REG - Reabold Resources - Unaudited Interim Results
28/09/2023 07:00
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RNS Number : 9001N Reabold Resources PLC 28 September 2023
28 September 2023
REABOLD RESOURCES PLC
("Reabold" or the "Company")
Unaudited Interim Results for the Six Months Ended 30 June 2023
Reabold Resources plc (AIM: RBD), the oil & gas investing company with a
diversified portfolio of exploration, appraisal and development projects,
announces its unaudited interim results for the six months ended 30 June 2023.
The results are included below and are also available at
https://reabold.com/investor-relations/reports-and-presentations/
(https://reabold.com/investor-relations/reports-and-presentations/) .
Highlights
· Good progress with onshore UK licence, PEDL183:
o The PEDL183 Joint Venture partnership (the "JV") agreed a specific well
path for the West Newton B-2 ("WN B-2") well, which has been approved by the
East Riding of Yorkshire Council. The operator has received the necessary
permit variation from the Environmental Agency for the use of oil-based fluids
at the A and B sites. Drilling and testing of the B-2 well is expected by June
2024, once Rathlin (UK) Energy Limited's ("Rathlin") funding solutions have
been confirmed as operator of the licence.
o Reabold identified Crawberry Hill, a significant potential discovery, on
PEDL183, which was drilled by Rathlin in 2013 and could add materially to the
already significant resource within the licence.
· Acquisition of 16.2% equity interest in LNEnergy Limited ("LNEnergy")
which was further increased to 17.6% post period end for a total consideration
of £2.5 million, £1.0 million of which was in cash and £1.5 million of
which was satisfied via the issue of 810,810,811 new ordinary shares of 0.1p
each in the capital of the Company ("Ordinary Shares"). Recent indicative
national and regional approvals have enabled the Colle Santo gas field to
enter operational phase:
o LNEnergy's primary asset is an exclusive option over a 90% interest in the
Colle Santo gas field, a highly material gas resource with an estimated 65bcf
of 2P reserves 1 (#_ftn1) , with two production wells already drilled. The
field is development ready, subject to approvals and permits.
o LNEnergy expects all the necessary approvals to be received in order to
carry out the Early Production Programme allowing early revenue generation
from the Colle Santo project.
o Reabold retains an option to increase its stake in LNEnergy to 26.1% for
consideration of £1.8 million, which expires on 29 December 2023.
· Reabold North Sea licences portfolio management:
o Post period end, Reabold announced the high-grading of its UK North Sea
offshore licences and will retain its interests in four key licences in the
North Sea, including the key Dunrobin prospect on licence P2478.
o A CPR prepared by RPS was released in April 2023 covering all four
retained licences, which included 201 mmboe(( 2 (#_ftn2) )) aggregate gross
unrisked(( 3 (#_ftn3) )) Pmean Prospective Resources on licence P2478.
o Completed acquisition of Simwell Resources Limited ("Simwell Resources")
in January 2023 which provided valuable data and added to Reabold's
understanding of the Zechstein play, which is fundamental to the Company's
onshore assets of West Newton and Crawberry Hill.
· Commencement of a share buyback programme in April 2023 for a maximum
amount of £750,000 as part of the proposed £4.0 million return to
shareholders announced via RNS on 3 October 2022 4 (#_ftn4) .
· Net cash of £2.6 million at 30 June 2023. Cash inflows expected in
Q4 2023 as part of the contingent consideration receivable arising from the
sale of Corallian to Shell. For further details of the contingent
consideration receivable, please see Review of Operations - UK offshore, and
Note 11.
Sachin Oza and Stephen Williams, Co-CEOs of Reabold, commented:
"We are encouraged with progress made across the Reabold portfolio in 2023.
The prospects for LNEnergy have developed rapidly since May 2023, when we
re-invested part of the proceeds from the disposal of the Victory asset in the
Colle Santo project. The post period end indicative approvals from both the
regional and national regulators are key steps to unlocking the material
potential of the Colle Santo gas field and to near-term production. We also
made good progress with UK onshore licence PEDL183 and anticipate commencement
of drilling at the well during H1 2024. The identification of an existing
discovery, Crawberry Hill, also on PEDL183, confirms the significant
prospectivity in the licence."
"The next 12 months will be exciting for Reabold with anticipated newsflow on
our key assets and the expected receipt of the £9.5 million contingent
payment from Shell (as the balance of the consideration for the Victory
project). We will continue with our disciplined strategy to allocate capital
to undervalued oil & gas assets where their development benefits from
being close to existing infrastructure and there is a clear path to
monetisation."
Enquiries:
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
James Dance
Rob Patrick
Stifel Nicolaus Europe Limited - Joint Broker +44 (0) 20 7710 7600
Callum Stewart
Simon Mensley
Ashton Clanfield
finnCap Ltd - Joint Broker +44 (0) 207 220 0500
Christopher Raggett
Barney Hayward
Camarco
Billy Clegg +44 (0) 20 3757 4980
Rebecca Waterworth reaboldenquiries@camarco.co.uk
Forward looking statements
This disclosure contains certain forward-looking statements with respect to
the business of Reabold and certain of the plans and objectives of Reabold
that involve substantial known and unknown risks and uncertainties. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will or may occur in the
future and are outside the control of Reabold. Actual results or outcomes, may
differ materially from those expressed in such statements, depending on a
variety of factors, including: the impact of general economic conditions where
Reabold operates, industry conditions, changes in consumer preferences and
societal expectations, the pace of development and adoption of alternative
energy solutions, changes in laws and regulations including the adoption of
new environmental laws and regulations and changes in how they are interpreted
and enforced, increased competition, the timing of bringing new fields
onstream, fluctuations in foreign exchange or interest rates, stock market
volatility, the success or otherwise of partnering, Reabold's access to future
credit resources, and other risk factors discussed in Reabold's 2022 Annual
Report. Accordingly, no assurances can be given that any of the events
anticipated by the forward looking statements will transpire or occur, or if
any of them do so, what benefits, including the amount of proceeds, that
Reabold will derive therefrom.
