Reabold Resources plc, the investing company focussed on developing strategic gas projects for European energy security, today announces its audited financial results for the year ended 31 December 2023

2023 Highlights

Portfolio developments

• Acquisition of a 26.1% interest in LNEnergy Limited ("LNEnergy"), built in stages throughout 2023 for a total consideration of £4.3m (£1.9 million of which was in cash and the balance in 1,297,297,298 new Reabold shares). LNEnergy's primary asset is an exclusive option over a 90% interest in the Colle Santo gas field, a highly material gas resource with an estimated 65bcf of 2P reserves, with two production wells already drilled and a development-ready field, subject to approvals and permits. Financing and approvals are progressing well for the liquified natural gas ("LNG") field development.

Balance sheet and capital allocation

• Cash of £5.4 million as at 31 December 2023; net assets of £42.2 million
• Cash proceeds of £5.2 million received during the financial year for second tranche proceeds from the sale of Corallian
•  £263,000 returned to shareholders through share buybacks as part of the distribution of Corallian sale proceeds, with a further £75,000 returned post period end.

Post Period End Highlights

• Final tranche cash proceeds of £4.4 million for the sale of Corallian, received from Shell in January 2024; Reabold net cash of £8.2 million as at 30 April 2024
• At West Newton, a Gas Export Feasibility study completed by independent energy consultants, CNG Services Limited, concluded that as a precursor to the intended West Newton full field development, an initial single well development and gas export plan can accelerate production and cash flow whilst requiring limited capital expenditure, giving the joint venture the ability to drill future wells out of cash flow. See Review of Operations section for further details.
• Execution of a non-binding Heads of Agreement between Gunvor International B.V. ("Gunvor") and LNEnergy for the purchase of LNG by Gunvor from LNEnergy from the Colle Santo gas field. 

UK Onshore

Rathlin Energy (UK) Limited and West Newton - PEDL183
West Newton is an onshore hydrocarbon discovery located north of Hull, England. To date, three successful wells have been drilled at West Newton (A-1, A-2 and B-1z) confirming a major discovery - potentially one of the largest hydrocarbon fields discovered onshore UK. Rathlin Energy (UK) Limited ("Rathlin") is the operator of the licence in which it holds a 66.67% interest.  Reabold has a 59.5% shareholding in Rathlin and a direct 16.67% interest in the licence, giving the Company an aggregate c. 56% economic interest in West Newton. The other co-venturer on the licence is Union Jack Oil with a 16.67% direct interest.

A Gas Export Feasibility study completed by CNG Services Limited in the first half of 2024, concludes that, as a precursor to the intended West Newton full field development, an initial single well development and gas export plan can accelerate production and cash flow whilst requiring limited capital expenditure. With the industry currently suffering from a lack of available development capital, the ability to achieve early production with limited capex is strategically extremely valuable. Initial gas production will be from a single horizontal well, processed through a modular plant, tied in from the A site to the National Transmission System at an existing above ground installation via a pipeline. The single well development plan benefits from early cash generation with the ability to drill future wells out of cash flow. Drilling of the next well at West Newton is subject to Rathlin funding and regulatory approval. Following drilling and testing of this horizontal well, first gas is expected 18 months later with an associated development capex estimated to be c.£12 million. Although early production from the single well development demonstrates highly attractive standalone economics and would support future wells being drilled from cashflow, it is envisaged that it will be a precursor to the full field conceptual development plan which had an associated pre-tax NPV(10) of US$222 million, net to Reabold, based on the PEDL183 CPR effective 30 June 2022.

In May 2024, Reabold commissioned GaffneyCline to perform a carbon intensity study for the West Newton field. The GaffneyCline study highlighted the following:

• The West Newton project has an AA rating for Carbon Intensity for its potential upstream gas and condensate production, the lowest possible carbon intensity rating category on GaffneyCline's scale
• The West Newton field has a Carbon Intensity significantly lower than the UK average and onshore and offshore analogues. It is also significantly lower than the average imported LNG, based on the NSTA Natural Carbon Footprint Analysis published in July 2023
• Based on the study, GaffneyCline estimates that West Newton could produce the equivalent of just 2.87 grams of CO2 per megajoule of energy developed (gCO2eq./MJ)
• As the development proceeds and project knowledge increases, there is potential to improve the Carbon Intensity by further reducing fugitive, flaring and venting emissions and by gas-to-grid development, reducing on site gas and condensate processing, and using the shortest possible route to the National Grid

The AA rating demonstrates the low carbon credentials of the West Newton project and is an example of the opportunities available in the UK to power the country through lower carbon, home grown energy, rather than relying on expensive and more carbon intensive imports.

