REG - Reabold Resources - Unaudited Interim Results
26/09/2024 07:00
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RNS Number : 6428F Reabold Resources PLC 26 September 2024
26 September 2024
REABOLD RESOURCES PLC
("Reabold" or the "Company")
Unaudited Interim Results for the Six Months Ended 30 June 2024
Reabold Resources plc (AIM: RBD), the investing company focussed on developing
strategic gas projects for European energy security, announces its unaudited
interim results for the six months ended 30 June 2024. The results are
included below and are also available at www.reabold.com
(http://www.reabold.com) .
Highlights
· Cash and cash equivalents up 41% at £7.6 million as at 30 June 2024,
compared with £5.4 million as at 31 December 2023.
· Final tranche cash proceeds of £4.4 million for the sale of
Corallian, received from Shell in January 2024.
· In August 2024, agreed to further increase interest in LNEnergy
Limited ("LNEnergy") taking Reabold's total shareholding to approximately
27.1% of LNEnergy's enlarged share capital. LNEnergy is the manager of
LNEnergy S.R.L., the Italian company which has applied for the Colle Santo gas
field concession, a highly material gas resource with an estimated 65Bcf of 2P
reserves(1).
· Execution of a non-binding Heads of Agreement between Gunvor
International B.V. ("Gunvor") and LNEnergy for the purchase of Liquified
Natural Gas ("LNG") by Gunvor from LNEnergy from the Colle Santo gas field.
o HoA provides for a potential prepayment for a portion of the first five
years of deliveries to help fund the development.
· At West Newton, a Gas Export Feasibility study completed by
independent energy consultants, CNG Services Limited, concluded that as a
precursor to the intended West Newton full field development, an initial
single well development and gas export plan can accelerate production and cash
flow whilst requiring limited capital expenditure, giving the joint venture
("JV") partnership the ability to drill future wells out of cash flow. See
Review of Operations section below for further details.
o The single well development plan benefits from early cash generation with
the ability to drill future wells out of cash flow. Following drilling and
testing of this horizontal well, first gas is expected after 18 months with an
associated development capex estimated to be c.£12 million.
· The North Sea Transition Authority ("NSTA") approved a revised work
programme for PEDL 183 onshore UK, which contains the West Newton field. The
JV partnership for PEDL 183 is expected to approve a forward plan, which will
initially consist of the re-entry and recompletion of an existing West Newton
well in order to establish sustained gas flow. The JV partnership believes
this is a low risk and low cost approach to derisk the project.
(1) RPS estimate, September 2022
Sachin Oza and Stephen Williams, Co-CEOs of Reabold, commented:
"Reabold enters the second half of the year with a strong balance sheet and a
number of exciting catalysts on the horizon.
The Company is excited by the potential of the Colle Santo gas project, which
holds significant gas reserves, and the regulatory process continues to be
encouraging. We are pleased LNEnergy has established a strong relationship
with Gunvor in the context of a gas offtake partner.
"The revised work programme for PEDL 183 confirms that significant value can
be unlocked at West Newton through the early production plan, which is
technically robust and economically attractive due to a low capex requirement,
and the JV remains focused on delivering this strategic UK gas project.
"We look forward to replicating the success of the Corallian sale elsewhere in
the portfolio as we carry out the Reabold strategy to create value for
shareholders."
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
Cavendish - Broker +44 (0) 20 7220 0500
Neil McDonald
Pearl Kellie
Camarco
Billy Clegg +44 (0) 20 3757 4980
Rebecca Waterworth reaboldenquiries@camarco.co.uk
Sam Morris
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 2023 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
LNEnergy - Colle Santo gas field, Italy
Following the Company's further purchase of shares in LNEnergy announced on 20
August 2024, Reabold holds a 27.1% stake in LNEnergy (26.1% as at 30 June
2024). LNEnergy's primary asset is an exclusive option over a 90% interest in
the onshore Colle Santo gas field in Abruzzo, Italy. LNEnergy may exercise the
option at any time until 1 February 2025. The exercise price is US$11 million.
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 consist of a
small-scale LNG facility to produce initially at 10mmcf/d from the existing
two wells with over 20 years of ultimate production. LNEnergy believes that
the field has the potential to generate an estimated €11-12 million of
gross post-tax free cash flow per annum.