Review of Operations
UK Onshore
Rathlin Energy (UK) Limited and West Newton - PEDL183
West Newton is an onshore hydrocarbon discovery located north of Hull,
England. To date, three wells have been drilled at West Newton (A-1, A-2 and
B-1Z) confirming a major discovery - potentially one of the largest
hydrocarbon fields discovered onshore UK. Rathlin is the operator of the
licence and holds a 66.67% interest. Reabold holds a 59.5% shareholding in
Rathlin and holds a direct 16.67% in the licence giving the Company an
aggregate c. 56% economic interest in West Newton.
In the first half of the year, the JV partnership, which comprises Rathlin,
Reabold and Union Jack Oil plc, agreed a specific well path for the West
Newton B-2 ("WN B-2") well. The JV has continued to analyse the geophysical,
petrophysical and test data from the West Newton A and B wells in preparation
for drilling. The data analysis has already confirmed the likelihood of
intersecting good reservoir quality that, when taken in conjunction with the
optimised drilling and completion methods, is expected to deliver good well
productivity from a horizontal well from WN B-2 and, as such, the JV
partnership has committed to the specific, optimised well path for WN B-2. The
WN B-2 well has been approved by the East Riding of Yorkshire Council. Rathlin
has received the necessary permit variations from the Environmental Agency for
the use of oil-based fluids at the A and B sites. An invitation to tender has
been distributed to potential drilling rig providers. It is envisaged that WN
B-2 will be followed by a multi-well development programme based on a 50
Mscf/d gas facility.
Rathlin, the operator of PEDL183 with a 66.67% licence interest, is currently
unfunded for its share of the WN B-2 well and is currently assessing funding
solutions including reducing its working interest position by bringing in a
partner to participate in drilling on PEDL183. The drilling and testing of the
WN B-2 well is planned to be completed by June 2024, in-line with the time
limits set by the North Sea Transition Authority ("NSTA"). Reabold may be in a
position to provide additional funding to Rathlin following receipt of the
second tranche payment from Shell relating to the sale of the Victory asset.
Alongside the drilling plans for the WN B-2 well, Reabold has continued to
appraise other opportunities within the PEDL183 licence. Reabold has
undertaken a technical review of its Zechstein play prospectivity in the UK,
including the licences acquired through the acquisition of Simwell Resources
and PEDL183, combining the significant quantity of seismic data, historical
wells, core analysis and other proprietary data and analysis assembled by the
Company.
Through this analysis, Reabold has identified on PEDL183 a significant
potential discovery, Crawberry Hill, which was drilled by Rathlin in 2013 and
which could add materially to the already significant resource within PEDL183.
The Crawberry Hill-1 well, drilled in 2013, intersected 141m of Kirkham Abbey
Formation with good indications of gas shows and porosity. The well was
originally drilled to test a deeper target and does not have a full suite of
logs over the Kirkham Abbey interval.
ERC Equipoise Ltd ("ERCE") has undertaken a petrophysical analysis of the
conventional reservoir of the Kirkham Abbey formation in the Crawberry Hill
and Risby-1 wells and interprets average porosities greater than 15% in the
top 20m of the Kirkham Abbey formation in Crawberry Hill-1.
Reabold believes the apparent discovery at Crawberry Hill to be an exciting
appraisal opportunity potentially significantly enhancing the already
strategic asset that is PEDL183.
UK Offshore
Victory contingent consideration receivable update
Further to the receipt of initial gross consideration of £10 million (c.
£3.2 million net to Reabold) in November 2022, the payment of the contingent
consideration arising from the sale of Corallian to Shell in 2022 will be
staged as follows:
A single payment of £22.0 million (£9.5 million net to Reabold) will be
made, assuming the development and production consent for the Victory gas
field is secured from the North Sea Transition Authority, on or before 1
December 2023. If consent has not been granted by this date, then Shell will
have the option to either: i) pay £12.0 million (£5.1 million net to
Reabold), with the remaining £10.0 million (£4.4 million net to Reabold)
being paid at a later consent date; or ii) offer to transfer-back the Victory
licence to the current Corallian shareholders for £1 consideration.
The Company understands, from documents made available to the public in August
2023 as part of the statutory public consultation, that Shell intends to
continue to pursue the development of the Victory gas field. Shell conducted
detailed surveys in 2023 to allow, subject to the necessary consents and
approvals, development drilling and subsea installation activities to be
undertaken from Q2 2024 with first gas targeted from 2025.
Reabold is encouraged by the progress being made on Victory field development
and will provide a further update with regards to the contingent consideration
receivable on or around 1 December 2023 as and when appropriate.
P2478 (36%), P2504 and P2605 (both 100%) and P2486 (10%)
During the first half of the year, a high-grading exercise was completed for
Reabold's North Sea licences, which resulted in the prioritisation of the
highest potential return assets. As at the start of October 2023, Reabold
will have retained its interests in four key licences in the North Sea - P2478
(36%), P2605, P2504 (both 100%) and P2486 (10%). This includes the key
Dunrobin prospect in licence P2478. In the first half of 2023, Reabold
relinquished interests in two North Sea licences (P2332 (30%) and P2329 (10%))
and a further 2 licences (P2464 and P2493 (both 100%)) in July 2023). Reabold
is due to relinquish its 10% interest in licence P2427 at the end of September
2023.
