RE: RBD - Another Cracking RNS5 Nov 2018 08:58
-- Planning permission for the appraisal well is in place and the target is drill ready
-- Connaught Management estimates supported by a 2017 Competent Person's Report (CPR)
In line with Reabold's strategy, the Company is providing part of the funding for a Q1 2019 appraisal campaign on the 189 Bcfe Contingent Resource West Newton discovery. The well will have two objectives. The first objective is to appraise the Kirkham Abbey Formation gas discovery which has an estimated 72% chance of success and an NPV of $247m*. The second objective of the well is to test a deeper Cadeby Formation reef flank oil prospect, considered by Rathlin to have an NPV of $850m and an estimated 24% chance of success*.
In line with Reabold's investment strategy, West Newton, in a success case, offers a fast pathway to monetisation through its proximity to existing gas pipelines and infrastructure.
*Connaught Management estimate (Note: this estimate is based on the economic evaluations run by Deloitte LLP for the CPR, updated by Connaught to reflect the most recent price forecasts provided by Deloitte)
In 2017, Deloitte prepared a CPR incorporating both the data from the West Newton discovery well and subsequently acquired 3D seismic data over the field. The Deloitte CPR assigns Contingent Resource to the Kirkham Abbey gas formation and is the source of management volumetric assessments.
For the year ended 31 December 2017, Rathlin recorded a loss after tax of GBP1.3 million and reported net liabilities of GBP30.0 million. A further condition precedent of the investment is that Connaught has agreed to settle a liability of GBP33.8 million owed to it by Rathlin immediately on completion. In addition, Reabold will have the right to appoint a director to the Board of Rathlin for so long as it holds an interest of more than 15 per cent. of Rathlin.
Stephen Williams, co-CEO of Reabold, commented:
"We are extremely excited to be a part of the proposed drilling of the West Newton appraisal well. In line with the Reabold model, the project offers near-term activity and has been de-risked from a geological perspective, offering a high chance of success and considerable value uplift. The ability to test the extremely significant oil reef play whilst appraising the lower risk gas discovery is highly advantageous."
Sachin Oza, co-CEO of Reabold, commented:
"Our investment in West Newton adds another transformational drilling event to our active programme and we look forward to updating investors on any success we may have. The window for this type of deal remains open and we continue to seek to capitalise on this in the current climate. We are thrilled that our strategy has provided us with another deployment of capital into a low-risk, high-impact prospect."
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