Demand for LNG is expected to continue to grow. LNG is critical to the energy
transition and plays an important role in enabling countries to replace higher
carbon-intensive forms of energy. The Italian government approved a decree,
which was converted into law in February 2024, to boost the country's
renewable energy production and energy security. The decree provides
incentives to build renewable power plants and prioritise onshore LNG projects
which are deemed strategically essential; the release of new licences for the
exploitation of gas fields aimed at providing gas to industries with high gas
consumption, at competitive prices; and incentives for carbon dioxide storage
programmes.
The Company also notes that LNEnergy's application for concession has been
recognised by the Italian Ministry of Environment and Energy Security ("MASE")
as a project that meets the requirements of the Italian government's National
Integrated Plan for Energy and Climate and National Plan for Economic
Recovery, for which €12 billion in grants and economic incentives have
been made available by executive decree.
On 2 May 2024, Reabold announced the execution of a non-binding Heads of
Agreement ("HoA") between Gunvor and LNEnergy for the purchase of LNG by
Gunvor from LNEnergy from the Colle Santo gas field. The HoA provides the
terms on which Gunvor would purchase LNG from LNEnergy at its planned
small-scale LNG production facility at the Colle Santo gas field and envisages
Gunvor purchasing approximately 44,000 tonnes of LNG per annum. The point of
sale would be the truck loading flange at the small-scale LNG plant, and the
LNG would then be delivered by truck in Italy. The price for the LNG would be
aligned with the Italian PSV price and the contract term would be for an
indefinite period with a minimum term of five years.
The HoA also provides for a potential prepayment by Gunvor for a portion of
the first five years of deliveries, with such amounts subject to prepayment
being a total of approximately 66,000 tonnes of LNG, or 999,000 MWh. The
average forward Italian PSV gas price for the years 2025-2030, at the time of
executing the HoA, was approximately €30 / MWh. The prepayment is
conditional on agreeing definitive transaction documentation and LNEnergy
obtaining the required permits to construct and operate the LNG production
facility and will help fund the development.
On the basis of the HoA, LNEnergy and Gunvor intend to negotiate a
fully-termed LNG sale and purchase agreement over the next three months.
During such time, LNEnergy will exclusively discuss the sale and purchase of
LNG from Colle Santo with Gunvor, whilst concurrently focusing its efforts
on obtaining the required permits to construct and operate the LNG production
facility.
In August 2024, Reabold announced it had increased its interest in LNEnergy by
a further 1.0% through the subscription of 17 new LNEnergy ordinary shares for
a cash consideration of approximately £205,000, at a price of £12,047 per
share. This takes Reabold's total shareholding to approximately 27.1% of
LNEnergy's enlarged share capital. LNEnergy also agreed to grant Reabold a
warrant (the "Warrant") to subscribe in cash, at the Company's sole
discretion, for a further approximately £747,000 worth of new LNEnergy
ordinary shares at a price of £12,047 per share. The Warrant has an
exercise period of six months and, if exercised, would take Reabold's
shareholding in LNEnergy to approximately 30.6% of its enlarged share capital.
UK Onshore
Rathlin Energy (UK) Limited and West Newton - PEDL 183
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 Energy (UK) Limited
("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. The other co-venturer on the licence is Union Jack Oil (AIM: UJO) with
a 16.67% direct interest.
A Gas Export Feasibility study completed by CNG Services Limited in the first
half of 2024, concluded that, as a precursor to the intended West Newton full
field development, an initial single well development and gas export plan is
economically and technically feasible, allowing for accelerated production and
cash flow whilst requiring limited capital expenditure. With the industry
currently suffering from a lack of available development capital, the ability
to achieve early production with limited capex is strategically extremely
valuable. Initial gas production is planned to be from a single horizontal
well, processed through a modular plant, tied in from the West Newton A site
to the National Transmission System at an existing above ground installation
via a pipeline. The single well development plan benefits from early cash
generation with the ability to drill future wells out of cash flow. Following
drilling and testing of this horizontal well, first gas is expected 18 months
later with an associated gross development capex estimated to be c.£12
million. Although early production from the single well development
demonstrates highly attractive standalone economics and would support future
wells being drilled from cashflow, it is envisaged that it will be a precursor
to the full field conceptual development plan.