Discussions to farm down these high-graded assets to help fund the de-risking
and value creation process continues.
P2478 (36%)
Licence P2478 is located in the Inner Moray Firth Basin. In February 2023,
Reabold released a CPR prepared by RPS on licence P2478 effective 30 September
2022. The key points from the CPR are set out below:
· 201 mmboe(1) aggregate gross unrisked(2) Pmean Prospective
Resources on licence P2478.
· The Dunrobin West prospect ("Dunrobin West"), agreed by the JV to be
the proposed location of the first exploration well on the licence, would
target 119 mmboe aggregate gross unrisked Pmean Prospective Resources(3).
· 34% Chance of Geologic Discovery (Pg) on Dunrobin West Jurassic
primary target.
· Secondary Triassic target at Dunrobin West, which along with the
Jurassic can be tested by a single vertical borehole, included in formal
resource assessment for the first time with a Pg of 12%.
· Dunrobin West dry hole drilling costs to a total depth of 800 metres
estimated by the JV to be £8.6 million gross.
· The Company believes that Dunrobin West is geologically analogous to
the Beatrice field, which produced 164 mmboe.
· Success at Dunrobin West would significantly de-risk Dunrobin Central
& East and Golspie analogous prospects.
(1) The CPR reports oil and gas Prospective Resources. The oil equivalent
value of the gas resources has been estimated by the Company using a factor of
5.8bcf per mmboe.
(2) The unrisked aggregation was performed by the Company and assumes that
all prospects at all levels are successful.
(3) The unrisked aggregation of Dunrobin West was performed by the Company.
The volumes were presented for each reservoir in the CPR and, at the Company
request, were not aggregated probabilistically.
In July 2023, the NSTA approved an extension of the licence until July 2025,
at which point a drilling decision will be made. The extension was made via a
Deed of Variation, which stipulates an additional commitment to acquire a
minimum of 30 square kilometres of 3D seismic data. Reabold estimates the
costs of its 36% share of the 3D acquisition to be c.£0.7 million.
P2504 and P2605 (100%)
Licence P2504 is located in the East Shetland Basin and contains the Oulton
Discovery, Oulton West Jurassic Prospect and Oulton West Eocene Prospect. The
Oulton West Ecoene prospect exhibits seismic amplitude anomalies analogous to
the nearby Nuggets Fields. Per the most recent CPR (effective 30 September
2022), the Oulton discovery has contingent resources of 11mmbbls (2C) with an
associated NPV10 of £59.0 million based on RPS's assumptions. Licence P2504
also has unrisked Pmean prospective oil resources of 38mmbbl and unrisked
Pmean prospective gas resources of 26bcf(a).
Licence P2605 is in the Faroe Shetland Basin, approximately 60 km northwest of
Shetland, and contains the Laxford discovery and Scourie prospect. Licence
P2605 has unrisked Pmean Prospective gas resources of 122bcf(a).
(a) Pmean totals are by arithmetic summation (in-house)
P2486 (10%)
Reabold has retained its interest in licence P2486 in the Southern North Sea
following the acquisition of Simwell Resources in January 2023. The operator
is investigating farm out opportunities prior to a drill or drop decision by
July 2024. The work undertaken on the Southern North Sea licences following
the Simwell Resources acquisition has provided the Company with valuable data
and added to its understanding of the Zechstein play, which is fundamental to
Reabold's West Newton and Crawberry Hill assets onshore.
LNEnergy - Colle Santo gas field, Italy
In May 2023, Reabold acquired a 3.1% interest in LNEnergy for cash
consideration of £250,000 and received options to acquire, at its sole
discretion, further shares in LNEnergy. In June 2023, Reabold exercised
certain of these options to increase the Company's stake in LNEnergy to 16.2%
through a cash consideration of £500,000 and the issuance of 810,810,811 new
Ordinary Shares as consideration for the increased investment. In September
2023, Reabold increased its stake in LNEnergy to 17.6% for a further cash
consideration of £250,000. Reabold retains a final option expiring 29
December 2023, to increase, at its sole discretion, its investment in LNEnergy
to 26.1% for a further consideration of £1.8 million, which would be
satisfied through either cash or new Ordinary Shares, at the option of
LNEnergy.
LNEnergy's primary asset is an exclusive option over a 90% interest in the
onshore Colle Santo gas field in Abruzzo, Italy. With 65bcf of 2P reserves, as
estimated by RPS as of 30 September 2022, this is a highly material
undeveloped onshore gas resource. Reabold believes this is the largest onshore
proven undeveloped gas field in mainland Western Europe. The field is
development ready subject to permits and approvals. Two wells have already
been drilled and are available for production, with no additional drilling
being required. The development will be a small-scale LNG facility to produce
initially at 10mmcf/d from the existing two wells with over 20 years of
ultimate production.
Post period end, in August 2023, Reabold announced that LNEnergy had recently
received a letter from the head of the Italian National Bureau of
Hydrocarbons and Georesources ("UNMIG"), the minerals division of Italian
Ministry of Environment and Energy Security ("MASE"), giving permission to
carry out well integrity and well service testing on the two existing wells
and to start work on the installation and commissioning of the monitoring
network at the Colle Santo gas field. The letter is a positive indication of
support for the development of the Colle Santo gas field and the next stage is
to receive a formal decree from MASE to conduct the work.
