logo-loader

Reabold Resources buys into south coast oil prospect

Published: 20:02 06 Nov 2017 AEDT

picture of Isle of Wight
Colter is off the south coast, close to the Isle of Wight
Reabold Resources PLC’s (LON:RBD) has invested £1.5mln for a 35% stake in Corallian Energy Limited, a private UK oil and gas group with a 60% interest in the Colter project off the Dorset coast.
 
Discovered by BP in the eighties, Colter is adjacent to one of Europe’s largest oil fields, Wytch Farm, which is still producing today.
 
Colter was deemed too small to be developed by the oil giant relative to Wytch Farm, which has so far produced 450mln barrels.
 
But at only a fraction of that volume, Reabold expects Colter to be ‘highly profitable’.
 
“It’s a look-alike Wytch Farm, just smaller.”
 
Corallian estimates the prospect contains 30mln barrels of oil with a net present value of £255mln (gross). 
 
Development costs are also expected to be low given the proximity to the existing Wytch Farm infrastructure.
 
Reabold has been refinanced recently through two cash calls (that brought in £5.7mln) following the appointment of former fund managers and oil and gas specialists.
 
“We will invest in projects that will deliver very strong returns in any reasonable oil price environment,” said Reabold
 
That proximity in location and geology means all of the technical data, drilling expertise and know-how built up over the life of the Wytch Farm is easily transferable to Colter.
 
An initial well is planned for the first half of next year subject to Corallian and partner Corfe Energy (40%) obtaining the regulatory approvals.
 
The strategy going forward will be more of the same, a focus on pre-cashflow assets rather than those in production.
 
 “They are much more difficult to value by the industry and hence less expensive.
 
 “De-risked, pre-cashflow stage assets at valuations that assume there is a huge amount of technical or geological risk associated with them,” sums it up.
 
More deals are already being pencilled in, with Europe the immediate focus. The duo reckon it is somewhere investments of around £2mln can be executed relatively quickly.
 
At present, the plan is for Reabold to take minority stakes in companies operating the assets as this is seen as the cheapest and best use of its capital.
 
There is a “wealth of assets” similar to Colter out there, according to the new team.
 
Colter/Corallian came just three weeks after Reabold completed the second of its fund raises.
 
“It is representative of how actively we are looking. Subsequent investments will come quickly.”
 
Shares currently are 0.79p, valuing the group at £11mln.
 

Proactive Investors' Best Bits

In this week's Best Bits we put the spotlight on Blockchain. Andrew Scott spoke to Clem Chambers from On-Line PLC (LON:ONL) which is soon to be re-named On-Line Blockchain PLC as well as Malcolm Palle and Eddy Travia from Coinsilium Group Limited (LON:COIN) who’ve just signed a deal with...

on 11/11/17