Rose
Petroleumplc
Rose Petroleum plc
Annual Report and Financial Statements
For the year ended 31 December 2019
Contents
Directors, Advisers and Officers 02
Chairman's Statement 03
Strategic Report 06
Directors' Report 16
Corporate Governance Statement 18
Statement of Directors' Responsibili7es 19
Independent Auditor's Report 20
Consolidated Income Statement 26
Consolidated Statement of Comprehensive Income 27
Consolidated Balance Sheet 28
Consolidated Statement of Changes in Equity 29
Consolidated Cash Flow Statement 30
Company Balance Sheet 31
Company Statement of Changes in Equity 32
Company Cash Flow Statement 33
Notes to the Financial Statements 34
Important informa7on regarding the
Annual General Mee7ng 72
No7ce of Annual General Mee7ng 73
Annual Report and Accountsfor the year ended 31 December 2019
01
Rose
Petroleumplc
Directors, Advisers and Officers
Directors
RL Grant | Non-Execu&ve Chairman |
TH Reynolds | Non-Execu&ve Director |
GB Stein | Non-Execu&ve Director |
JC Harrington | Chief Execu&ve Officer |
CJ Eadie | Chief Financial Officer |
Secretary | |
CJ Eadie |
Registered Office | |
20-22 Wenlock Road | |
London | |
N1 7GU | |
Auditor | Solicitors |
RSM UK Audit LLP | Memery Crystal LLP |
Central Square, 5th Floor | 165 Fleet Street |
29 Wellington Street | London |
Leeds | EC4A 2DY |
LS1 4DL | |
Registrars | Nominated Adviser |
Link Asset Services | Allenby Capital Limited |
34 Beckenham Road | 5 St Helen's Place |
Beckenham | London |
Kent | EC3A 6AB |
BR3 4TU | |
Bankers | Broker |
Barclays Bank Plc | Turner Pope Investments Ltd |
Level 27 | Becket House |
1 Churchill Place | 36 Old Jewry |
London | London |
E14 5HP | EC2R 8DD |
Annual Report and Financial Statementsfor the year ended 31 December 2019 |
Chairman's Statement
Overview
During these very challenging 7mes, I would first of all like to reiterate that the primary concern of the Company's Board of Directors ("Board") is the safety of all the Group's stakeholders and employees. We truly hope for good health for all.
While the period under review was dominated by a restructuring of the Group, our more recent focus, as a result of the current global turmoil, has been to protect the Group, safeguard its exis7ng asset base and posi7on it for a8rac7ve growth opportuni7es that we expect will arise from the current environment. As part of this process, we have implemented comprehensive cost reduc7ons which will enable the Group to con7nue trading effec7vely. With the con7nued financial support of our brokers and major Shareholder we can now focus our efforts and a8en7on on implemen7ng our growth strategy.
The Group has no debt, very low fixed costs and no near-term capital commitments, and it is my firm belief that the Group is now well posi7oned for the future despite the tremendous economic and financial shockwaves caused by the dual impact of the coronavirus pandemic and the oil price vola7lity.
These factors have already inflicted considerable distress to the U.S. natural resource landscape, but I also believe this distress has created significant opportunity for the Group, as demonstrated by numerous Chapter 11 filings, increased asset sale ac7vity and more a8rac7ve valua7on entry points. Even in this challenging environment we believe that a8rac7ve, value-addi7ve acquisi7ons exist. A disciplined focus on cash genera7on, sustainable and responsible growth, and value to Shareholders will be central to our decision-making.
Group Restructuring and Revised Strategy
The key objec7ves of the Group restructuring were to augment the Board with highly experienced individuals, to reduce the Group's opera7onal cost base, and to define and implement a new strategy to ensure the Group is op7mally posi7oned for success.
The restructuring resulted in the closure of subsidiaries related to legacy ventures in Cuba, Mexico, Germany and the U.S.A. We also conducted an overhaul of our exis7ng asset in the Paradox Basin (the "Paradox", "Paradox acreage" or "Paradox project") in order to reposi7on the asset in such a way as to maximise value for Shareholders over the medium to longer term.