In September 2023, Reabold announced that the Abruzzo regional government had
confirmed its agreement with, and intention to approve, by decree, the Early
Production Programme for the Colle Santo gas field, allowing early revenue
generation from the Colle Santo project. The Early Production Programme and
associated monitoring will facilitate completion of the work required by the
Visual and Environmental Impact Assessment Commission for the granting of the
full development concession for the Colle Santo gas field.
The Early Production Programme includes the following:
· Production of gas for a period of 24 months;
· Conversion of gas to power for sale to the electricity grid; and
· Renewal of the Abruzzo Region's earlier 24-month test approval
permit.
The permissions from UNMIG and the Abruzzo regional government significantly
de-risk the full concession permit approval to allow for over 20 years of
production.
Colle Santo has the potential to generate an estimated €11-12m of post-tax
free cash flow per annum(1). LNEnergy will seek to secure €30m in debt
financing to fund the exercise of the option to purchase the Colle Santo gas
field and development capex to achieve first gas.
(1)LNEnergy Management estimate, at 9 mmcf/d sales gas and €45/MWh
Daybreak Oil and Gas Inc - USA
Reabold has a 42% shareholding in Daybreak Oil and Gas Inc ("Daybreak").
Daybreak is an OTC traded oil and gas company engaged in the exploration,
development and production of onshore crude oil and natural gas, primarily in
California.
Danube Petroleum Limited - Parta and Iecea Mare licences, Romania
Reabold has a 50.8% equity position in Danube Petroleum Limited ("Danube"),
with ASX listed ADX Energy Ltd ("ADX") holding the remaining 49.2%. Danube has
a 100% interest in the Parta exploration licence and a 100% interest in the
Iecea Mare production licence.
ADX has continued to engage with the Romanian authorities with respect to
preparation for a government decision in relation to the Parta exploration
licence extension. The Iecea Mare production licence which has a validity (or
term) of 20 years is not affected.
Other Business and corporate
In February 2023, investors voted to support a capital reduction and share
buyback programme. The capital reduction was approved at the High Court of
Justice in March 2023 and a buyback programme of up to £750,000 was announced
in April 2023, as part of a proposed £4.0 million return of excess cash to
shareholders. For further details on the progress of the buyback programme
please see Note 8.
In April 2023, the board adopted the Reabold Resources plc 2023 Long Term
Incentive Plan ("LTIP"). The maiden award has been made to members of the
Group's executive team and senior management. All previous share option plans
in the Company expired in March 2023. Please see Note 10 for further details.
Financial Review
Group Income Statement
The Group's loss for the first half of 2023 was £3.65 million (1H 2022: loss
of £2.72 million).
The Group generated nil revenue and incurred nil cost of sales in the first
half of 2023 as a result of the completion of the equity exchange agreement
with Daybreak in May 2022 (1H 2022: £560,000 and £834,000 respectively).
The Group incurred a loss of £895,000 on financial assets (1H 2022: gain of
1,165,000). The loss primarily arose from a decline in the market value of
Daybreak's shares.
Exploration expenses of £1.3 million were incurred in the first half of 2023
(1H 2022: Nil). The charge in 2023 principally relates to exploration
expenditure written off as a result of the relinquishment of several North Sea
licences. See Note 5 for further details.
Reabold's share of loss of associates was £263,000 (1H 2022: £1.2 million).
The decrease was largely due to the absence of non-cash impairment charges
which Corallian had incurred in 1H 2022. See Note 9 for a breakdown per
associate.
The Group's administrative expenses for the period were £1.1 million (1H
2022: £0.7 million). The biggest driver being an increase in legal fees as a
result of the LNEnergy acquisition as well as the impact of inflation across
all suppliers. Foreign exchange losses of £107,000 (1H 2021: gains of
£695,000) arose on US dollar denominated financial assets as sterling
strengthened compared to the US$ during 1H 2023.
Group Balance Sheet
Reabold retains a strong balance sheet with no borrowings, limited
decommissioning liabilities and cash inflows expected in Q4 2023 as part of
the contingent consideration receivable arising from the sale of Corallian to
Shell. Receipt of the contingent consideration will allow the Company to fund
ongoing capital investment programmes as well as seeking new acquisition and
investment opportunities. For further details of the contingent consideration
receivable please see Review of Operations - UK offshore, and Note 11.
Exploration and evaluations assets increased from £6.8 million at 31 December
2022 to £7.1 million at 30 June 2023. Additions at West Newton as well as the
acquisition of four North Sea licences as part of the acquisition of Simwell
Resources was largely offset by several relinquishments within the North Sea
portfolio. See Note 7 for further details.
Other non-current investments increased from £3.5 million at year end to
£4.6 million at 30 June 2023. The increase was driven by the investment of
£2.25 million into LNEnergy, offset by a decline of £1.2 million in the
market value of Reabold's investment in Daybreak.
Group cash flow
The decrease in cash balances from £5.5 million at 31 December 2022 to £2.6
million at 30 June 2023 reflected cash used in operations of £1.3 million and
cash capital expenditure of £1.5 million.
Cash used in operations of £1.3 million for the half year compared with £0.8
million for the same period last year, consistent with the movements in
administration expenses for the periods as well as the introduction of
exploration expenditure on Reabold's North Sea licences.
Capital expenditure for the half year was £1.5 million compared with £0.5
million in the same period in 2022 reflecting the £0.75 million spend on the
investment in LNEnergy and the £0.5 million spend on the acquisition of
Simwell Resources, including transaction costs of £0.1 million. Capital
expenditure in 1H 2022 included £0.25 million on the acquisition of North Sea
licences from Corallian.
