Reabold Sticks to its Guns on UK Deltic Bid

London-listed Reabold Resources has urged Deltic Energy shareholders to reconsider its all-share bid for the entire company, saying that the main event for Deltic is still at least nine months away. That is when Shell starts drilling Pensacola, offshore UK, Deltic's first target, which the Anglo-Dutch major has farmed into.

The alternative, Reabold suggested, is for Deltic to twiddle its thumbs as it burns through a pile of cash – whose value, Deltic said July 16, was not reflected in the bid – while other investment opportunities pass it by.

Reabold by contrast can offer "near term news flow" with its two, fully funded appraisal wells at West Newton, the first of which is planned for this quarter. It also queried whether Deltic's dismissal of Newton was based on the latest seismic data; and if so, why it had chosen such a poor prospect as an analogue for its own, promising Pensacola gas project n the southern North Sea.

Reabold, which has already had talks with some of Deltic's shareholders, invited July 17 the board and its advisers to inspect its "exciting portfolio of assets," holding out the prospect of applying West Newton data to the Pensacola drilling programme.

Deltic Energy's funds set aside for drilling Selene could be used for new, nearer term projects and Reabold has "a proven track record for new project investment and/or acquisition." Merging now would provide "exciting opportunities, which the combined group can pursue in-line with Reabold's existing investment policy." 

Reabold says it will seek to engage with "certain Deltic shareholders", including those with which it has already had initial conversations. While Reabold is a larger company with a more diverse asset base, the possible offer is more akin to a merger of equals, with clear synergies on both sides. "Therefore Reabold does not believe that a significant premium for control is appropriate, with Deltic shareholders remaining as investors in the combined group."

Reabold will have a 56% economic interest in Newton on completion of the acquisition of Humber Oil & Gas' 16.7% interest and it is "potentially the largest onshore hydrocarbon discovery in the UK since 1973." There is a substantial liquids element too: it puts the base case at 146.4mn barrels of oil and 211.5bn ft³ of gas, in both cases on an "initially in-place" basis.

The combined group would also have a diverse and highly active portfolio of assets, including producing assets in California and near-term potential production from Reabold's assets in Romania. Deltic Energy had been called Cluff Natural Resources until the board changed the name in June.