismic shoot, and we believe the seismic shoot can be the catalyst to deliver significant shareholder value.”

Idiens said that, having already started the surveying, the company was now able to commence the physical shoot “without delay” and had mobilised the teams to begin operations.

“3D seismic is an essential part of unlocking the basin and with the expertise of the team we now have in place we are confident of success.”

The additional uses of the seismic data beyond the assessment of the Paradox clastics, including assessing the Leadville Limestone formation which had been successfully exploited very close to Rose’s acreage, and also the assessment of the lithium potential, provided “further upside” for shareholders than previously considered, Idiens added.

“Whilst shareholders may be disappointed with the pricing level of the fundraise, it was crucial for the company to clear this funding hurdle and commence what we hope will be a very exciting time for the company.

“We would like to take this opportunity to welcome our new shareholders on board and look forward to keeping all our shareholders informed of our progress as we implement our work programme outlined above over the coming months.”