The joint venture has a commitment to the North Sea Transition Authority ("NSTA") to drill and test a new Kirkham Abbey deviated or horizontal well by June 2024 and to recomplete or sidetrack and test one of the existing wells in that same timeframe. As mentioned above, drilling of the first development well is subject to Rathlin securing funding. There is an active process underway to assess options to source funding for Rathlin's share of the cost, including through a farmout, or through further investment from Reabold, which, following the receipt of the proceeds from Shell, the Company could potentially provide, in addition to funding its own share. As a result of Rathlin's funding shortfall, drilling of the first development well will not be completed prior to June 2024. Rathlin, as operator, has initiated discussions with the NSTA to defer the deadlines for these commitments.

Italy - LNEnergy

Colle Santo Gas Field
In May 2023, Reabold acquired a 3.1% interest in LNEnergy for cash consideration of £250,000 and received options to acquire, at its sole discretion, further shares in LNEnergy. In June 2023, Reabold exercised certain of these options to increase the Company's stake in LNEnergy to 16.2% through a cash consideration of £500,000 and the issuance of 810,810,811 new ordinary shares as consideration for the increased investment. In September 2023, Reabold increased its stake in LNEnergy to 17.6% for a further cash consideration of £250,000. In November 2023, Reabold increased its interest in LNENergy by 0.8% to 18.4% through a partial exercise of the remaining option for a cash consideration of £150,000. In December 2023, Reabold exercised the remainder of the final option to increase its stake in LNEnergy to 26.1% through a cash consideration of £750,000 and the issuance of 486,486,487 new ordinary shares as consideration for the increased investment. 

LNEnergy's primary asset is an exclusive option over a 90% interest in the onshore Colle Santo gas field in Abruzzo, Italy. With 65bcf of 2P reserves, as estimated by RPS as of 30 September 2022, this is a highly material undeveloped onshore gas resource. Reabold believes this is the largest onshore proven undeveloped gas field in mainland Western Europe. The field is development ready subject to permits and approvals. Two wells have already been drilled and are available for production, with no additional drilling being required. The development will consist of a small-scale LNG facility to produce initially at 10mmcf/d from the existing two wells with over 20 years of ultimate production. LNEnergy believes that the field has the potential to generate an estimated €11-12m of gross post-tax free cash flow per annum. First gas is targeted for 2025.

Demand for LNG is expected to continue to grow. LNG is critical to the energy transition and plays an important role in enabling countries to replace coal-fired power generation with a less carbon-intensive alternative, and provides grid stability alongside wind and solar power in electricity generation. The Italian government has recently approved a decree, which was converted into law in February 2024, to boost the country's renewable energy production and energy security. The decree provides incentives to build plants for energy production from renewable sources, such as the liquefaction of natural gas; the release of new licences for the exploitation of gas fields aimed at providing gas to industries with high gas consumption, at competitive prices; incentives for LNG terminals and incentives for carbon dioxide storage programmes.

In August 2023, Reabold announced that LNEnergy had received a letter from the head of the Italian National Bureau of Hydrocarbons and Georesources ("UNMIG"), the minerals division of Italian Ministry of Environment and Energy Security ("MASE"), giving permission to carry out well integrity and well service testing on the two existing wells and to start work on the installation and commissioning of the monitoring network at the Colle Santo gas field. The letter is a positive indication of support for the development of the Colle Santo gas field and the next stage is to receive a formal decree from MASE to conduct the work.

In December 2023, LNEnergy reported that it had filed the Environmental Impact Study ("EIS") for the new small-scale LNG development plan at the Colle Santo gas field with MASE. This is a further step towards achieving the granting of a production concession at Colle Santo. The study was performed on behalf of LNEnergy by its technical partner Italfluid, and various subsidiary companies of Italfluid, along with several independent technical specialists.