In addition, the North Sea Transition Authority ("NSTA") has approved a
revised work programme for PEDL 183 onshore UK, which contains the West
Newton field. With the necessary approval from the NSTA for the revised work
programme for PEDL 183 secured, Reabold can continue to progress this
important UK gas project in the most optimal manner. The revised minimum
work programme for PEDL 183 is as follows:
· Re-enter and recomplete or sidetrack one of the currently suspended
wells on or before 30 June 2026;
· Re-enter and recomplete or sidetrack one of the remaining suspended
wells or drill and complete a new deviated or horizontal well on or before 30
June 2027; and
· Submit a field development plan on or before 30 June 2027.
The JV partnership for PEDL 183 is expected to approve a forward plan, which
will initially consist of the re-entry and recompletion of the West Newton A-2
well in order to establish sustained gas flow. The JV partnership believes
this is a low risk and low cost approach to derisk the project.
Rathlin, has been informed by the Environment Agency that its application on
behalf of the JV for the recompletion of the West Newton A-2 well has been
'Duly Made'. For the recompletion of the West Newton A-2 well to proceed,
Rathlin is required to obtain the NSTA's consent and receive a permit from
the Environment Agency. The JV is fully funded for re-entry and recompletion
which is expected to commence in 1H 2025. Further updates will be provided in
due course.
Alongside our strategy to unlock significant near-term value from West Newton,
we have also considered the carbon intensity of the project. In May 2024,
Reabold commissioned GaffneyCline & Associates Limited ("GaffneyCline") to
perform a carbon intensity study for the West Newton field which highlighted
the following:
· The West Newton project has an AA rating for Carbon Intensity for its
potential upstream gas and condensate production, the lowest possible carbon
intensity rating category on GaffneyCline's scale;
· The West Newton field has a Carbon Intensity significantly lower than
the UK average and onshore and offshore analogues. It is also significantly
lower than the average imported LNG, based on the NSTA Natural Carbon
Footprint Analysis published in July 2023;
· Based on the study, GaffneyCline estimates that West Newton could
produce the equivalent of just 2.87 grams of CO(2) per megajoule of energy
developed (gCO(2)e/MJ); and
· As the development proceeds and project knowledge increases, there is
potential to improve the Carbon Intensity by further reducing fugitive,
flaring and venting emissions and by gas-to-grid development, reducing on site
gas and condensate processing, and using the shortest possible route to the
National Grid.
The AA rating demonstrates the low carbon credentials of the West Newton
project and is an example of the opportunities available in the UK to power
the country through lower carbon, home grown energy, rather than relying on
expensive and more carbon intensive imports.
We believe West Newton is an important strategic asset to the UK as the
country looks to secure domestic energy supply for secure and affordable
energy, at a time when the country is exposed to potentially significant gas
supply disruptions. The study proves that the operator, Rathlin, is a
responsible hydrocarbon producer complying with best environmental practice to
produce much needed UK hydrocarbons in the most efficient and
environmentally friendly way possible.
Reabold is committed to the highest standards of environmental processes, and
we incorporate these responsibilities into our operational decision-making and
investments.
UK Offshore
Victory contingent consideration receivable
In January 2024, Reabold received the final tranche payment of £4.4 million,
following Shell's receipt of development and production consent for the
Victory gas field from the North Sea Transition Authority. This follows
the £8.3 million already received by the Company in previous periods,
taking the total proceeds for the sale of Reabold's 49.99% interest in
Corallian, to £12.7 million.
North Sea licences
At the beginning of 2024, Reabold had interests in four North Sea licences:
P2605, P2504 (both 100%), P2478 (36%) and P2486 (10%). Reabold relinquished
its 36% interest in licence P2478 in March 2024, following unavoidable and
significant delays to the acquisition of 3D seismic data, as had been
stipulated in the deed of variation concerning the extension to phase A of the
Licence. The delays were largely a result of continuous wind farm construction
activities in the area. All commitments have been fulfilled and there remain
no further obligations.
