RockRose Energy (LSE:RRE) provided investors with a year-end trading update on Wednesday. The company spent much of 2018 focussing on its newly acquired producing assets.
Earlier this year, RockRose acquired gas and condensate producing assets in the Netherlands from Dyas BV. Group production, including the contribution from Dyas B.V since the effective date of the acquisition (1st January 2018), averaged 10,772 barrels of oil equivalent per day (boepd), with production in December averaging 11,200 boepd. This figure includes production from RockRose’s UK assets of 5,194 boepd.
In August, the company continued its asset sweep entering into an agreement to acquire a 20.43% stake in the Arran field from Dana Petroleum, the operator of the offshore UK field. The asset will add 3,500 boepd after completion of a proposed development that would connect the field through a subsea tie-back to the Shearwater platform operated by Shell.
Forecast target production from RockRose’s current portfolio for 2019 remains between 10,000-12,000 boepd. As at 31st December 2018 the total cash at bank was $121.4 million, of which $53.3 million is held in connection with Decommissioning Security Agreements (DSAs).
In November, the company bought back 2,923,240 of its ordinary shares, resulting in a 19% reduction in RoskRose’s market capitalization. The reason given for the making the tender offer at 560p was that the directors did not believe the potential of the company’s assets were fairly represented in the share price.
At today’s share price of 650p, the debt-free company is valued at around £80m. Considering the current cash position is around £54m net of DSAs, that gives an Enterprise Value (EV) of just £26m.
RockRose Executive Chairman, Andrew Austin said:
“2018 was a busy year for RockRose Energy. We integrated the acquisitions of Idemitsu, Egerton and Sojitz, which completed at the close of 2017, returned capital to shareholders, agreed and closed the further acquisitions of Dyas B.V and our 30.4% interest in the Arran Field, agreed the FDP on Arran and tendered for 20% of the equity in the company.
We continue to invest in the organic growth of our portfolio, while also actively evaluating acquisition opportunities. The recent decline in the oil price, combined with the strength of our balance sheet and absence of any debt, potentially presents further value accretive acquisition opportunities for RockRose.”