Business
Unaudited half-yearly results period ended 31 Dec
Unaudited half-yearly results period ended 31 Dec.
About this update from Red Rock Resources Plc
[{"type":"text","content":"\n \nRNS Number : 6182T Red Rock Resources plc 31 March 2016 \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n31 March 2016\n\n\n\n\n \n\n\n\n\nRed Rock Resources plc (\"Red Rock\" or the \"Company\"), the oil and mineral exploration and development company with interests in oil production in Louisiana, manganese production in South Africa, and gold production in South America, announces its unaudited half-yearly results for the six months ended 31 December 2015.\n\n\n\n\n \n \n\n\n\n\nChairman's statement\n\n\n\n\n \n\n\n\n\nWe present the Company's interim report for the six months to 31st December 2015.\n \nThe repositioning and restructuring of the company have continued during the period and since. Operating off a low cost base, cost outflows have been minimised, while management has concentrated on developing streams of income, as the company moves from a typical exploration company model to a cash flow-generative model.\n \nIn December 2015 a capital reorganisation was carried out and reduced the number of ordinary shares outstanding by consolidating every 25 old shares into one new share. While it is too early to be definitive, the indications so far are that the exercise may be succeeding in its purpose of reducing trading spreads and increasing tradability of the shares. \n \nAfter a prolonged period of study of potential cash-flow generative oil opportunities in 2014 and 2015, the company acquired a 20% working interest in the Shoats Creek Oil Field in Louisiana in late 2015, initially by an agreement to participate in the drilling of two future wells, Lutcher More 21 and Lutcher More 22. Subsequently an equivalent interest in the Lutcher More 20 (LM 20) well, already drilled and coming into production, was purchased. On 7 March 2016 the coming into full production and first stable production rates from LM 20 (at over 200 barrels per day) were announced, and so as of that date Red Rock became an oil producer.\n \nThis investment was stress-tested for a number of different scenarios before it was made. On the basis of $30 a barrel oil, an 18% discount rate (rather than the normal 10% assumption), and first year production figures 40% below operator forecasts, Red Rock modelled a satisfactorily positive net present value. Currently, comparable oil prices are over $40 a ba...