Licence P2486 was relinquished in July 2024. Reabold have retained licences
P2605 and P2504, however there is a drill or drop deadline of 30 November 2024
on both of these licences. Despite the Company's best efforts, we have been
unable to farm down these assets. The ability of potential counterparties to
commit to investment in the North Sea has been negatively affected by the
Labour party's pledge to increase the Energy Profits Levy ("EPL") and remove
investment allowances attached to the EPL, in the lead up to the UK General
Election held in July 2024. Therefore, the Company expects to relinquish these
licences in November 2024.
On 29 July 2024, the Chancellor's statement to Parliament outlined plans to
increase the EPL by 3% to 78% from November 2024, to remove the main
investment allowance attached to the EPL and extend the policy until March
2030. The announced changes continue to leave material uncertainty,
particularly around capital allowances, and we hope to have more clarity
following the October budget.
Award of UKCS Licence - P2659 (10%)
In July 2024, Reabold was awarded a 10% interest in Licence P2659 in the
Southern North Sea, as part of the UK's 33(rd) Offshore Licensing Round. The
other partners on the licence are Horizon Energy Acquisition Limited (45%) and
Horizon Energy Partners Limited (45%). The licence covers blocks 37/26 and
37/27 and the initial four year Phase A work programme commitments for the
licence are focused on completing an advanced geophysical processing study
using 475 sq km of existing 3D seismic data.
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. Further details on Daybreak can be found on its website at
www.daybreakoilandgas.com/ (http://www.daybreakoilandgas.com/) .
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 is engaged in ongoing discussions with the authorities in relation to
options for the Parta exploration licence extension. ADX has delivered a
number of requested reports in support of the extension discussions. The Iecea
Mare production licence, which has a term of 20 years, is not affected.
Options to exploit the geothermal potential of the Romanian part of the
Pannonian Basin are under investigation with the authorities in combination
with a subsurface review of the likely prospectivity.
Other Business and corporate
· In January 2024, the Board successfully defended a second attempt,
from a group of beneficial shareholders, to remove the entire Board of
directors of Reabold and replace them with four new directors. All resolutions
proposed by the requisitioning shareholders were rejected at a general
meeting. The resolutions were broadly unchanged from the 2022 requisitioned
general meeting which was also rejected by shareholders and the requisitioning
shareholders received support from approximately 21% of shareholders who
voted.
· 78 million Ordinary Shares were repurchased in the first half of the
year, for a total cost of £75,000.
· On 9 May 2024, Reabold announced that Cavendish Capital Markets
Limited would act as the Company's sole broker.
Financial Review
Group Income Statement
The Group's loss for the first half of 2024 was £2.0 million (1H 2023: loss
of £3.7 million).
Exploration expenses of £0.3 million were incurred in the first half of 2024
(1H 2023: 1.3 million), reflecting lower exploration write-offs in the North
Sea. See Note 4 for further details.
Reabold's share of loss of associates was £0.5 million (1H 2023: £0.3
million). The increase was due to pre-development expenditure at LNEnergy. See
Note 8 for a breakdown per associate.
The Group's administrative expenses for the period were in line with the first
half of 2023 at £1.0 million (1H 2023: £1.1 million).
In the first half of 2024, Reabold incurred £80,000 in legal and professional
fees, which Reabold has classified as non-underlying items. See Note 11 for
further details.
Group Balance Sheet
Reabold retains a strong balance sheet. At the end of first half of 2024, cash
balances were £7.6 million compared with £5.4 million at the end of 2023.
Exploration and evaluation assets decreased from £7.0 million at 31 December
2023 to £6.9 million at 30 June 2024. Additions of £0.2 million at West
Newton were offset by write-offs of £0.3 million within the North Sea
portfolio. See Note 6 for further details.
Other current investments decreased from £4.4 million at year end to £nil at
30 June 2024 following the receipt of £4.4 million of contingent
consideration for the sale of Corallian to Shell, as announced on 1 November
2022.
At the end of the first half of 2024, investments in associates was £26.1
million (1H 2023: £26.1 million). A £0.5 million investment in LNEnergy was
offset by £0.5 million of losses from associates.
Group cash flow
Net cash used in operating activities for the first half of 2024 was £1.5
million compared with £1.3 million in the same period in 2023, driven by an
increase in working capital outflows.
