Reabold Resources (AIM:RBD) has bought out its partner in Rathlin Energy, the operator of an onshore gas development in East Yorkshire.
The AIM listed firm will pay out £700,000 to Calgary, Canada-based Connaught Oil and Gas for its 20.4% stake in Rathlin, which leads on the development of the West Newton licence.
The deal comes as similar onshore projects face planning difficulties in the face of a landmark court case over pollution caused by oil and gas production.
However, Reabold boss Sachin Oza was bullish about the field’s prospects following the UK Government retaining investment incentives in its recent budget.
He joined a number of oil and gas firms who have welcomed “certainty” offered by UK chancellor Rachel Reeves in October. She confirmed that the government would increase and extend the hated energy profits levy (EPL) on oil and gas production to a headline rate of 78% and remove the associated investment allowance, but would retain the 100% first-year capital allowance and a 66% decarbonisation allowance.
The firm said West Newton is the largest undeveloped onshore gas field in the UK, located near to infrastructure and a “gas hungry industrial base” at a time when demand for indigenous gas “has never been stronger”.
Once the deal completes, Reabold said it will hold 69.9% of the West Newton field and the PEDL 183 licence, through it’s 79.8% stake in Rathlin. It added it also has a 16.665% direct interest in PEDL 183.
Rathlin, which has a 67% stake in the licence, reported a net loss of £851,286.
Oza, Co-CEO of Reabold, said the firm was “thrilled to be further increasing our interest in Rathin”.
He added: “Furthermore, Reabold will also be increasing its exposure to the broader PEDL 183 licence area which, we believe, has significant running room beyond West Newton, and on highly attractive terms.
“The UK budget has provided much needed fiscal clarity and against this more stable backdrop, we are confident in our ability to progress the West Newton work programme and bring this important UK gas asset to the next stage of development and monetisation.
“As the energy transition in the UK moves forward, the economic, fiscal, energy security and environmental case for using indigenous gas has never been stronger.”
The company also added the North Sea Transition Authority (NSTA) has approved a revised work programme on the license which means it must submit a new field development plan on or before 30 June 2027.
Its single well development plan is expected to cost around £12m and would benefit from “early cash generation”.
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