Reabold Resources Regulatory News (RBD)

5 November 2018

Reabold Resources Plc

"Reabold" or "the Company"

Investment in Rathlin Energy (UK) Ltd

Reabold is delighted to announce that it has signed a subscription agreement with Rathlin Energy (UK) Limited ("Rathlin"), a wholly-owned subsidiary of Calgary-based Connaught Oil & Gas Limited ("Connaught"), to invest a total of £3 million ("the investment") for an equity interest of 37.08 per cent. in Rathlin, which is the operator of the PEDL183 license onshore UK. The investment is conditional on, inter alia, the completion of a farm out, by Rathlin, of PEDL183 to Union Jack Oil plc ("Union Jack") and Humber Oil & Gas Ltd ("Humber") (the "Farm Out") which will result in Rathlin retaining a 66.67% equity interest in PEDL183. The license contains the significant West Newton A-1 gas discovery, and the investment is intended, together with the Farm Out, to fund the drilling of an appraisal well on this discovery in Q1 2019. 

Project Highlights:

· Q1 2019 drilling programme, designed to test two high-impact targets

· Gross Contingent Resource of 189Bcfe (31.5Mboe) assigned to the West Newton A-1 gas discovery

· Gas appraisal target with an estimated 72% chance of success and gross NPV (10) of $247M*

· Additional future upside from the testing of the reef flank Cadeby formation oil prospect, with gross Prospective Resource of 79.1Mboe

· Cadeby oil exploration target which has an estimated 24% chance of success and gross NPV (10) of $850m*

· 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 £1.3 million and reported net liabilities of £30.0 million. A further condition precedent of the investment is that Connaught has agreed to settle a liability of £33.8 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."

Glossary:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

ENDS

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Notes to Editors

Reabold Resources 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, demonstrated by existing investments in the UK, Romania and the United States.