REG - Reabold Resources - West Newton Conceptual Development Plan

Reabold ResourcesAnnouncement

21/06/2022 07:00

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RNS Number : 5475P  Reabold Resources PLC  21 June 2022

21 June 2022

 

Reabold Resources plc

 

("Reabold" or the "Company")

 

 

West Newton Conceptual Development Plan

 

 

Reabold, the AIM quoted investing company which focuses on investments in
upstream oil and gas projects, is pleased to provide an update on the West
Newton Project, in which the Company owns a 56% economic interest.

 

Highlights:

·      The Company is progressing the conceptual development plan for
West Newton as, predominantly, a gas development project following the
completion of the significant work carried out by PEDL 183 Joint Venture
partners and independent third-party experts

 

·      Post Extended Well Test ("EWT") analysis:

o  Indicates the potential for good well productivity from new wells and,

o  Underpins the strong economic returns of the project

 

·      Conceptual plan (subject to funding) envisages a phased eight
well gas development, which will target recoverable hydrocarbon volumes of 35
Mboe with a sales gas component of 203 Bcf

o  Following an initial five well development drilling campaign, First Gas is
anticipated as early as 2025

o  A further three wells will be drilled in 2028-2030, modelling plateau
production rates of 44 Mcfd of sales gas

o  Economic modelling calculated a Gross pre-tax NPV(10) of $448 million and
a pre-tax IRR of 87%, based on recoverable sales gas and small volumes of
associated liquids, for the development

o  Potential for further fields within the Greater West Newton area to be
tied into West Newton infrastructure; not currently included in the modelling

 

·      The Joint Venture intends to drill the low-cost wells in a manner
which phases the development cost, significantly de-risking the financial
profile of the project

 

·      Immediate next steps include:

o  Completion of a Competent Persons Report ("CPR") by RPS Group in Q3 2022

o  First development well, planned for H1 2023 to materially de-risk the
project at modest cost

 

A new presentation which details the work completed and the Company's strategy
to deliver production from West Newton can be found on the Company's website
here: https://reabold.com/investor-relations/reports-and-presentations/
(https://reabold.com/investor-relations/reports-and-presentations/) .

 

Project Background

 

Following the results of the first EWT programme at West Newton A-2 and B1-z
in 2021, the Company, together with its Joint Venture partners and third-party
experts, including RPS and CoreLab, have worked to understand how to deliver
significant commercial hydrocarbon flow from future wells at West Newton.
Following post EWT analysis, it is now understood that two key issues which
constrained hydrocarbon production at last year's test were local formation
damage and a lower than anticipated benefit from the acidisation process,
where acid stimulation only interacted with a small section of the perforated
intervals.

 

Crucially, analysis completed by CoreLab demonstrated actual fluid flow
through many of the reservoir samples supporting the view that optimised
development wells could deliver good hydrocarbon productivity. Furthermore,
this has enabled the Company to formulate a development concept for the West
Newton field based on eight wells and the associated gas and liquid
infrastructure.

 

In addition, it is estimated that the eight wells would recover substantially
all the recoverable gas from West Newton of 203 Bcf, which equates to 25 bcf
of recoverable sales gas per well. The initial five wells are expected to
deliver the plateau production rate of 44 Mcf/d of gas, with the additional
three wells to be drilled between 2028 and 2030 extending the plateau.

Economic modelling 1  indicates significant cash flow generation from the
first year of production, anticipated in 2025, with cumulative gross cash flow
calculated at ca. US$1.3 billion. The Gross NPV(10) of the project is modelled
to be US$448 million pre-tax with a pre-tax IRR of 87%. Initial scoping work
indicates a total pre-production capex of US$139 million for the initial five
well development, facilities and tie-in with additional wells drilled from
cash flow.

It is expected that successful drilling results on the follow-on targets
(Spring Hill, Withernsea and Ellerby) would utilise parts of the
infrastructure used at West Newton adding significant further value to the
licence.

 

 1  Based on RPS forecast gas price as at April 2022.

 

Stephen Williams, Co-CEO, commented:

"We are delighted by the results of work completed by RPS Group and CoreLab,
which have demonstrated the potential of West Newton as an extremely valuable
gas development opportunity. Centred in an area of significant infrastructure
and with substantial additional exploration potential within the licence, a
development at West Newton could deliver substantial volumes of low-carbon gas
and also facilitate further success in the Greater West Newton Area.

 

"These studies are the beginning of an exciting new chapter for this project,
which we expect will see Reabold drilling multiple, high-impact wells at West
Newton in the coming years."

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018, as amended.

Qualified Person's Statement

Pursuant to the requirements of the AIM Rules - Note for Mining and Oil and
Gas Companies, the technical information contained in this announcement has
been reviewed by Dr Jeremy Jarvis as a Qualified Person. Jeremy has more than
35 years' experience as a petroleum geologist, holds a BSc in Geology from the
University of Dundee and a Ph.D. from Imperial College, University of London.
He is a member of the American Association of Petroleum Geologists and the
Petroleum Exploration Society of Great Britain.

 

 

 For further information, contact:

 

 Reabold Resources plc                                      c/o Camarco

 Sachin Oza                                                 +44 (0) 20 3757 4980

 Stephen Williams

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

 James Spinney

 Rory Murphy

 James Dance

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

 Callum Stewart

 Simon Mensley

 Ashton Clanfield

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

 Hugh Rich

 Camarco                                                    +44 (0) 20 3757 4980

 James Crothers

 Billy Clegg

 Rebecca Waterworth

 

 

 

Notes to Editors

 

Reabold Resources plc is an investing company investing in the exploration and
production ("E&P") sector. The Company's investing policy is to acquire
direct and indirect interests in exploration and producing projects and assets
in the natural resources sector, and consideration is currently given to
investment opportunities anywhere in the world.

 

As an investor in upstream oil & gas projects, Reabold aims to create
value from each project by investing in undervalued, low-risk, near-term
upstream oil & gas projects and by identifying a clear exit plan prior to
investment.

 

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

 

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

 

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