Cash flow from investing activities was an inflow of £3.7 million compared to
an outflow of £1.5 million in the same period in 2023. The inflow included
divestment proceeds of £4.4 million received as part of the deferred
consideration from the sale of Corallian to Shell in 2022, offset by the
purchase of £0.5 million of loan notes from LNEnergy Limited, as well as
£0.2 million of expenditure at West Newton.
Cash flow from financing activities in the first half of 2024 was an outflow
of £0.1 million. The cash flows related to the repurchase of shares and
office lease liability payments.
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 PEDL 183 - West Newton
Reabold's minimum work programme for PEDL 183 is as follows:
· Re-enter and recomplete or sidetrack one of the currently suspended
wells on or before 30 June 2026
· Re-enter and recomplete or sidetrack one of the remaining suspended
wells or drill and complete a new deviated or horizontal well on or before 30
June 2027, and
· Submit a field development plan on or before 30 June 2027
Reabold anticipates re-entering and recompleting an existing West Newton well
in 2025 in order to establish sustained gas flow The gross cost to re-enter
and re-complete is expected to be c.£1.4 million (c.£0.2 million net cost
for Reabold).
Southern North Sea - P2659
The initial four year Phase A work programme commitments for the licence are
focused on completing an advanced geophysical processing study using 475 sq km
of existing 3D seismic data.
Approved on behalf of the Board
Sachin Oza and Stephen Williams
Co-Chief Executive Officers
25 September 2024
Reabold Resources plc
Group Income Statement
For the period ended 30 June 2024
Six months ended 30 June 2024 £000 Six months ended 30 June 2023 £000
(Unaudited) (Unaudited)
Notes
Revenue - -
Cost of sales - -
Gross profit - -
Net gain (loss) in financial assets measured at fair value through profit or 10 26 (895)
loss
Other income 24 24
Share of losses of associates 8 (540) (263)
Exploration expense 4 (325) (1,292)
Administration expenses (1,030) (1,111)
Non-underlying items 11 (80) -
Share based payments expense 9 (110) (15)
Foreign exchange (loss) gain - (107)
Loss on ordinary activities (2,035) (3,659)
Finance costs - unwinding of discount on decommissioning provisions (9) (7)
Finance income 87 16
Loss before tax for the period (1,957) (3,650)
Taxation - -
Loss for the period (1,957) (3,650)
Attributable to:
Reabold shareholders (1,957) (3,650)
(1,957) (3,650)
Earnings per share
Basic and fully diluted loss per share (pence) 5 (0.02) (0.04)
Group statement of comprehensive income
For the period ended 30 June 2024
There is no comprehensive income attributable to the shareholders of the
company other than the loss for the period.
Reabold Resources plc
Group balance sheet
As at 30 June 2024
30 June 2024 31 Dec 2023
£000 £000
Notes (Unaudited) (Audited)
Non-current assets
Exploration & evaluation assets 6 6,940 7,023
Right-of-use assets 66 -
Investments in associates 8 26,060 26,083
Other investments 10 53 27
Trade and other receivables 8 -
33,127 33,133
Current assets
Prepayments 20 95
Trade and other receivables 105 126
Other investments 10 - 4,365
Restricted cash 53 25
Cash and cash equivalents 7,583 5,413
7,761 10.024
Total assets 40,888 43,157
Current liabilities
Trade and other payables 166 330
Accruals 5 271
171 601
Non-current liabilities
Lease liabilities 66 -
Provision for decommissioning 389 382
455 382
Total liabilities 626 983
Net assets 40,262 42,174
EQUITY
Share capital 7 10,589 10,589
Share premium account 1,103 1,103
Capital redemption reserve 200 200
Treasury shares (338) (263)
Share based payment reserve 2,087 1,977
Retained earnings 26,621 28,568
Total Equity 40,262 42,174
Reabold Resources plc
Group statement of changes in equity
For the period ended 30 June 2024
Share Share premium Capital Redemp-tion reserve Treasury Shares Share based payments reserve Retained earnings Total
Capital(1) account
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2023 (audited) 9,044 29,033 200 - 1,920 6,263 46,460
Loss for the period - - - - - (3,650) (3,650)
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
At 30 June 2023 (unaudited) 10,102 689 200 (122) 1,935 32,067 44,871
Loss for the period - - - - - (3,544) (3,544)
Total comprehensive loss for the period - - - - (3,544) (3,544)
Issue of ordinary share capital 487 414 - - - - 901
Repurchase of ordinary share capital - - - (141) - - (141)
