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UK's RockRose to cut 2020 capex by 25%, hedges N Sea oil. gas output


Guidance had been for $200 million capex

RockRose has portfolio of North Sea assets

Sees operating cost of $30/boe in 2020

London — North Sea-focused independent RockRose Energy is cutting its planned capital expenditure in 2020 by 25% from an originally guided $200 million, the company said Thursday.

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RockRose -- which has built up a portfolio of oil and gas assets in the North Sea since its creation in 2015 -- said most of its capex this year was to cover the cost of developing the Shell-operated Arran gas and condensate field.

RockRose has a 30% stake in Arran, which is expected to produce 100 Mcf/d (3 million cu m/d) of gas at peak, as well as 4,000 b/d of condensate.

"The company has previously guided that capital expenditure in 2020 would be around $200 million, with much of that earmarked for the development of Arran," it said in a statement.

"However, other discretionary spending is being reviewed and it is anticipated that at least $50 million of this capital expenditure will be deferred, a drop of 25% and in line with other businesses," it said.

First gas from Arran -- which is made up of two gas fields previously known as Barbara and Phyllis -- is expected in 2021.

RockRose executive chairman Andrew Austin said RockRose remained "well placed" to navigate the current economic situation.

"The business is underpinned by a strong balance sheet, hedging, and management's ability to reduce capital expenditure this year and next, if required," Austin said.

Production hedges

RockRose said it had hedging in place to support its current capital expenditure commitments.

It hedged 455,000 barrels of oil at $65.70/b for the first quarter of 2020 -- well above the current Brent price of around $27/b -- and 63 million therms of gas at Eur0.53/th (49 p/th) for calendar 2020.

Looking further ahead, an additional 54 million therms of gas has been hedged in each of 2021 and 2022 at Eur0.41/th and Eur0.45/th (38 p/th and 42 p/th), respectively.

The NBP day-ahead price is currently 22.25 p/th, according to S&P Global Platts assessments Wednesday.

The Calendar Year 21 NBP contract was assessed Wednesday at 34.13 p/th.

Operating costs

RockRose said it could be resilient through the current low price environment.

It said it was listed on the London Stock Exchange in January 2016, when Brent crude was below $30/b, and has remained focused on being able to operate in a low oil price environment.

"Currently we anticipate unit operating costs of around $30/boe in 2020," it said.

RockRose said it had been forced to delay its full financial report, which had been planned to be published Thursday, after the UK Financial Conduct Authority on March 21 requested that all listed companies observe a moratorium on the publication of preliminary financial statements for at least two weeks due to the coronavirus outbreak.

RockRose said it had not experienced an adverse impact on its operations as a result of coronavirus, and that the precautionary and contingency measures put in place, on both operated and non-operated assets, "are working well."