- Reabold Resources Plc has emerged in a solid financial position with an exciting and potentially transformative year ahead.
- The vagaries of Covid-19 on the oil & gas industry have highlighted the strength of the Reabold model of investing in undervalued assets.
- A major development for the year ended 31 December 2020, was the opportunistic acquisition of a direct 16.665% interest in the West Newton field.
Reabold Resources Plc (LON: RBD), an upstream oil and gas projects investor, has once again proved its mettle. The company, despite all odds amid the unprecedented challenges of Covid-19, reported solid progress in its investment projects for the year ended 31 December 2020.
This past year had been a difficult one for the natural resources sector, particularly given that Covid related lockdowns resulted in delays to work programmes. Nonetheless, Reabold Resources emerged in a strong financial position with an exciting and potentially transformative year ahead, especially in respect to the West Newton and Victory projects.
The company’s main aim is to generate supernormal returns through investment in undervalued, low-risk, near-term upstream oil and gas projects and by monetisating these projects as they are matured. The strength of Reabold’s business model was highlighted by its production assets being able to generate positive cashflows despite the low oil prices caused by the pandemic. This exemplified the strategy of investing in assets that are able to deliver profitably under any realistic oil and gas price assumption as they are at the lower end of the industry cost curve and competitive against other sources of hydrocarbons.
- The Group’s loss for the reported period reduced significantly to £2,707,000 as compared to a loss of £4,266,000 in 2019. The Group’s total net assets and net current assets as of 31 December 2020 were £38,920,000 and £1,588,000, respectively.
- The passing year proved a year of tremendous growth for the company when significant discovery at the West Newton field with the B-1Z well was reported. The results were not only better than expectations, but further indicated that the West Newton discovery could be the largest UK onshore discovery since 1973.
- The UK Oil and Gas Authority (OGA) awarded Corallian Energy Limited, a 100 per cent interest in block 207/1a. The block is of utmost importance for the company as it contains the Victory gas discovery, a simple, low-risk gas development, which has been fully appraised, and no additional pre-development drilling is required for it.
- In 2020, the company had made an additional investment in Corallian development of £600,000, through the exercise of warrants.
- The biggest development of the period was an opportunistic acquisition of a direct 16.665% interest in the West Newton field, which led to an increase in effective economic interest in West Newton to around 56.4% from previously held 39.7%.
- There were other developments as well, such as the further commercial discovery on West Brentwood licence in California, testing of the IMIC-1 discovery well in Romania got started.
Post reporting period, there were some important developments, the company successfully raised £7.5 million at 0.55 pence per share in an oversubscribed placing. Also, the company made a further investment of £1,000,000 into Corallian by way of a Convertible Loan.
Firm strategy for a prosperous future
The company, under the able and experienced leadership of its co-Chief Executive Officers Sachin Oza and Stephen Williams, is all set to create value from each project from the portfolio of its assets in the UK, US and Romania. Despite the downturn in the industry, the company has successfully positioned itself to thrive throughout 2021 and beyond.
There are several developments planned for the year and beyond which will guide the company to a robust and prosperous future. The B-1Z well at the West Newton has indicated substantial areal extent by discovering pay in the Kirkham Abbey formation 2.5 km south of the West Newton A wells. West Newton continues to surpass expectations and with a significant work programme to appraise further planned in the latter part of the year.
Also, by the end of this year, Corallian will be submitting the Victory draft Field Development Plan. At the same time, Victory is expected to add sizable value to Reabold as one of the best residual undeveloped assets on the UK Continental Shelf. Overall, the company holds a robust financial position, well-funded for all the major work of 2021.