Share based payment - - - - 42 - 42
Share of equity-accounted entities' changes in equity - - - - - 45 45
At 31 December 2023 (audited) 10,589 1,103 200 (263) 1,977 28,568 42,174
Loss for the period - - - - - (1,957) (1,957)
Total comprehensive loss for the period - - - - - (1,957) (1,957)
Repurchase of ordinary share capital - - - (75) - - (75)
Share based payment - - - - 110 - 110
Share of equity-accounted entities' changes in equity - - - - - 10 10
Balance 30 June 2024 (unaudited) 10,589 1,103 200 (338) 2,087 26,621 40,262
(1) See Note 7 "Called-up Share Capital"
Reabold Resources plc
Group cash flow statement
For the period ended 30 June 2024
Six months ended 30 June 2024 Six months ended 30 June 2023
£000 £000
(Unaudited) (Unaudited)
Notes
Operating activities
Loss for the period (1,957) (3,650)
Adjustments to reconcile loss for the period to net cash used in operating
activities
Exploration expenditure written off 4 294 1,154
Depreciation 13 -
Net (gain) loss on financial assts at fair value through profit or loss 10 (26) 895
Share of losses from associates 8 540 263
Net finance (income) (78) (9)
Share-based payments 9 110 15
Unrealised currency translation losses - 107
Decrease in receivables 86 78
(Decrease) in payables (430) (164)
Net cash used in operating activities (1,448) (1,311)
Investing activities
Expenditure on exploration & evaluation assets 6 (211) (229)
Acquisitions - (1,241)
Investments in associates (500) -
Total cash capital expenditure (711) (1,470)
Proceeds from disposal of associate 4,365 -
Interest received 81 16
Movements in restricted cash (28) -
Net cash generated by (used in) investment activities 3,707 (1,454)
Financing activities
Repurchase of shares 7 (75) (122)
Lease liability payments (14) -
Net cash used in financing activities (89) (122)
Currency translation differences relating to cash and cash equivalents - (4)
Increase (decrease) in cash and cash equivalents 2,170 (2,891)
Cash and cash equivalents at the beginning of the period 5,413 5,511
Cash and cash equivalents at the end of the period 7,583 2,620
Reabold Resources plc
Notes to the unaudited interim condensed consolidated financial statements
1. Corporate information
The unaudited interim condensed consolidated financial statements of Reabold
Resources plc and its subsidiaries (collectively, the "Group") for the six
months ended 30 June 2024 were authorised for issue in accordance with a
resolution of the directors on 25 September 2024. 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 gas projects.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements for the
six months ended 30 June 2024 have been prepared in accordance with IAS 34
Interim Financial Reporting as issued by the International Accounting
Standards Board ("IASB") and adopted by the UK, and on the basis of the same
accounting principles as those used in the Company's Annual Report and
Accounts for the year ended December 31, 2023, as filed with the Registrar of
Companies for England and Wales.
The financial information presented in the unaudited condensed consolidated
interim financial statements does not constitute statutory accounts within the
meaning of section 434(3) of the Companies Act 2006 ("the Act"). Statutory
accounts for the year ended December 31, 2023, were published in Reabold's
Annual Report and Accounts, a copy of which was delivered to the Registrar of
Companies for England and Wales. The auditor's report on those accounts was
unqualified, did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying the report and did not
contain a statement under sections 498(2) or 498(3) of the Act.
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 2023.
There are no new or amended standards or interpretations adopted from 1
January 2024 onwards that have a significant impact on the financial
information.
The financial information presented herein has been prepared in accordance
with the accounting policies used in preparing Reabold's annual consolidated
financial statements for the year ended 31 December 2023, 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 2023. 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
The equity method of accounting
Loans advanced to equity-accounted entities that have the characteristics of
equity financing are also included in the investment on the Group balance
sheet.
3. Segmental information
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 2024 and 2023, respectively.
