Reabold to acquire further 16.665% interest in West Newton field
The AIM-listed company has signed a sale and purchase agreement with UK firm Humber in exchange for £1.4m in cash and the issue of 350m new ordinary shares in Reabold at 0.1p, it told investors this morning.
Following the completion of the acquisition, Reabold will increase its effective economic interest in the West Newton field stake from around 39% to around 56%.
This will comprise a 16.665% direct interest and a 39.66% indirect interest via the group’s 59.48% shareholding in the site’s operator Rathlin Energy which holds 66.67% of the licence.
The acquisition’s approval is now conditional upon, inter alia, the approval of the transfer of Humber's interest in PEDL 183 to Reabold by the Oil and Gas Authority, Reabold noted.
Shares in Reabold Resources were trading 4.20% higher at 0.620p on Tuesday morning.
"We are delighted to have agreed to significantly increase our exposure to West Newton, which we believe could be a key driver of value for Reabold, at a highly attractive price,” said Stephen Williams, co-CEO of Reabold.
“Our increased investment should facilitate the unlocking of the large potential value we see at West Newton and we look forward to the upcoming activity,” he said.
It said this will include the drilling of the B-1 well where site construction is currently underway.
Meanwhile, Reabold has also secured a £5m discretionary equity line cash facility to provide additional flexibility and strengthen its financial position, the group detailed this morning.
“Whilst current macro conditions are throwing up substantial challenges for the industry as a whole, the ability to act opportunistically to enhance shareholder value during low points in the cycle is a key aspect of the Reabold strategy,” said Williams.
“The decision to enter into the ELA is intended to provide an added layer of contingency to the company's financial position,” he added.
The company told investors that despite the move, it maintains a strong balance sheet with sufficient financial resources to meet its planned work commitments across its portfolio.
“We deemed it prudent to have additional headroom whilst we progress the activity at West Newton,” highlighted Williams.
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