Issue of equity and Board Changes

RNS Number : 8339V

Rose Petroleum PLC

11 April 2019

 

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

11 April 2019

Rose Petroleum plc

("Rose", the "Company" or the "Group")

Issue of equity, Board Changes and appointment of Joint Broker and Adviser

Further to its recent announcement on 28 March 2019, Rose Petroleum plc (AIM: ROSE), the AIM-quoted natural resources business, provides a further update on the Company's funding plan and Board composition.

Highlights

·     £275,000 raised, before expenses, through a direct subscription with the Company for 25,000,000 ordinary shares in the Company (the "Fundraise");

·     Robert Bensh, an experienced Chairman with extensive experience of onshore US oil & gas, has joined the Board in the capacity of Executive Chairman and to support the Company has subscribed for all of the Fundraise shares;

·     Tom Reynolds will also join the Board, as Non-Executive Director; and

·     David Sefton and James Berwick will no longer be joining the Board.

Fundraise

Rose has raised £275,000, before expenses, via a subscription by Robert Bensh for 25,000,000 new ordinary shares (the "New Ordinary Shares") at a price of 1.1 pence per share. The New Ordinary Shares have been issued using the Company's existing share authorities and will rank pari-passu with the existing ordinary shares of 0.1p each in the Company ("Ordinary Shares"). 

The proceeds of the Fundraise will be used for general corporate purposes including the appraisal of identified investment opportunities within the Company's current portfolio of business development projects.

Settlement of the Fundraise is expected to take place in the next two weeks.  Once the funds have been received by the Company, application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM ("Admission"). A further announcement will be made at the appropriate time.

Following Admission, Robert Bensh will have an interest in 25,000,000 Ordinary Shares, equivalent to 14.84% of the Company's enlarged issued share capital.

The Board of the Company has been notified that it is the intention of certain Directors and Management of the Company to place orders to purchase in aggregate £75,000 worth of Ordinary Shares of the Company in the open market.

Directorate changes

On 28 March 2019, the Company announced that David Sefton and James Berwick had agreed to join the Board following being proposed by a group of shareholders. The Company has subsequently been informed by Mr Sefton and Mr Berwick that they are no longer seeking to join the Board.

As a result, the Company has continued to implement its plan to strengthen the Board through the appointment of new directors and is pleased to announce the appointment of Robert Bensh to the Board as Executive Chairman, with immediate effect. In addition, Tom Reynolds will also join the Board as a Non-Executive Director, subject to completion of the regulatory due diligence process.

Robert Bensh is an international energy executive with over 20 years of senior management and board level experience. Mr Bensh has significant capital markets experience both in London and North America and is based in the US. His experience will assist Rose as it develops its existing assets and looks at complementary opportunities.

Amongst other senior executive roles previously held, Mr Bensh led and financed Oklahoma-based Condor Exploration, transforming it into a 1,000 boepd, 14 MMboe of reserves and US$145million of PV oil and gas operation in just two and half years.  He has previously worked in Ukraine and Eastern Europe, as well as South America and in the Mid-continent United States shale plays.   Prior to this, he was Chairman and CEO of NCNRG, a Mississippi Lime and Hunton focused business that grew from 50,000 acres and 3 employees to 5,000 bopd of production before its sale to private equity investors. Before this he was again Chairman and CEO of AIM traded Cardinal Resources plc, an independent oil and gas company with operations in Ukraine, before its sale for US$72million in 2007.

Mr Reynolds has been working with the Company for the past six months on a consultancy basis and has a detailed knowledge of the Group's operations.  He is a Chartered Engineer with over 25 years' experience in the energy sector, including a range of technical and commercial roles with BP plc, Total SA and British Nuclear Fuels plc. He has also held management positions at private equity investment and advisory firms, including 3i plc, and specialises in strategic planning, investment management and cross-border M&A transaction execution in the oil, gas, energy and infrastructure sectors.

Mr Reynolds has held board seats on various companies listed in London, Oslo and Toronto. He is a non-executive director of AIM listed Solo Oil plc. He was previously CEO of Iona Energy Inc. and, immediately prior to that, he was CEO of Bridge Energy ASA, which Mr Reynolds grew through a series of acquisitions before listing the group in both Oslo and London, prior to its c.US$150m sale to HitechVision-backed Spike Exploration Holding AS in 2013.

The Company has previously notified of Philip Jeffcock and Kelly Scott's intentions to step down from the Board.  Philip Jeffcock has now stepped down from the Board with immediate effect and Kelly Scott will step down upon the appointment of Mr Reynolds to the Board. Following this, Kelly Scott will continue in his executive role with the Company in a non-Board capacity. The Board is extremely grateful to both of them for their work during this challenging period.

Additional appointments to the Board are being considered, both executive and non-executive, and the Company will make further announcements at the appropriate time.

Outlook

Rose continues to engage with prospective farm-in partners for its Gunnison Valley property in Utah, USA, as well as screening other opportunities which offer a route to establishing cash generative production in the near term. With interim funding now in place and with the assistance of the new Board members and advisers, the Company will continue to work on identifying the optimal path to deliver shareholder value and will provide an update to shareholders in due course.

