Rockrose Energy potential acquisition and Syncona Q3 update

Rockrose Energy (RRE.L, Market Cap £411m, 1820p, 9.1% of JIC Portfolio and 9.1% of JIC Top 10)

It has announced that it intends to acquire 100% of the Cotton gas field in the Southern North Sea. 

Conclusion: Depending on price, this looks like a sensible use of some of its cash balance. To put 12,000 boepd compares with its current plans for 21,000 boepd in 2020. After a strong start to the year, Rockrose has dropped 20% in short order. On 15th January it was just shy of £23 per share. Fear about the impact of Coronavirus on global growth has hit the oil price and gas prices have also been weak. Rockrose management will be frustrated about its share price especially when it looks at the value of deals being done in the North Sea and what the read-across is for its valuation. By any reading, public markets are undervaluing Rockrose. Maybe the answer is that unless Rockrose sees a re-rating of its shares, someone else will step in. Pure speculation, but how about a private equity back bid by management, (Andrew Austin, CEO owns just short of 30%).  Anyway, the shares look very cheap to me and I think ultimately value will out. Sticking with Low Risk/High Reward. Happy Holder!

The field was discovered in 2009 and ‚Äúhas the potential to produce at a peak rate of up to 70mmscf/d (12,000 boepd) from two horizontal development wells‚ÄĚ.

There is no mention of price as a Final Investment Decision (FID) will be made after Rockrose has ‚Äúcarried out further studies to ensure that both the subsurface delivery and the project economics are robust, particularly given the current challenging gas price.‚ÄĚ

Andrew Austin, Executive Chairman of RockRose, said:
“This acquisition gives RockRose the option of a significant amount of production and reserves in an area of the Southern North Sea Gas Basin in which we already have other producing assets. We look forward to carrying out further evaluation of the discovery prior to committing to FID.”

Richard T Strachan CEO of Speedwell Energy Limited said:
“Having identified the potential in Cotton some three years ago, which was a relinquished asset going nowhere, to one now where we have a draft Field Development Plan and a delivery team in place capable of bringing Cotton through to First Gas, we are delighted that RockRose will now take over Cotton and¬†¬†are looking at how to potentially take it forward and we wish them all the best as they do so.”

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Syncona Ltd (SYNC.L Market Cap. 1427m, FTSE 250 Index, 215p and 3.0% of JIC Portfolio and 0.0% of JIC Top 10)

Q3 update for quarter ending 31st December.

The full statement can be found HERE

Conclusion: Steady as she goes at Syncona. No change to my feelings towards Syncona which I believe will create huge value over the long term. Inevitably progress will be lumpy as it is dependent on news from its development investments. The shares currently stand at an 8% premium to the end of December NAV. Over the last few years, it has managed premiums of 30% or more. I remain a Happy Holder!


NAV increased by 0.2% to 199.4p per share.

It has nine portfolio companies and committed $80M to Freeline, in which it has a 79% holding, invested £29.5m in Azeria, in which it owns 61%.

Further progress was made on the clinical front with data from Autolus. Freeline and Gyroscope are progressing clinical trials and Achilles has commenced enrollment in its non-small cell lung cancer and melanoma programmes.

Martin Murphy, CEO, Syncona Investment Management Limited, said:¬†“We have had a productive third quarter, funding Freeline as it continues to scale and leading a financing in a new Syncona company, Azeria, where there is an exciting opportunity to build a world-class oncology company. We have also seen strong clinical progress across the portfolio with Autolus, Freeline and Gyroscope progressing seven clinical trials.

“We continue to take a hands-on approach to capitalise on the significant opportunities ahead. We have a strong pipeline of opportunities to found new companies and will ambitiously fund our growing portfolio.
“We are delighted that Lorenz has joined Syncona. He will be a valuable addition to the team, and we look forward to working with him as we found, build and fund the next generation of healthcare companies seeking to deliver transformational treatments to patients.”

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