The Company also notes that LNEnergy's application for concession has been recognised by MASE, as a project that meets the requirements of the Italian government's National Integrated Plan for Energy and Climate and National Plan for Economic Recovery, for which €12 billion in grants and economic incentives have been made available by executive decree.

On 2 May 2024, Reabold announced the execution of a non-binding Heads of Agreement ("HoA") between Gunvor and LNEnergy for the purchase of LNG by Gunvor from LNEnergy from the Colle Santo gas field. The HoA provides the terms on which Gunvor will purchase LNG from LNEnergy at its planned small-scale LNG production facility at the Colle Santo gas field. Gunvor will purchase approximately 44,000 tonnes of LNG per annum. The point of sale will be the truck loading flange at the small-scale LNG plant, and the LNG will then be delivered by truck in Italy. The price for the LNG will be aligned with the Italian PSV price. The contract term will be for an indefinite period with a minimum term of five years.

The HoA also provides for a potential prepayment by Gunvor for a portion of the first five years of deliveries, with such amounts subject to prepayment being a total of approximately 66,000 tonnes of LNG, or 999,000 MWh. The average forward Italian PSV gas price for the years 2025-2030 is currently approximately €30 / MWh. The prepayment is conditional on agreeing definitive transaction documentation and LNEnergy obtaining the required permits to construct and operate the LNG production facility.

On the basis of the HoA, LNEnergy and Gunvor intend to negotiate a fully-termed LNG sale and purchase agreement over the next six months. During such time, LNEnergy will exclusively discuss the sale and purchase of LNG from Colle Santo with Gunvor, whilst concurrently focusing its efforts on obtaining the required permits to construct and operate the LNG production facility.

UK Offshore

Victory contingent consideration receivable
Following the receipt of the initial £3.2 million net to Reabold      in November 2022, for the sale of Corallian, Reabold received a further £5.2 million in December 2023. In January 2024, Reabold received the final tranche payment, following Shell's receipt of development and production consent for the Victory gas field from the North Sea Transition Authority, taking Reabold's final proceeds for the sale of its 49.99% interest in Corallian to £12.7 million.

Licences retained - P2605, P2504 (both 100%) and P2486 (10%)
In 2023, Reabold relinquished interests in five North Sea licences: (P2464 and P2493 (both 100%), P2332 (30%), P2329 and P2427 (10%)). Reabold relinquished its 36% interest in licence P2478 in March 2024.

Discussions to farm down Reabold's remaining North Sea licences to help fund the de-risking and value creation process continues, however, the energy profits levy and political uncertainty in the UK has created difficulties for the farmout process.

Romania - Danube Petroleum Limited

Reabold has a 50.8% equity position in Danube Petroleum Limited ("Danube"), with ASX listed ADX Energy Ltd ("ADX") holding the remaining 49.2%. Danube has a 100% interest in the Parta exploration and Iecea Mare production licence in Western Romania, which include the IMIC-1 discovery and the IMIC-2 prospect.

During the reporting period, following several positive meetings with the governing authority, ADX has submitted technical and financial documents in relation to the Parta Exploration Licence to the relevant Romanian authorities for the possible extension of the current licence period (note: the validity of the Iecea Mare production licence is 20 years and not affected). The governing authority is the National Agency for Mineral Resources (NAMR) which is supporting the extension which can be granted through a government process. ADX is currently providing several reports to assist NAMR with documenting the extensive past activity with the objective of receiving a de facto waiver on the fulfilment of the obligatory work programme.

With regards to the Iecea Mare Production Licence, ADX has forwarded the 2024 work programme to the government agency and is reviewing options to convert part of the licence into a geothermal prospecting area.

USA - Daybreak

Reabold has a 42% shareholding in Daybreak Oil and Gas Inc ("Daybreak"). Daybreak is an OTC traded oil and gas company engaged in the exploration, development and production of onshore crude oil and natural gas, primarily in California.

KeyFacts Energy: Reabold Resources UK country profile