The Company has, amongst others, identified one such potential project in Texas, USA, which it believes could offer the potential for rapid production. The project is to drill a side track well off an existing vertical well with relatively low drilling costs. Rose has engaged an independent petroleum engineer to assess the project and the associated risks. The Directors believe the project could produce at an Initial Production rate of 350bopd, which would imply payback within approximately six months. The Company has developed an excellent working arrangement with the owner/operator who has access to a number of other similar projects which have the potential to act as a pipeline of projects for the Company to build production in the near-term. For the avoidance of doubt the Company does not currently have a binding agreement over this project.

Total Voting Rights

The Fundraise is conditional, among other things, upon Admission becoming effective. Following Admission, the issued share capital of the Company will comprise 168,413,940 Ordinary Shares with one voting right per share.

The Company does not hold any shares in treasury. Therefore, following Admission, the total number of Ordinary Shares and voting rights in the Company will be 168,413,940. The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Appointment of Joint Broker and Adviser

The Company is pleased to announce that it has appointed Novum Securities as Joint Broker with immediate effect. Turner Pope Investments and Cantor Fitzgerald Europe will remain as Co-Brokers.

The Company is pleased to announce it has appointed Gneiss Energy Limited ("Gneiss") as its commercial and strategic advisor. Gneiss is a specialist corporate advisory boutique with extensive energy sector M&A experience.  Gneiss has been appointed to assist the Board with the Company's existing asset portfolio alongside delivering a sustainable and growth focused asset operation.

Regulatory Disclosures

Further information on Robert Bensh as required to be disclosed in accordance with Schedule 2 (g) of the AIM Rules for Companies:

Robert ("Rob") Joseph Bensh (formerly Robert Joseph), aged 51, is or has been a director of the following companies or partnerships in the past five years:

Current directorships/partnerships	Past directorships/partnerships (within the past 5 years)
·      44 Bensh Media Holdings LLC ·      Red Bensh Fork Energy LLC ·      Altore Inc ·      Benes Advisors LLC ·      Pelicourt Limited ·      Chama Energy Inc ·      Leadville Resources Partners LLC	·      Kub-Gaz LLC (also known as Kub-Gas LLC) ·      Gastek LLC ·      Taurex Resources Plc (formerly known as Cardinal Resources Plc)* ·      TV2U International Limited (formerly known as Cossack Energy Limited) ·      Westeros Holdings Ltd

* Mr Bensh was appointed a director of Cardinal Resources Plc (later renamed Taurex Resources Plc) on 19 February 2004. On 27 October 2009 petition was filed and on 1 February 2010 winding up of the company commenced. The company was in compulsory liquidation until 15 January 2015 and it was subsequently dissolved on 23 April 2015.

Matthew Idiens, CEO, Rose Petroleum plc, said: "I am delighted to welcome Rob Bensh as Executive Chairman and believe that his outstanding regional and operational expertise will be of great value to Rose as we look to optimise our portfolio and unlock additional opportunities in the upcoming months.

"Tom has been working with Rose on a consulting basis for the past six months and I am pleased he has agreed to join the Board to extend the capacity in which he can assist. I would also like to take this opportunity to thank Philip and Kelly for their service to Rose and wish each well for future endeavours."

Contacts:

Rose Petroleum plc Matthew Idiens (CEO) Chris Eadie (CFO)	Tel: [phone] Tel: [phone]
Allenby Capital Limited - AIM Nominated Adviser Jeremy Porter / James Reeve / Liz Kirchner	Tel: [phone]
Cantor Fitzgerald Europe - Financial Adviser and Joint Broker Nick Tulloch David Porter	Tel: [phone] Tel: [phone]
Novum Securities Limited - Joint Broker Colin Rowbury	Tel: [phone]
Turner Pope Investments - Joint Broker Andy Thacker	Tel:  [phone]

Media enquiries:

Allerton Communications	Tel: [phone]
Peter Cunliffe	[e-mail]

Notes to editors

Rose Petroleum plc (http://rosepetroleum.com) is a North America-focused oil and gas company whose primary asset is approximately 80,000 net acres in the prolific oil and gas producing Paradox Basin in Utah, U.S.A., where it is earning into a 75% working interest. Using high-quality data gathered in a 3D seismic survey completed in October 2017, the Company has identified drilling locations in naturally fractured areas of the Paradox Formation and has chosen the first well location and it is now permitted to drill and plans to commence the drilling programme and the first well as soon as possible, subject to rig availability, stipulations of the leases, BLM Unit obligations and financing.

On 22 June 2018, Rose announced a Competent Person's Report ("CPR") and Maiden Contingent Resource by Gaffney Cline & Associates ("GCA") on the Rose acreage covered by the 3D seismic, approximately 17,250 acres of the 80,000 acres held.  The CPR estimated a 2C Contingent Resource, net to Rose, of 9.25 MMBbl of oil and 18.50 Bscf of gas, and an unrisked pre-tax Net Present Value (NPV10) on the 2C Resources, net to Rose, of US$122 million. The CPR focused solely on one single reservoir - the Cane Creek reservoir (the "CCR" or "Clastic 21") - of the multiple prospective reservoirs within the Paradox Formation.

The Company's established management is supported by an expert technical team with extensive experience of the basin, where current operations nearby have proven successful, with significant initial production rates and low decline rates, offering strong economics even in the present oil price environment.

The Company's strategy is to grow both organically and through acquisition, identifying additional hydrocarbon assets, conventional or unconventional, that would benefit from the Company's fast-acting, entrepreneurial approach.

Rose Petroleum has been quoted on AIM since June 2004.

 

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