RBD9 Mar 2020 07:56
What effect do changing oil and gas prices have on Reabold?
Reabold is an oil and gas investing company with oil production assets. This means that rising oil and gas prices have positive, yet subtle effects on the Company and its growth.
Firstly, as a producer, Reabold directly benefits from rising global oil prices through the sale of oil from its Californian assets which are priced in relation to Brent Crude. Similarly, the value of de-risked resources and reserves which Reabold has proved through drilling, track oil and gas prices.
As an investing company, however, the effect of oil and gas prices changing has a more subtle effect.
As defined by its strategy, Reabold focuses on projects which the industry does not value correctly. This valuation anomaly exists primarily as a result of the oil and gas industry’s focus on increasing reserves and, ultimately production. This has meant that production opportunities, which are contingent on oil and gas prices, have been valued highly during the oil downturn.
With the industry’s focus on production acquisition, appraisal or low-risk exploration opportunities have been less highly valued and are not contingent on prevailing oil and gas prices. The low valuations of these opportunities have provided an opportunity for investors such as Reabold to provide capital and to prove reserves through low-cost, near-term drilling. Once de-risked through successful drilling, these assets attract much higher valuations and become more interlinked to oil and gas prices.
Find out more about Reabold’s strategy here: https://reabold.com/about-us/strategy/
Will Reabold participate in any additional projects in the near future?
We continue to believe that this is a fantastic time to deploy capital into pre-cash flow upstream oil & gas projects, as costs remain low and opportunities abundant. We are constantly assessing a number of projects for capital deployment, but consider these against further investment in the projects we are already involved in.
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