Reabold Resources said that its portfolio company Corallian Energy has entered into a letter of intent (LOI) with UK-based drilling contractor Ensco U.K. to deploy its jack-up drilling unit to drill the Colter and Wick wells.
Within the LOI the parties have agreed, subject to approvals and consents, headline terms for a suitable unit to conduct drilling operations in Q3/4 2018.
Reabold Resources Co-CEO Sachin Oza said: “We are extremely pleased with the progress made within the Corallian portfolio since we cornerstoned its fundraise last year.
“The Colter and Wick prospects have both attracted farm-ins on attractive commercial terms and we look forward to the drilling of both of these transformational wells in the next few months.”
Since Reabold’s initial investment in Corallian Energy Limited (“Corallian”), becoming its cornerstone investor last November, substantial progress has been achieved within the portfolio of UK nearshore licenses:
Nov 2017: Upland Resources and Corfe Energy farm into the Wick prospect, resulting in Corallian’s interest being partially carried for the initial exploration well
Jan 2018: United Oil & Gas farms into the Colter prospect, paying a cash equivalent to 13.33% to earn a 10% interest
Feb 2018: Baron Oil acquired a part of Corfe Energy’s position in Wick agreeing to pay 20% of the well costs to earn a 15% interest in the licence
March 2018: Baron Oil farms into the Colter prospect, paying 6.67% to earn a 5% interest
March 2018: Corallian completes further fundraise at premium valuation to Reabold’s initial investment
This leaves Corallian fully funded to drill Colter, with an estimated 30 mmbbls gross recoverable resources*, at a 51.67% equity interest, and Wick, with an estimated 23 mmbbls gross recoverable resources, at a 40% interest.
In addition, the Oulton appraisal project continues to be progressed with a CPR underway, potentially providing an additional and compelling third leg to Corallian’s portfolio of UK assets.
This value-enhancing activity within the Corallian portfolio following the Company’s intital investment validates Reabold’s corporate strategy of providing capital to unlock undervalued pre-cash flow assets.
Reabold Resources co-CEO Stephen Williams said: “With the industry having been capital constrained for several years, we see an abundance of high impact projects available to Reabold.
“Furthermore, with commodity prices rising and costs still very low following the oil industy downturn, project economics are increasingly compelling. There is a rare opportunity to deliver outsized returns when capital is applied to the right projects over the coming months”.
Source: Company Press Release.