REG - Reabold Resources - Agreed Terms of Conditional Sale of Corallian

Reabold ResourcesAnnouncement

14/09/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220914:nRSN3496Za&default-theme=true

RNS Number : 3496Z  Reabold Resources PLC  14 September 2022

14 September 2022

 

Reabold Resources plc

 

("Reabold" or the "Company")

 

 

Conditional Sale of Corallian for £32 million Gross to Oil & Gas Major

 

 

Reabold, the AIM quoted investing company with a portfolio of upstream oil and
gas projects, is pleased to provide the following update on the conditional
sale of its investee company, Corallian Energy Limited ("Corallian" or "CEL"),
further to its announcement of 4 May 2022.

 

Key highlights for Reabold shareholders:

 

·      Total gross cash consideration for Corallian and its Victory
licence of £32 million to an oil and gas major; with Reabold's share of net
proceeds being c.£12.7 million

o Corallian has notified its shareholders that Corallian has received a
conditional offer of £3.20/Corallian share, with the proceeds to be staged as
outlined below

o  Reabold holds 3,769,487 shares in Corallian

o  Reabold will hold a further 195,416 Corallian shares post conversion of
Reabold's Convertible Loan Notes ("CLNs") which will occur prior to completion
of the sale and will be sold on the same terms and simultaneously with the
currently issued Corallian shares

 

·      Victory asset sale valuation represents significant uplift on
Reabold's total investment of £7.5 million in Corallian since late 2017;
remaining North Sea licences currently owned by Corallian will be acquired by
Reabold

 

·      Net proceeds received will provide Reabold with improved
financial flexibility

 

·      Excellent opportunities remain to fund, progress, and monetise
Reabold's existing oil & gas assets including:

o  West Newton drilling of first development well, planned for H1 2023 to
materially de-risk the project at modest cost, as part of a phased investment
programme

o  North Sea licences to be acquired from Corallian for £250,000, which have
prospects located near existing oil and gas infrastructure

 

·      Market dynamics: industry conditions and the UK's focus on energy
security very supportive of asset development opportunities

 

Stephen Williams, Co-CEO of Reabold, commented:

 

"The Board is delighted with the value uplift and improved financial position
this transaction brings to Reabold. We will continue in our mission to
identify, fund, and monetise low-risk, under-valued, strategically important
oil & gas assets where their development benefits from being near existing
infrastructure. We also recognise our role of improving the UK's energy
security, by unlocking the potential of currently under appreciated assets.

 

With the enhanced capital resources this transaction brings, the Board will
continue its strong oversight of the company's capital allocation policy.
There remains tremendous potential to drive further value for shareholders
through recycling the Corallian proceeds across the portfolio, initially
focussed on West Newton's first development well in 2023."

 

 

 

Details of Corallian's agreed terms of sale

 

The Board of Directors of CEL has now agreed the terms of a transaction with
an oil and gas major, in which the CEL shareholders will sell, and the oil and
gas major will purchase, the entire issued share capital of CEL for a gross
consideration of £32 million, equating to an estimated £3.20/Corallian
share. The transaction is subject to obtaining the consent (referred to
below), and the approval of Corallian's shareholders to enter into the
agreement.

Separately, CEL will have successfully completed the sale of its assets (other
than Victory) to Reabold North Sea Limited, a wholly owned subsidiary of
Reabold, prior to the completion of the sale of CEL to the oil and gas major.
This was a condition of the sale of CEL to the oil and gas major, leaving CEL
with only the Victory licence as its sole asset at the time of sale.

Transaction consideration and shareholder protection

The payment of the consideration from the oil and gas major will be staged,
related to progress of the Victory gas field development. On completion of the
transaction, the oil and gas major will pay an initial consideration of £10
million. This will be followed by a further single payment of £22 million,
assuming the development and production consent for the Victory gas field is
secured from the North Sea Transition Authority (NSTA), on or before 1
December 2023. If consent has not been granted by this date, then the oil and
gas major will have the option to either: i) pay £12 million, with the
remaining £10 million being paid at a later consent date; or ii) offer to
transfer-back the Victory licence to the current CEL shareholders for £1
consideration.

The transfer-back offer protection has been added for CEL shareholders'
benefit, to mitigate against the unlikely event of the Victory project not
being progressed sufficiently. For the licence to be returned to shareholders,
a new entity will be created to receive the licence prior to the completion of
the sale of CEL to the oil and gas major, which will mirror the shareholdings
in CEL, at the time of the licence transfer. At the point of the return of the
licence, the Victory licence will still have a year to run, and the CEL Board
is confident that this will provide sufficient time for an alternative
development or transaction to be secured.

Management of the transaction and payments to CEL shareholders

The current CEL management, as the "Sellers' Representatives", will continue
to have oversight of progress of the transaction and the oil and gas major's
progress towards development and production consent from the NSTA. The oil and
gas major will confirm, to the Sellers' Representatives, receipt of any
development and production consent received for the Victory Field.

Corallian has served notice requiring the convertible loan note holders, which
includes Reabold, to convert their notes into ordinary shares in Corallian.
These shares will be sold on the same terms and simultaneously with the
current issued shares.

Payments to shareholders will be made following receipt of the funds from the
oil and gas major, and after payments have been made related to the
transaction costs and other outstanding CEL liabilities.

The initial payment of £10 million, is anticipated to be made during Q4 2022,
when CEL shareholders will receive an estimated £0.80/Corallian share for
every share held. If the £22 million consideration is made as a single
payment on or before 1 December 2023, then CEL shareholders will receive an
estimated further £2.40/Corallian share following receipt of funds from the
oil and gas major. Otherwise, CEL shareholders will receive the estimated
£2.40/Corallian share in two separately timed payments related to the time of
receipt of the £12 million and final £10 million from the oil and gas
major.

This announcement contains inside information for the purposes of the UK
version of the market abuse regulation (EU No. 596/2014) as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act
2018, as amended.

 

For further information, contact:

 

 Reabold Resources plc                                      c/o Camarco

 Sachin Oza                                                 +44 (0) 20 3757 4980

 Stephen Williams

 Strand Hanson Limited - Nominated & Financial Adviser      +44 (0) 20 7409 3494

 James Spinney

 Rory Murphy

 James Dance

 Stifel Nicolaus Europe Limited - Joint Broker              +44 (0) 20 7710 7600

 Callum Stewart

 Simon Mensley

 Ashton Clanfield

 Panmure Gordon - Joint Broker                              +44 (0) 207 886 2733

 Hugh Rich

 Camarco                                                    +44 (0) 20 3757 4980

 James Crothers

 Billy Clegg

 Rebecca Waterworth

 

 

 

Notes to Editors

 

Reabold Resources plc is an investing company investing in the exploration and
production ("E&P") sector and has a diversified portfolio of assets in
upstream oil & gas projects. Reabold aims to create value from each
project by investing in undervalued, low-risk, near-term projects and by
identifying a clear exit plan prior to investment. The Company's investing
policy is to acquire direct and indirect interests in exploration and
producing projects and assets in the natural resources sector, and
consideration is currently given to investment opportunities anywhere in the
world.

 

Reabold's long term strategy is to re-invest capital made through its
investments into larger projects in order to grow the Company. Reabold aims to
gain exposure to assets with limited downside and high potential upside,
capitalising on the value created between the entry stage and exit point of
its projects. The Company invests in projects that have limited correlation to
the oil price.

 

Reabold has a highly-experienced management team, who possess the necessary
background, knowledge and contacts to carry out the Company's strategy.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  DISSFMFWDEESEIU