Reabold Resources PLC on Tuesday announced the £32 million sale of the Victory gas project to Shell UK Ltd.
Shares in Reabold traded 9.4% higher at 0.085 pence on Tuesday in London.
The London-based investor in ‘low-risk, near-term’ oil and gas projects said it received the final payment from Shell in January, leaving it with net proceeds of £12.7 million.
Reabold said its focus is now on its West Newton and Colle Santo projects in the UK and Italy, ‘two key gas assets that have strong parallels with Victory’ and where it ‘plans to apply the same successful strategy’.
Reabold reported a current cash balance of £9.1 million, leaving it ‘financially well positioned to progress these key assets, as well as distributing excess cash to shareholders’.
Reabold also said it intends to drill a first development well, WN-A3, at the West Newton project this year. An ‘active process’ is currently underway by operator Rathlin (UK) Energy Ltd to raise ‘sufficient funding’, which may include additional investment from Reabold.
The company said a feasibility study is currently being undertaken by independent consultants for a gas development and export plan at WN-A3, and Reabold thinks ‘that gas production could be brought to market within months of drilling and testing with a materially reduced capital investment, providing significant early cash flow whilst additional activity is carried out on [West Newton’s] further development’.
Reabold added that the Colle Santo project is development-ready, and that the approval process continues to progress for well testing operations and for the full field development. It also said progress has been made on sourcing vendor financing from the project’s Italian contract operator.
‘After receiving the final tranche of the payment from Shell, Reabold is now financially well positioned to progress its two key assets, and in doing so, contribute significantly to European gas supply and energy security,’ commented Co-Chief Executive Officer Stephen Williams.
‘We are excited by the new phased capex plan at West Newton which could see production and cash flow much sooner than previously expected, and with considerably reduced initial capital investment,’ he continued. ‘We anticipate a funding solution for the drilling of WN-A3 being finalised in the near future, and this first development well being drilled this year.
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