Reabold has entered into a conditional convertible loan instrument with Corallian Energy pursuant to which Reabold will advance £1 million to Corallian.
Corallian intends to utilise the proceeds of the Convertible Loan to support workstreams related to the submission of a draft Field Development Plan for the Victory gas field, which Corallian is aiming to do before the end of 2021, and for general working capital purposes.
Stephen Williams, Co-CEO of Reabold, commented:
"We are delighted to be able to provide further investment in Corallian through an attractive structure in order to fund near-term activity, in line with our stated strategy. The Victory environmental study will take place this summer and we are eagerly awaiting the submission of the draft Field Development Plan to the OGA at the end of this year.
"Victory is a simple, low-risk project, which has been fully appraised and requires no further pre-development drilling, accelerating the potential return on investment for Reabold."
For the year ended 31 October 2019, Corallian reported a loss of £7,161,415 and, as at 31 October 2019, reported net assets of £1,974,480.
West of Shetland - Victory area
The licence was offered in 32nd Round. Block 207/1a contains the Victory gas discovery which Corallian considers to be a fully appraised commercially attractive gas discovery requiring sub-sea development tie back for production. Victory is located in shallow water (160m) and was discovered by well 207/1-3 drilled by Texaco in 1977 which intersected a high quality Lower Cretaceous sandstone of 67m gross and 61m net pay dry gas (97% methane), at a depth of c. -1200m below mean sea level. The discovery was subsequently appraised by well 207/1a-5, which encountered a well-developed Victory sandstone reservoir but below the Victory gas water contact (GWC). The 207/1-3 discovery well was cored and tested and has excellent reservoir properties (unconsolidated sands with multi Darcy permeabilities measured in the core). A drill stem test (DST2) for the Victory sandstone reservoir unit was curtailed early as a result of sand inflow into the test string, the well flowing a maximum of 9.15 mmscf/d. Reservoir pressures from the DST when combined with the regional aquifer pressure data from the 207/1a-5 well indicate a GWC of -1358m, which is co-incident with gas responses observed in the full stack 3D seismic volume. The proposed development assumes gas production will be limited to a plateau of 70 mmscfg/d to minimise sand production.
Victory is covered by a high quality 3D seismic data set which illuminates both the structural trap and the reservoir and hydrocarbon fill, the field exhibiting gas seismic responses including a flat lying event (flat spot) co-incident with the gas water contact (GWC) predicted from pressure data, together with a seismic polarity reversal (flip) at the same GWC and co-incident down-dip structural conformance of seismic amplitudes and attributes over the mapped extent of the field. No further appraisal activity is required, and the discovery will now move to the development phase.
An interim Competent Persons Report was completed by SLR in November 2020. SLR estimated a most likely (2C) of 157 bcf gas recoverable from the discovery (1C-3C range of 105-236 bcf). SLR consider the Contingent Resources to fall under sub-class Development Pending, as project activities are ongoing to justify commercial development in the foreseeable future.
Subject to the successful negotiation of infrastructure access, the field will be economically developed as a direct subsea tie-back to the Total operated Greater Laggan Area gas pipeline (GLA), which has an access tee for third party business located 18km south of the Victory discovery well 207/1-3. An alternative export option is available if required.
The majority of the near term work will be focused on completing all aspects of Front End Engineering and Design (FEED) for the Victory development, and to submit to the OGA the Field Development Plan for the Victory gas development within 18 months of award of the licence. First gas from the project is anticipated in 2024.
Corallian holds a 100% interest in the licence.