Future commitments
The Group has obligations to carry out defined work programmes on its licences
under the terms of the award of rights to these licences.
Onshore PEDL183 - West Newton
Reabold and its partners have a commitment with the NSTA to drill and test a
new Kirkham Abbey deviated or horizontal appraisal well by June 2024 as well
as the recompletion or sidetrack and testing of one of the WNA-1, WNA-2, or
WNB-1Z wells in that same timeframe. The Company estimates that its 16.67%
share of the costs to be c.£2.2 million.
Central North Sea - P2478
In July 2023, the Company was granted an extension until July 2025 for licence
P2478. The extension was made via a Deed of Variation to the licence by the
NSTA, which stipulates an additional commitment to acquire a minimum of 30
square kilometres of 3D seismic data. Reabold estimates its 36% share of the
3D acquisition costs to be c.£0.7 million.
Approved on behalf of the Board
Sachin Oza and Stephen Williams
Co-Chief Executive Officers
27 September 2023
Reabold Resources plc
Group Income Statement
For the period ended 30 June 2023
Six months ended 30 June 2023 £000 Six months ended 30 June 2022 £000
(Unaudited) (Unaudited)
Notes
Revenue - 560
Cost of sales - (834)
Gross profit - (274)
Net (loss) gain in financial assets measured at fair value through profit or 11 (895) 1,165
loss
Other income 24 26
Share of losses of associates 9 (263) (1,185)
Other expenses - (89)
Loss on sale of business - (2,345)
Exploration expense 5 (1,292) -
Administration expenses (1,111) (722)
Share based payments expense 10 (15) (17)
Foreign exchange (loss) gain (107) 695
Loss on ordinary activities (3,659) (2,746)
Finance costs - unwinding of discount on decommissioning provisions (7) (9)
Finance income 16 39
Loss before tax for the period (3,650) (2,716)
Taxation - -
Loss for the period (3,650) (2,716)
Attributable to:
Reabold shareholders (3,650) (2,716)
(3,650) (2,716)
Earnings per share
Basic and fully diluted loss per share (pence) (0.04) (0.03)
Reabold Resources plc
Group statement of comprehensive income
For the period ended 30 June 2023
Six months ended 30 June 2023 £000 Six months ended 30 June 2022 £000
(Unaudited) (Unaudited)
Notes
Loss for the period (3,650) (2,716)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences - 77
Exchange (gains) on translation of foreign operations reclassified
to loss on sale of business - (80)
Other comprehensive income/(loss) - (9)
Total comprehensive loss (3,650) (2,725)
Attributable to
Reabold Shareholders (3,650) (2,725)
Reabold Resources plc
Group balance sheet
As at 30 June 2023
30 June 2023 31 Dec 2022
£000 £000
Notes (Unaudited) (Audited)
Non-current assets
Exploration & evaluation assets 7 7,100 6,815
Investments in associates 9 22,009 22,272
Other investments 11 4,559 3,484
33,668 32,571
Current assets
Prepayments 79 120
Trade and other receivables 94 181
Other investments 11 8,901 8,728
Restricted cash 25 25
Cash and cash equivalents 2,620 5,511
11,719 14,565
Total assets 45,387 47,136
Current liabilities
Trade and other payables 58 198
Accruals 84 111
142 309
Non-current liabilities
Provision for decommissioning 374 367
374 367
Total liabilities 516 676
Net assets 44,871 46,460
EQUITY
Share capital 8 10,102 9,044
Share premium account 689 29,033
Capital redemption reserve 200 200
Treasury shares (122) -
Share based payment reserve 1,935 1,920
Retained earnings 32,067 6,263
Total Equity 44,871 46,460
Reabold Resources plc
Group statement of changes in equity
For the period ended 30 June 2023
Share Share premium Capital Redemp-tion reserve Treasury Shares Share based payments reserve Foreign currency translat-ion reserve Retained earnings Total
capital account
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2022 9,044 29,033 200 - 1,898 9 6,308 46,492
Loss for the year - - - - - - (2,716) (2,716)
Other comprehensive income - - - - - (9) - (9)
Total comprehensive loss for the period - - - - - (9) (2,716) (2,725)
Share based payment - - - - 17 - - 17
At 30 June 2022 9,044 29,033 200 - 1,915 - 3,592 43,784
Profit for the period - - - - - - 2,671 2,671
Other comprehensive income - - - - - - - -
Total comprehensive income for the period - - - - - - 2,671 2,671
Share based payment - - - - 5 - - 5
At 31 December 2022 (audited) 9,044 29,033 200 - 1,920 - 6,263 46,460
Loss for the period - - - - - - (3,650) (3,650)
Other comprehensive loss - - - - - - - -
Total comprehensive loss for the period - - - - - - (3,650) (3,650)
Issue of ordinary share capital 1,058 1,110 - - - - - 2,168
Repurchase of ordinary share capital - - - (122) - - - (122)
Reduction of share premium account - (29,454) - - - - 29,454 -
Share based payment - - - - 15 - - 15
Balance 30 June 2023 (unaudited) 10,102 689 200 (122) 1,935 - 32,067 44,871
Reabold Resources plc
Group cash flow statement
For the period ended 30 June 2023
Six months ended 30 June 2023 Six months ended 30 June 2022
£000 £000
(Unaudited) (Unaudited)
Note
Operating activities
Loss for the period (3,650) (2,716)
Adjustments to reconcile loss for the period to net cash used in operating
activities
Exploration expenditure written off 5 1,154 -
Depreciation - 318
Net loss (gain) on financial assts at fair value through profit or loss 11 895 (1,165)
Net loss on sale of business - 2,345
Share of losses from associates 9 263 1,185
Net finance (income) costs (9) (30)
Share-based payments 10 15 17
Other non-cash movements - 89
Unrealised currency translation losses (gains) 107 (695)
Decrease (increase) in receivables 78 (220)
(Increase) in inventories - (22)
(Decrease) increase in payables (164) 50
Net cash used in operating activities (1,311) (844)
Investing activities