Period ended 30 June 2024 UK onshore UK offshore International Other business & corporate Total
£000 £000 £000 £000 £000
Revenue - - - - -
Segment loss (239) (316) (286) (1,116) (1,957)
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)
The following table presents assets and liabilities information for the
Group's operating segments as at 30 June 2024 and 31 December 2023,
respectively:
UK onshore UK offshore International Other business & corporate Total
£000 £000 £000 £000 £000
Assets
30 June 2024 23,940 14 9,181 7,753 40,888
31 December 2023 23,959 4,651 8,957 5,590 43,157
UK onshore UK offshore International Other business & corporate Total
£000 £000 £000 £000 £000
Liabilities
30 June 2024 422 - - 204 626
31 December 2023 404 21 - 558 983
4. 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 2024 Six months ended 30 June 2023
Exploration expenditure written off 294 1,154
Other exploration costs 31 138
Total exploration expense 325 1,292
Exploration expenditure written off relates to the following North Sea
Licences: P2605 - £177,000, P2504 - £117,000 (1H 2023: P2332 - £633,000,
P2329 - £382,000, P2427 - £42,000, P2464 - £94,000, P2493 - £3,000).
5. 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 2024 Six months ended 30 June 2023
Results for the period (£000)
Loss for the period attributable to Reabold shareholders (1,957) (3,650)
Number of shares (thousand) ((a))
Basic weighted average number of shares outstanding 10,196,548 9,191,540
Basic loss per share (pence) (0.02) (0.04)
Diluted loss per share (pence) (0.02) (0.04)
(a) Excludes treasury shares
6. Exploration and Evaluation Assets
Total
£000
Cost:
At 1 January 2023 6,815
Acquisitions 1,210
Additions 398
Exploration expenditure written off (1,400)
At 31 December 2023 7,023
Additions 211
Exploration expenditure written off (294)
At 30 June 2024 6,940
Exploration expenditure written off relates to the following North Sea
Licences: P2605 - £177,000, P2504 - £117,000 (1H 2023: P2332 - £633,000,
P2329 - £382,000, P2427 - £42,000, P2464 - £94,000, P2493 - £3,000).
Acquisitions in 2023 relate to the acquisition of Simwell Resources.
7. 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 2023 8,929,612,550 8,930
Issue of new shares 1,545,072,657 1,545
At 31 December 2023 10,474,685,207 10,475
At 30 June 2024 10,474,685,207 10,475
"A" Deferred shares 6,915,896 114
10,589
During the first half of 2024 the Company repurchased 78,159,978 Ordinary
Shares for a total consideration of £75,000, including transaction costs of
£1,000. The number of shares in issue is reduced when shares are repurchased.
All shares purchased were retained in treasury. At 30 June 2024, 280,271,717
Ordinary Shares of nominal value £280,272 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 2024, the issued share capital of the Company comprised
10,194,413,490 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 10,194,413,490.
8. 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 2024 30 June 2023
Rathlin 222 223
LNEnergy 294 -
Danube 24 40
540 263
£000
Balance Sheet
Investments in associates
30 June 2024 31 Dec 2023
Rathlin 16,921 17,143
LNEnergy 4,561 4,359
Danube 4,578 4,591
26,060 26,083
Details of the Company's associates as at 30 June 2024 are shown below
Associates % Country of incorporation Principal activities
Rathlin Energy (UK) Limited 59.5 England & Wales Exploration and Evaluation
LNEnergy Limited 26.1 England & Wales Exploration and Evaluation
Danube Petroleum Limited 50.8 England & Wales Exploration and Evaluation
9. Share-Based payments
The Company operates two incentive share option plans: the Reabold Resources
plc Deferred Annual Bonus Plan ("DABP") and the Reabold Resources plc 2023
Long Term Incentive Plan ("LTIP").
Deferred Annual Bonus Plan
On 6 June 2024 (the "Grant Date"), 96,016,810 share option awards (the
"Awards") were granted to certain Directors and Persons Discharging Managerial
Responsibilities under the DABP. The Awards were made in accordance with the
rules of the DABP and as provided for in the 2023 Directors' Remuneration
Report, which can be found in the Company's 2023 Annual Report. The Awards
represent 50% of the total 2023 annual bonus value, which is required to be
deferred into nil-cost options over Ordinary Shares, pursuant to the terms of
the DABP. In calculating the number of Ordinary Shares over which the Awards
have been made, the Remuneration Committee applied the closing price per
Ordinary Share on the day prior to the Grant Date. The nil-cost options
will become exercisable from the third anniversary of the Grant Date, subject
to the terms and conditions of the DABP. The fair value of the options granted
was 0.07p.
