Rockrose Energy (LON:RRE) have said that they will complete a 100% acquisition of the Cotton gas field in the UK.
The Cotton Gas field forms part of the UK sector of the Southern North Sea, and the deal terms are yet be disclosed.
Rockrose have signed a sale and purchase agreement to acquire Speedwell Energy Ltd, which owns all of the Cotton gas field.
The purchase comes at an impressive time for the firm, who have pledged to grow across 2020 and increase volumes of operations.
The Cotton gas field lies 100 kilometers east of Scarborough between the Kilmar and Garrow Fields, where Rockrose hold a 15% interest in both sites.
The field was initially discovered in 2009 by well 43/21b-5Z, which encountered a gas column of up to 1,260 feet over six gas bearing sandstone units.
Rockrose have told the market and shareholders that a draft development plan has been prepared by Speedwell for submission to the UK Oil and Gas Authority.
Once regulators have given the green light of approval, then Rockrose have the all clear to ensure that production and development can commence.
Rockrose intend to commence further studies and observations on the field before taking a final investment decision, which has been affected by both volatile oil and gas prices tied in with an uncertain macroeconomic environment.
Andrew Austin, Executive Chairman of RockRose, said:
“This acquisition gives RockRose the option of a significant amount of production and reserves in an area of the Southern North Sea Gas Basin in which we already have other producing assets. We look forward to carrying out further evaluation of the discovery prior to committing to FID.”
Richard T Strachan CEO of Speedwell Energy Limited added:
“Having identified the potential in Cotton some three years ago, which was a relinquished asset going nowhere, to one now where we have a draft Field Development Plan and a delivery team in place capable of bringing Cotton through to First Gas, we are delighted that RockRose will now take over Cotton and are looking at how to potentially take it forward and we wish them all the best as they do so.”
Rockrose deliver on expectations
Rockrose gave shareholders a confident update a few weeks back for its 2020 operations and made it clear that they expect to meet 2019 guidance.
The firm said that in 2019, a pro forma production was in line with guidance of roughly 19,200 barrels of oil equivalent per day.
Excluding shutdowns and other variables, annual pro forma production was about 20,500 boepd, with about 21,000 boepd produced in December.
Average production for 2020 is expected to be around 21,000 which shareholders will be thoroughly impressed with.
This figure reflects a 9.4% rise year on year, and this accounts for planned shutdowns including the Forties pipeline system in mid-June for three weeks.
The company has guided for a dividend of 25 pence per share, giving a total dividend of 85 pence across 2019.
Expenditure in 2019 was $80 million, which was below previous guidance. Another impressive stat for shareholders to be excited about.
For 2020, capital expenditure is guided at about $200 million – which the company said will lead to higher production. At the year end, total cash was $370.7 million, of which $54.9 million is restricted.
Cashflows have been underpinned by enhanced production following completion of the Marathon acquisition and the Company remains debt-free.
Rockrose have made an impressive start to the year with the new acquisition proposal whilst keeping shareholders sufficed with their expectations, and the firm will hope that this can translate into a good run of results.
Shares in Rockrose trade at 1,875p (+3.02%). 4/2/20 14:53BST.