Expenditure on oil and gas assets - (8)
Expenditure on exploration & evaluation assets 7 (229) (193)
Acquisitions 3 (1,241) (250)
Investments in associates - -
Total cash capital expenditure (1,470) (451)
Interest received 16 1
Movements in restricted cash - (19)
Net cash disposed from sale of business - (16)
Net cash used in investment activities (1,454) (485)
Financing activities
Repurchase of shares 8 (122) -
Net cash used in financing activities (122) -
Currency translation differences relating to cash and cash equivalents (4) -
(Decrease) in cash and cash equivalents (2,891) (1,329)
Cash and cash equivalents at the beginning of the period 5,511 4,883
Cash and cash equivalents at the end of the period 2,620 3,554
Reabold Resources plc
Notes to the unaudited interim condensed consolidated financial statements
1. Corporate information
The interim condensed consolidated financial statements of Reabold Resources
plc and its subsidiaries (collectively, the "Group") for the six months ended
30 June 2023 were authorised for issue in accordance with a resolution of the
directors on 27 September 2023. Reabold Resources plc is a public limited
company, incorporated and domiciled in England & Wales, whose shares are
traded on AIM in London. The registered office is located at 20 Primrose
Street, London, EC2A 2EW. The Group is principally engaged in the investment
in pre-cash flow upstream oil and gas projects.
2. Basis of preparation
The interim condensed consolidated financial statements for the six months
ended 30 June 2023 have been prepared in accordance with IAS 34 Interim
Financial Reporting. The Group has prepared the financial statements on the
basis that it will continue to operate as a going concern. The directors
consider that there are no material uncertainties that may cast significant
doubt over this assumption. They have formed a judgement that there is a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing the financial statements.
The interim condensed consolidated financial statements do not include all the
information and disclosures required in the annual financial statements, and
should be read in conjunction with the Group's annual consolidated financial
statements as at 31 December 2022.
There are no new or amended standards or interpretations adopted from 1
January 2023 onwards that have a significant impact on the financial
information.
The financial information presented herein has been prepared in accordance
with the accounting policies expected to be used in preparing Reabold's annual
consolidated financial statements for the year ended 31 December 2023 which
are the same as those used in preparing Reabold's annual consolidated
financial statements for the year ended 31 December 2022, with the exception
of the changes described in the 'Updates to significant accounting policies'
section below.
Significant accounting judgements and estimates
Reabold's significant accounting judgements and estimates were disclosed in
Reabold's Annual Report 2022. These have been subsequently considered at the
end of the period to determine if any changes were required to those
judgements and estimates. No significant changes were identified.
Updates to significant accounting policies
Own equity instruments - treasury shares
Own equity instruments that are reacquired (treasury shares) are recognised at
cost and deducted from equity. Treasury shares represent Ordinary Shares
repurchased and available for specific and limited purposes. No gain or loss
is recognised in profit or loss on the purchase, sale, issue or cancellation
of the Group's own equity instruments. Any difference between the carrying
amount and the consideration, if reissued, is also recognised in equity.
Change in segmentation
During the first half of 2023, the Group's reportable segments changed
consistent with a change in the way that resources are allocated and
performance is assessed by the chief operating decision maker, who for Reabold
is the co-chief executive officers, from that date. From the first half of
2023, the Group's reportable segments are onshore UK, offshore UK, and
international. At 31 December 2022, the Group's reportable segments were
UK/Europe and USA.
Onshore UK comprises the Group's investment in Rathlin and the Group's 16.67%
direct interest in PEDL183, which was previously reported as part of the
UK/Europe segment.
Offshore UK comprises the Group's interest in UK North Sea licences, which was
previously reported as part of the UK/Europe segment.
International comprises the Group's investments in Danube Petroleum Ltd,
Daybreak Oil & Gas Inc., and LNEnergy Ltd.
Comparative information for 2022 has been restated in Note 4 to reflect the
changes in reportable segments.
3. Acquisitions
On 3 January 2023, Reabold acquired 100% of the issued share capital of
Simwell Resources. Total cash consideration for the acquisition was £491,000,
including transaction costs of £118,000. In addition to the cash
consideration, 247,775,359 new Ordinary Shares were issued as part of the
consideration for the acquisition.
Between May and June 2023, Reabold acquired 16.2% of the ordinary share
capital of LNEnergy for a cash consideration of £750,000 and the issuance of
810,810,811 new Ordinary Shares to LNEnergy.
4. Segmental information((a))
The directors consider the Group to have three segments, being onshore UK,
offshore UK and international. Other business and corporate comprises the
Group's treasury functions and corporate activities. The following tables
present revenue and profit/(loss) information for the Group's operating
segments for the six months ended 30 June 2023 and 2022, respectively.
