Reabold to Raise Stake at UK Onshore Find
London-listed Reabold Resources announced on May 26 it had struck a deal with UK firm Humber Oil & Gas to take an extra 16.7% stake in UK onshore licence PEDL 183, containing the West Newton oil and gas discovery.
The sales and purchase agreement will see Reabold pay £1.4mn ($1.7mn) in cash and issue 350mn ordinary shares priced at £0.001 in exchange for the stake.
The deal, raises Reabold's interest in the licence to around 56.3%, comprising a 16.7% direct share and a 39.7% indirect stake through its majority ownership of Rathlin Energy, the licence's operator with a 66.7% position. The remaining 16.7% interest in the licence is held by Union Jack Oil.
West Newton is situated in Yorkshire, northern England. Rathlin upgraded its resource estimate for the field in November last year to a base case of 146.4mn barrels of oil and 211.5bn ft3 of gas initially in place. Reabold's transaction requires approval from the Oil and Gas Authority.
"We are delighted to have agreed to significantly increase our exposure to West Newton, which we believe could be a key driver of value for Reabold, at a highly attractive price," Reabold's co-CEO Stephen Williams said in a statement. "Our increased investment should facilitate the unlocking of the large potential value we see at West Newton and we look forward to the upcoming activity."
This activity includes drilling the B-1 appraisal well, where site construction is already underway. Reabold also said it had secured a £5mn discretionary equity line cash facility, to shore up its financial position.
"Whilst current macro conditions are throwing up substantial challenges for the industry as a whole, the ability to act opportunistically to enhance shareholder value during low points in the cycle is a key aspect of the Reabold strategy," Williams said.
Despite obtaining the credit line, Reabold said its balance sheet was strong enough to support its planned work commitments across its portfolio, which include interests in offshore licences off the coast of Dorset, southern England, and projects in Romania and California.
"We deemed it prudent to have additional headroom whilst we progress the activity at West Newton," Williams said.