In September 2019, we unveiled the Group's new strategy, which in addi7on to developing the Paradox project, focuses solely on the upstream sector in the Rocky Mountain region of the U.S.A., an area with a significant number of produc7on and development acquisi7on opportuni7es of a scale suited to our strengths and size. Our goal is to produce a 7ght, cost-effec7ve path to near-term cash flow, and we are well underway with efforts to execute this strategy.
In November 2019, the Group announced that it had nego7ated an op7on to acquire a working interest in the 317-acre McCoy lease located in the Denver-Julesburg Basin ("DJ Basin") in Weld County, Colorado, U.S.A. ("McCoy" or "McCoy acquisi7on"). The op7on has since been extended through to the end of December 2020 at no cost to the Group.
Annual Report and Financial Statementsfor the year ended 31 December 2019
03
Rose
Petroleumplc
Chairman's Statement
continued
The DJ Basin is a world-class, liquids-rich resource play with over 4,000 horizontal wells drilled to date. There is significant infrastructure in place with available capacity and ready access to service providers and contractors.
The Group's management team, together with that of our opera7ng partner, has significant experience delivering produc7on from horizontal development in close proximity to the McCoy project. The McCoy project is a low-risk development opportunity and the Board believes that it would complement and balance the Paradox project in the Group's por6olio. Although commodity prices in the spring of 2020 did not support the development of the McCoy project as originally envisaged, rapidly falling capex costs combined with a stabilised oil price will prove beneficial to the development of the project. We believe Great Western Petroleum, the operator of the project, will elect to move forward with drilling in the coming months, and the Group will likely seek to maximise its par7cipa7on in the project if the economics are suppor7ve and appropriate funding can be secured.
In addi7on, the Board believes the current market turmoil should deliver mul7ple a8rac7ve investment opportuni7es within our area of focus, and we are working with both industry and financial partners to iden7fy high value targets which might be added to our por6olio.
Board and Management Changes
Since the last Annual Report, we have made further changes to the structure of the Group's Board to ensure we have the team necessary to deliver our new strategy.
In September 2019, Colin Harrington became the Group's full 7me Chief Execu7ve Officer at which point I moved to the posi7on of non-execu7ve Chairman.
In addi7on, the Group appointed two new independent non-execu7ve Directors to the Board, and Ma8hew Idiens stepped down from the Board in August 2019.
Tom Reynolds was appointed as a Director in April 2019. Tom is a Chartered Engineer with over twenty-five years' experience in the energy sector and specialises in strategic planning, investment management and cross-border merger and acquisi7on transac7ons in the oil and gas, energy and infrastructure sectors.
Gordon Stein joined the Board in September 2019. Gordon has over 26 years of interna7onal experience in the oil and gas sector and has a significant track record of working with AIM quoted natural resources businesses.
Gordon's financial experience and long-standing rela7onships in the sector will be invaluable over the coming months as the Group completes its transforma7on into a geographically-focused upstream par7cipant. As part of the Group's inten7on to bolster its governance framework, Gordon has taken on the roles of Chairman of the Audit and Remunera7on Commi8ees.
I have been delighted by the dynamism and cohesiveness of the new Board and I believe we now have a Board structure that meets all our key criteria:
• longstanding rela7onships and exper7se in the geographical areas of focus (DJ Basin and the wider Rockies area);
• significant experience with company turnarounds and special situa7ons (with mul7ple successful exits);
• successful track record of building and managing both small and large cap companies;
• a Board that is aligned with our Shareholders (the Board's combined shareholding is over 25% of the Company's issued share capital);
• access to capital and proven fundraising ability (including non-tradi7onal funding sources); and
• a strong background in ESG and corporate governance adherence.
Annual Report and Financial Statementsfor the year ended 31 December 2019
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Rose Petroleum plc published this content on 09 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 July 2020 12:22:09 UTC