Period ended 30 June 2023 UK onshore UK offshore International Other business & corporate Total
£000 £000 £000 £000 £000
Revenue - - - - -
Segment loss (278) (1,133) (1,207) (1,032) (3,650)
Period ended 30 June 2022 UK onshore UK offshore International Other business & corporate Total
£000 £000 £000 £000 £000
Revenue - - 560 - 560
Segment loss (383) (712) (1,408) (213) (2,716)
The following table presents assets and liabilities information for the
Group's operating segments as at 30 June 2023 and 31 December 2022,
respectively:
UK onshore UK offshore International Other business & corporate Total
£000 £000 £000 £000 £000
Assets
30 June 2023 24,050 9,400 9,177 2,760 45,387
31 December 2022 24,090 9,161 8,141 5,744 47,136
UK onshore UK offshore International Other business & corporate Total
£000 £000 £000 £000 £000
Liabilities
30 June 2023 374 - - 142 516
31 December 2022 367 72 - 237 676
(a) Comparative information for 2022 has been restated to reflect the
changes in reportable segments. For more information see Note 2 basis of
preparation - Change in segmentation
5. Exploration expense
The following table represents amounts included within the Group income
statement relating to activity associated with the exploration for and
evaluation of oil and natural gas resources.
£000 £000
Six months ended 30 June 2023 Six months ended 30 June 2022
Exploration expenditure written off 1,154 -
Other exploration costs 138 -
Total exploration expense 1,292 -
Exploration expenditure written off relates to the following North Sea
Licences: P2332 - £633,000, P2329 - £382,000, P2427 - £42,000, P2464 -
£94,000, P2493 - £3,000.
6. Loss per share
Basic loss per ordinary share is calculated by dividing the loss for the
period attributable to ordinary shareholders by the weighted average number of
Ordinary Shares outstanding during the period. As the Group is reporting a
loss in each period, in accordance with IAS 33, outstanding share options are
not considered to be dilutive because the exercise of the share options would
have the effect of reducing the loss per share.
Six months ended 30 June 2023 Six months ended 30 June 2022
Results for the period (£000)
Loss for the period attributable to Reabold shareholders (3,650) (2,716)
Number of shares (thousand) ((a))
Basic weighted average number of shares outstanding 9,191,540 8,929,613
Basic loss per share (pence) (0.04) (0.03)
Diluted loss per share (pence) (0.04) (0.03)
(a) Excludes treasury shares
7. Exploration and Evaluation Assets
Total
£000
Cost:
At 1 January 2022 9,123
Exchange adjustments 240
Acquisitions 343
Additions 572
Disposals (3,463)
At 31 December 2022 6,815
Acquisitions 1,210
Additions 229
Exploration expenditure written off (1,154)
At 30 June 2023 7,100
Acquisitions in 2023 relate to the acquisition of Simwell Resources.
Exploration expenditure written off relates to the following North Sea
Licences: P2332 - £633,000, P2329 - £382,000, P2427 - £42,000, P2464 -
£94,000, P2493 - £3,000.
The disposal of £3.5 million in 2022 represents the derecognition of E&E
assets in California as a result of the equity exchange agreement with
Daybreak.
8. Called-up Share Capital
Allotted, called-up and fully paid share capital at 30 June was as follows:
Number £000
Ordinary Shares of 0.1p each
At 1 January 2022 8,929,612,550 8,930
At 31 December 2022 8,929,612,550 8,930
Issue of new shares 1,058,586,170 1,058
At 30 June 2023 9,988,198,720 9,988
"A" Deferred shares 6,915,896 114
10,102
During the first half of 2023 the Company repurchased 83,281,490 Ordinary
Shares for a total consideration of £121,830, including transaction costs of
£994. All shares purchased were retained in treasury. At 30 June 2023,
83,281,490 Ordinary Shares of nominal value £83,281 were held in treasury.
These treasury shares are not taken into consideration in relation to the
payment of dividends and voting at shareholder meetings.
At 30 June 2023, the issued share capital of the Company comprised
9,904,917,230 Ordinary Shares (excluding treasury shares) par value 0.1p per
share, each with one vote; and 6,915,896 "A" Deferred shares of 1.65p. The "A"
deferred shares do not carry voting rights. The total number of voting rights
in the Company is therefore 9,904,917,320.
A further 28,291,347 Ordinary Shares were repurchased between the end of the
reporting period and 25 September 2023, the latest practicable date before the
completion of these financial statements, for a total cost of £35,770. The
number of shares in issue is reduced when shares are repurchased.
247,775,359 new Ordinary Shares were issued in January 2023 as part of the
consideration for the acquisition of Simwell Resources. 810,810,811 new
Ordinary Shares were issued in June 2023 as part of the investment into
LNEnergy.
9. Investments in associates
The following tables provide aggregated summarised financial information for
the Group's associates as it relates to the amounts recognised in the Group
income statement and on the Group balance sheet.
£000
Income Statement
Losses from associates
30 June 2023 30 June 2022
Rathlin 223 394
Danube 40 29
Corallian - 762
263 1,185
£000
Balance Sheet
Investments in associates
30 June 2023 31 Dec 2022
Rathlin 17,381 17,604
Danube 4,628 4,668
22,009 22,272
Details of the Company's associates as at 30 June 2023 are shown below
Associates % Country of incorporation Principal activities
Rathlin Energy (UK) Limited 59.5 England & Wales Exploration and Evaluation
Danube Petroleum Limited 50.8 England & Wales Exploration and Evaluation
10. Share-Based payments
On 27 April 2023, the Board adopted the Reabold Resources plc 2023 LTIP. On
adoption of the LTIP, 390,000,000 share options were granted to members of the
Group's executive team and senior management. All previous share option plans
in the Company expired on 19 March 2023.
