Reabold Resources plc (RBD), the AIM quoted investing company with a portfolio of upstream oil and gas projects, announces its unaudited interim results for the six months ended 30 June 2022.
Highlights
- Offer from an oil and gas major for Corallian and its Victory licence, in which Reabold holds a 49.99% interest:
- Conditional sale agreed post period end in September 2022[1]; total gross cash consideration for Corallian of £32 million in staged payments; Reabold's share of net proceeds c.£12.7 million
- Reabold a key facilitator in progressing the Victory gas asset to the point of development and monetisation; valuation achieves significant uplift on Reabold's investment
- Acquisition of remaining Corallian assets for £250,000 with economic effective date of 4 May 2022 - completion announced in September 2022[2]; six North Sea licences acquired with attractive development and monetisation prospects
- Encouraging developments at West Newton in first half and post period end
- Planning granted for drilling and production at Rathlin's West Newton A site, as well as a time extension to allow for further exploratory drilling at the West Newton B site, paving the way for the next phase of activity at West Newton towards development
- Rigorous internal and external technical testing throughout 2021 and the first half of 2022 underpins strong economic and strategic value of West Newton; CoreLab analysis demonstrates actual reservoir fluid flow through several reservoir samples
- First horizontal appraisal well planned for 2023 as part of phased investment programme to considerably de-risk the project
- Post period end CPR published in September 2022 confirms gross 2C unrisked technically recoverable resources of 197.6 bcf of sales gas, with an estimated 86% geological chance of success
- Converted drilling and production success in subsidiary Reabold California LLC into a 42% stake in Daybreak Oil & Gas Inc ("Daybreak"), an OTC traded, Californian oil and gas operator; the transaction in May 2022 creates liquidity for Reabold and forms a new, cash flow producing business with good growth prospects
- Net cash of £3.6m at 30 June 2022; financial flexibility and funding of development opportunities will be further improved with Corallian sale proceeds
- On 28 September 2022, Reabold announced it has agreed to conditionally acquire the entire issued share capital of Simwell Resources Limited, which includes interests in four Southern North Sea licences1
- Appointment of CFO Chris Connolly in May 2022; former Finance Director Anthony Samaha appointed Non-Executive Director
- 2 An additional £93,000 was paid on 14 September 2022 to reflect interim period cashflows between the economic effective date of 4 May 2022 and completion
Financial Results
- As at 30 June 2022, the company had no borrowings and cash and cash equivalents of £3.6 million
- Capital expenditure in the first half of the year was £451,000 (H1 2021: £599,000)
- Net cash used in operating activities was £844,000 in H1 2022 (H1 2021: £550,000). The increase was driven largely as a result of higher operating costs in the US and adverse working capital movements
- Upon completion of the equity exchange with Daybreak, Reabold derecognised its interest in Reabold California LLC in exchange for recognising an investment in Daybreak as a financial asset measured at fair value. Within the first half results, the loss on disposal and subsequent gain in fair value led to a net charge of £1.2 million[3]
Sachin Oza and Stephen Williams, Co-CEOs of Reabold, commented:
"We made good progress in the first half of 2022 and have confidence in the value creation opportunities that lie ahead for Reabold and its shareholders. The impending monetisation of the Victory asset is a major milestone for us. The sale has demonstrated the cycle of our investment strategy, attracting an oil & gas major to acquire the asset we identified at the early stage of development as low-risk, under-valued and strategically important. The transaction also provides us with greater financial capacity to fund development and subsequent value realisation in our other investments, primarily the excellent prospect of West Newton in the near-term.
Reabold has continued to invest in the development of new UK hydrocarbon resources, acquiring six new North Sea licences from Corallian, and agreeing to acquire interests in another four North Sea Licences via the transaction to buy Simwell Resources post period end. We recognise the important role we can take in contributing to the security and affordability of the UK's energy supplies.
Reabold can look forward to an exciting future. We will continue with our disciplined strategy to allocate capital to undervalued oil & gas assets where their development benefits from being close to existing infrastructure."
