Oil and gas company Reabold Resources has received a conditional, non-binding offer from a “credible party” for its major share in Corallian Energy.
Negotiations are progressing with the potential purchaser on the offer, which the board of Corallian deems to be “sufficiently attractive” for all shareholders to begin a sales process.
A further update is expected in due course.
Reabold (LON: RBD) is carrying out an ongoing review of its 49.99% stake in Corallian, which has a 100% interest in the Victory Gas discovery, west of Shetland.
As part of the potential sale process, Reabold has entered into a conditional agreement to acquire Corallian’s working interest in all the non-Victory licences within its portfolio for £250,000.
Subject to adjustment, the cash is “immediately payable”.
The North Sea exploration and appraisal licences that will transfer to Reabold are P2396, P2464, P2493, P2504 and P2605 (all at 100% working interest) and P2478, (36% working interest).
Victory
Accordingly, at the time of completion of the acquisition, Corallian’s only remaining asset will be licence P2596, which contains Victory.
Plans were submitted to the UK Government last year to develop Victory, which is estimated to hold mid-case recoverable resources of 179 billion cubic feet of gas (bcf).
It is valued at around £193 million, based on a historic average gas price of 50p per therm.
Farm-out E&A licenses
Reabold has also laid out its plans to seek appropriate farm-out opportunities for the six licenses it is taking on from Corallian.
Doing so would “de-risk and monetise the prospects”, the company said.
The acquisition of Corallian hinges on the firm receiving notice from the purchaser that the potential sale may proceed to completion.
It also requires sign off from industry regulator the North Sea Transition Authority.
If the Acquisition does not complete before August 31, either party may terminate it and Corallian will be required to repay the £250,000 to Reabold within 90 days.
Sachin Oza, co-chief executive of Reabold, commented: “This is potentially a very exciting transaction for Reabold.
“As part of the Corallian strategic review, which has reached the stage of a non-binding, conditional offer for Corallian based on its Victory asset, we have agreed to acquire six licences from Corallian.
“Four of the licences in particular have significant prospective potential in addition to the de-risked contingent resources associated with Oulton, which we believe, can be progressed in a low-cost manner given, inter alia, the low spending commitments.
“We look forward to providing further updates in the weeks ahead.”
Summary of Key Licences:
P2605 (100%)
The licence is located West of Shetland, northwest of the Victory licence (P2596) and contains the Laxford gas discovery, made in 1984 by British Gas well 214/30-1, which flowed 17.5 mmscfg / day from the Palaeocene Vaila Sandstone.
The licence also contains the Scourie prospect, a Palaeocene Vaila Sandstone target exhibiting a seismic amplitude anomaly similar to that seen at the nearby Glenlivet gas field.
The P50 prospective recoverable resource of Laxford is 68* bcfe, and for Scourie is 90* bcfe.
P2478 (36%)
The licence is located in the Inner Moray Firth and contains the Dunrobin Prospect. The primary reservoir intervals are sandstones of the Beatrice Formation and Dunrobin Bay Group and the reservoir quality of these formations in nearby wells is good to excellent. A potential secondary reservoir is provided by Triassic Lossiehead Formation sandstone.
The estimated P50 prospective recoverable resource is 115* mmboe gross.
It is worth noting that the Dunrobin Prospect is located in shallow water, with shallow target depths and consequently drilling costs are expected to be relatively low.
P2464 (100%)
The licence is located in the East Shetland Basin and contains the Unst gas prospect, an Eocene Frigg sandstone prospect which exhibits a seismic amplitude anomaly similar to that observed at the nearby Nuggets Fields.
The estimated P50 prospective recoverable resource volume is 68* bcfe, located within 30km of gas infrastructure.
The licence also contains the Quoys prospect, a Jurassic structural / stratigraphic trap up dip of the 3/19b-2 oil discovery.
P2504 (100%)
The licence is adjacent to licence P2464 in the East Shetland Basin and contains the Oulton oil discovery, drilled by Amoco in 1974 in the 3/11-1 and side-track 3/11-1ST wells. Light oil was tested from the Jurassic Emerald sandstones contained within a fault block trap as imaged on 3D seismic data.
The discovery is estimated to contain 10-19 million barrels of oil recoverable (1C to 3C Contingent Resources), based upon a Schlumberger CPR completed in 2018.
The block also contains the Oulton West prospect, a stratigraphic trap at the Emerald level, which is up-dip and potentially connected to the Oulton discovery via a structural saddle mapped in the south-eastern limit of the prospect.
In addition, the Oulton West prospect is overlain by an Eocene-aged Frigg sandstone gas prospect exhibiting a direct hydrocarbon indicator (DHI) in the form of an amplitude anomaly which conforms to structure at the mapped top reservoir horizon.