The vesting criteria of the options is based on Total Shareholder Return
("TSR") over a three-to-five-year period. For the awards to vest in full, the
TSR of a share must be at or more than six times (6x) the market value of a
share at the grant date using a 30-trading day average. The first measurement
date shall be at the end of year three, the second measurement date at the end
of year four and the final measurement date at the end of year five. If TSR is
less than 2.5x market value, 0% of the award vests. If TSR is at 2.5x market
value, 30% of the award vests and if TSR is at 4x market value, 60% of the
award vests. Performance between TSR thresholds shall be calculated on a
straight-line basis. The fair value at grant date is estimated using a Monte
Carlo model, taking into account the terms and conditions upon which the
options were granted. The fair value of options granted during the six months
ended 30 June 2023 was estimated on the date of grant using the following
inputs and assumptions:
Dividend yield 0.0%
Volatility 68%
Risk-free rate (3 years) 3.82%
Risk-free rate (4 years) 3.73%
Risk-free rate (5 years) 3.67%
Share price £0.0018
Exercise price Nil
The fair value of the options at grant date was £0.00109. For the 6 months
ended 30 June 2023, the Group has recognised £15,000 of share-based payment
expense in the income statement (30 June 2022: £17,000).
11. Other investments
30 June 2023 31 Dec 2022
£000 £000
Current Non-Current Current Non-Current
Investment in Connaught Oil & Gas Ltd - 15 - 15
Contingent consideration 8,901 8,728 -
Investment in Daybreak - 2,294 - 3,469
Investment in LNEnergy - 2,250 - -
8,901 4,559 8,728 3,484
The contingent consideration relates to amounts arising on the disposal of
Corallian in 2022 which are financial assets classified as measured at fair
value through profit or loss. The payment of the contingent consideration from
Shell will be staged as follows:
A single payment of £22 million (£9.5 million net to Reabold) will be made,
assuming the development and production consent for the Victory gas field is
secured from the North Sea Transition Authority, on or before 1 December 2023.
If consent has not been granted by this date, then Shell will have the option
to either: i) pay £12 million (£5.1 million net to Reabold), with the
remaining £10 million (£4.4 million net to Reabold) being paid at a later
consent date; or ii) offer to transfer-back the Victory licence to the current
Corallian shareholders for £1 consideration.
The table below summarises the change in fair value of other investments as
reported in the income statement.
Change in fair value
Six months ended 30 June 2023 Six months ended 30 June 2022
£000 £000
Convertible loan notes - 10
Contingent consideration 173 -
Investment in Daybreak (1,068) 1,155
(895) 1,165
12. Events after the reporting period
On 12 September 2023, Reabold increased its stake in LNEnergy from 16.2% to
17.6% for cash consideration of £250,000. For further details on LNEnergy and
the Colle Santo gas project please see Review of Operations - LNEnergy - Colle
Santo gas field, Italy.
13. Non-Statutory accounts
The financial information shown in this publication, which was approved by the
Board of Directors on 27 September 2023, is unaudited and does not constitute
statutory financial statements. Audited financial information will be
published in Reabold's 2023 Annual Report. Reabold's 2022 Annual Report has
been filed with the Registrar of Companies in England and Wales.
GLOSSARY
2C resources, 2C
Best estimate contingent resource, being quantities of hydrocarbons which are
estimated, on a given date, to be potentially recoverable from known
accumulations but which are not currently considered to be commercially
recoverable.
1U resources, 1U
Unrisked low estimate prospective resources.
2U resources, 2U
Unrisked best estimate prospective resource.
3U
Unrisked high estimate prospective resource.
Best estimate
With respect to resources categorisation, the most realistic assessment of
recoverable quantities if only a single result were reported. If probabilistic
methods are used, there should be at least a 50% probability (P50) that the
quantities actually recovered will equal or exceed the best estimate.
bcf
Billion standard cubic feet.
boe
Barrels of oil equivalent.
Capital expenditure
Total cash capital expenditure as stated in the Group cash flow statement.
CPR
Competent Persons Report.
High estimate
With respect to resources categorisation, this is considered to be an
optimistic estimate of the quantity that will actually be recovered from the
accumulation by a project. If probabilistic methods are used, there should be
at least a 10% probability (P10) that the quantities actually recovered will
equal or exceed the high estimate.
IFRS
International Financial Reporting Standards.
Joint arrangement
An arrangement in which two or more parties have joint control.
Joint control
Contractually agreed sharing of control over an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of
the parties sharing control.
Joint operation
A joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities,
relating to the arrangement.
Low estimate
With respect to resources categorisation, this is a conservative estimate of
the quantity that will actually be recovered from the accumulation by a
project. If probabilistic methods are used, there should be at least a 90%
probability (P90) that the quantities actually recovered will equal or exceed
the low estimate.
mmboe
Million barrels of oil equivalent.
mmcf/d
Million cubic feet per day.
MWh
Megawatt hour.
NPV10
Net Present Value using a 10% discount factor.
NSTA
North Sea Transition Authority.
OTC
Over-the-counter.
Pmean
Reflects a mid-case volume estimate of resource derived using probabilistic
methodology. This is the mean of the probability distribution for the resource
estimates and may be skewed by resource numbers with relatively low
probabilities.
Prospective Resources
Quantities of hydrocarbons which are estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations by application of
future development projects
1 (#_ftnref1) RPS estimate, September 2022
2 (#_ftnref2) The CPR reports oil and gas Prospective Resources. The oil
equivalent value of the gas resources has been estimated by the company using
a factor of 5.8bcf per mmboe.
3 (#_ftnref3) The unrisked aggregation was performed by the company and
assumes that all prospects at all levels are successful.
4 (#_ftnref4) For further details on the progress of the buyback programme
see note 8
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