Long term Incentive Plan
At 30 June 2024, 390,000,000 options granted by the Company under the 2023
LTIP were outstanding. No options were granted in the first half of 2024, and
none are exercisable as at 30 June 2024.
For the six months ended 30 June 2024, the Group recognised £110,000 of
share-based payment expense in the income statement (30 June 2023: £15,000)
10. Other investments
30 June 2024 31 Dec 2023
£000 £000
Current Non-Current Current Non-Current
Investment in Connaught Oil & Gas Ltd - 15 - 15
Contingent consideration - - 4,365 -
Investment in Daybreak - 38 12
- 53 4,365 27
The contingent consideration relates to amounts arising on the 2022 disposal
of Corallian. The final tranche payment of £4.4 million was received in
January 2024 following the NSTA's grant of development and production consent
for the Victory gas field. This follows the £8.3 million already received
by the Company in previous periods, taking Reabold's final proceeds for the
sale of its 49.99% interest in Corallian to £12.7 million
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 2024 Six months ended 30 June 2023
£000 £000
Contingent consideration - 173
Investment in Daybreak 26 (1,068)
26 (895)
11. Non-underlying items
Non-underlying items are charges or credits included in the financial
statements that Reabold has decided to disclose separately because it
considers such disclosure to be meaningful and relevant to investors. They are
items that management considers not to be part of underlying business
operations and are disclosed in order to enable investors to understand better
and evaluate the Group's financial performance. In the first half of 2024,
Reabold incurred £80,000 (1H 2023: £Nil) in legal and professional fees in
relation to the successful defence from a second attempt, from a group of
beneficial shareholders, to remove the entire Board of Directors of Reabold
and replace them with four new directors by way of a requisitioned general
meeting. All resolutions proposed by the requisitioning shareholders were
rejected at a general meeting held in January 2024.
12. Events after the reporting period
In July 2024 Rathlin made an application to the Environment Agency to conduct
a reservoir stimulation within the conventional Kirkham Abbey gas reservoir in
the existing West Newton A-2 well. On 24 September 2024 Reabold announced that
Rathlin had been informed by the Environment Agency, that its application on
behalf of the Joint Venture partnership for the recompletion of the West
Newton A-2 well has been 'Duly Made'. For further details please see Review of
Operations - UK Onshore and Rathlin's website at
https://www.rathlin-energy.co.uk/latest-update/
(https://nam02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.rathlin-energy.co.uk%2Flatest-update%2F&data=05%7C02%7Csam.morris%40camarco.co.uk%7C5d493916bf244d26cb1d08dcdbe3d215%7C77a5f6209d7747dba0cd64c70948d532%7C1%7C0%7C638627018753049313%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=FB1UMWO29OIjzr0kq986koBdA7pxy2sIiAklydF1fLo%3D&reserved=0)
In August 2024, Reabold announced it had increased its interest in LNEnergy by
a further 1.0% through the subscription of 17 new ordinary shares for a cash
consideration of approximately £205,000, at a price of £12,047 per share.
This takes Reabold's total shareholding to approximately 27.1% of LNEnergy's
enlarged share capital. LNEnergy also agreed to grant Reabold a warrant (the
"Warrant") to subscribe in cash, at the Company's sole discretion, for a
further approximately £747,000 worth of new ordinary shares at a price
of £12,047 per share. The Warrant has an exercise period of six months and,
if exercised, would take Reabold's shareholding in LNEnergy to approximately
30.6% of its enlarged share capital.
GLOSSARY
bcf
Billion standard cubic feet.
Capital expenditure
Total cash capital expenditure as stated in the Group cash flow statement.
CPR
Competent Persons Report.
gCO2e/MJ
Grams of carbon dioxide equivalent per megajoule of energy
IFRS
International Financial Reporting Standards.
LNG
Liquified natural gas
Megajoule
A unit of energy equivalent to one million joules
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.
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
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