UK RockRose Cuts Spending, Opex

UK independent RockRose announced a reduced discretionary spending programme this year as its two-week financial reporting moratorium ended April 6. It said capital expenditure in 2020 will be reduced by at least $80mn, down from the original plan of around $200mn. And unit operating (opex) costs will fall to below $30/barrel of oil equivalent (boe), about a tenth lower than the dated Brent price at time of press.

Production last year was up on the year before owing to acquisitions, including the Marathan Oil assets, and in line with guidance at 13,886 boe/d on a working interest basis. Abandonment expenditure will also be cut by around $5mn from $30mn.  The company continues to work with all its joint venture partners to reduce both capital expenditure and opex across its portfolio, it said.

Excluding planned shutdowns, pro forma 2019 output was 20,500 boe/d. The Foinaven field was shut down for 34 days longer than anticipated for scheduled maintenance. Overall, production increased by 117% versus the prior year average including a full year contribution from the Dyas acquisition and a six months contribution from the Marathon Oil UK acquisition.

Operational progress continues as planned across the portfolio. It is now drilling the second of two West Brae infill wells – part of the Marathon acreage – and the first is now on production and is contributing at rates above expectation. The company continues to work to convert 2C resources to 2P reserves while delivering significant production growth and extending field life.

At the year end, total cash was $375.5mn, three times the $121.3mn in 2018. A progressive dividend policy was initiated, whereby the company will seek to pay regular dividends as appropriate.

Pro forma adjusted pre-tax earnings (Ebitda) of $162.4mn reflecting the contribution of the Brae Complex and Foinaven field from January 1 2019. Adjusted Ebitda of $97.9mn excludes the six months pre-acquisition results from those assets.

CEO Andrew Austin said RockRose was well placed to deal with the twin challenges of Covid-19 and weak commodity prices. "We remain committed to the principle of being able to thrive throughout the commodity price cycle," he said.