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Reabold Resources: Completion of EBS at Victory Gas Discovery is a key step forwards

Summary

  • Environment Baseline Survey (EBS) at Victory Gas Discovery successfully completed.
  • Victory Gas Discovery is operated by Corallian Energy, in which Reabold Resources has a 49.99 per cent stake.
  • Corallian Energy is planning for a draft Field Development Plan for Victory Gas Discovery by this year-end.
  • Data collected from this EBS will be a key input into the Field Development Plan.

Reabold Resources Plc (LON: RBD), a prominent investor in upstream oil and gas projects, has announced the completion of the Environment Baseline Survey (EBS) at the Victory Gas Discovery located in the north-west region of the Shetland Isles. The Victory Gas Discovery is owned and operated by Corallian Energy Limited, in which Reabold has a 49.99 per cent interest.

The development is important for Reabold as the completion of Victory EBS brings Corallian closer to completing the draft Field Development Plan (FDP), which the company plans to submit to the UK's Oil and Gas Authority (UKOGA) by this year-end. UKOGA is an organisation working with the government and the industry to maximise the benefit from the country’s oil and gas reserves.

Highlights of EBS at Victory Gas Discovery

  • Data acquisition for Victory EBS was completed on 23 June 2021.
  • Reabold has been the driving force behind the Victory EBS by providing the funding to Corallian through a convertible loan instrument, which was announced on 22 February 2021.
  • The data acquired through the EBS includes side-scan sonar, multibeam echosounder and seabed sediment samples. Also, the proposed project sites’ video and camera stills have been recorded.
  • All the data collected from this EBS will be used to complete an Environmental Impact Assessment, which will finally be used as an Environmental Statement for the Victory project.
  • The company has reported that the data and sample processing and analysis will take around four months to complete.
  • The Environmental Statement for the Victory project will be submitted to the applicable UK authorities, along with the Victory draft FDP, as per the schedule, by the end of this year.

The potential of Victory Gas Discovery

  • The Victory Gas Discovery is located around 48 km northwest of the Shetland Isles. It was first drilled in 1977 by Texaco, which intersected a high-quality 224 ft (68 metres) of gas-charged Lower Cretaceous sandstone at well 207/1-3 at a subsea depth of 4144 ft (1263 metres).
  • In 1996, 3D seismic data was captured over the vicinity as part of a Shell-operated group-shoot. The data demonstrated that the Rona Ridge and the linked West Shetland Basin in the region had experienced a multifaceted geological history with multiple phases of Cretaceous tectonism.
  • As per SLR November 2020, 2C of 157 bcf gas is recoverable from the discovery - 1C-3C range of 105-236 bcf. The first gas from the project is estimated in 2024.

The Victory Development

(Image source- Company Release)

Way forward

Corallian, the operator of Victory Gas Discovery, is expecting a Competent Persons Report (CPR) to be completed during Summer 2021 and the first gas production in 2024. Thereafter, an initial three-year plateau gas production phase is planned at 70 mmscf/d from 2025, delivering over 25 BCF per year, with total planned gas production recovered over the eight-year field life of 157 BCF.

Corallian believes that the Victory Gas Discovery is a simple, low-risk gas development project that has been fully appraised and does not require any further pre-development drilling.  The field’s valuation as per SLR Consulting, currently ranges from around £85 million as per the current gas price forecasts of 42.5pence/therm, to around £146 million, based on historical average gas price and base case valuation of 50pence/therm.

The Victory Gas Discovery is an example of Reabold’s successful and proven strategy-of delivering near-term project activity and value creation. The Victory project doesn’t require any pre-development drilling and is expected to provide fast payback in the years ahead.

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