Reabold Resources has announced a conditional offer to acquire Simwell Resources, a privately held explorer with several licences across the southern North Sea.
AIM-listed Reabold Resources (AIM:RBD) said on Wednesday it had struck a deal for the entire issued share capital of Simwell, alongside the settlement of the company’s outstanding creditors and liabilities for around £1 million.
Of this, just under £362,000 will be paid to the sellers via the issue of 134,105,159 new ordinary shares at a price of 0.27 pence per share, while around £305,000 will be paid to certain Simwell creditors by the issue of 113,021,374 new creditor shares.
An additional £333,000 will be paid to creditors in cash from the company’s existing cash resources.
Europe-focused Simwell currently holds interests in four UK licences in the southern North Sea: P2332, operated by Shell; and P2329, P2427 and P2486, operated by Horizon Energy Partners.
The company is headed up by chairman Gabriel “Kapo” Simonian, who has been involved in the advising and sale of several private E&Ps, including Scotsdale Petroleum in the North Sea, and the listing and farm-out of companies including Crown Energy and Thombo Petroleum.
Simwell has a 30% equity interest P2332, following a farmout to Shell in 2020, leaving the supermajor with its 70% operated stake. Shell acquired a 640 square km of 3D seismic survey in the area covering the licence in August 2019, funding Simwell’s share.
The survey also covered parts of the adjacent licence P2252, containing the Pensacola prospect. Also operated by Shell (70%) and Deltic Energy (30%), the high-impact prospect is estimated to have potentially recoverable resources of 309 billion cubic feet (bcf) of gas.
Pensacola is set to be drilled this month, and has a 55% geological chance of success. Simwell notes that a successful find “would derisk a number of similar prospects” in nearby P2332.
In the meantime, Shell will continue to fund 100% of the licence costs until a drilling decision is made, likely some time in 2023.
A further contingent deferred consideration of £150,000 will be payable to Simwell if Shell and Reabold commit to drilling a well and a carrying out a work programme within “applicable timescales.”
The acquisition “substantially increases Reabold’s footprint in the emerging Zechstein trend,” the company said, in a move that would complement its onshore position at licence PEDL183, which includes the West Newton project.
Meanwhile, Simwell’s 10% share in licences P2329, P2427 and P2486 are split with Horizon (77.5%) and Ardent Oil (12.5%). A fourth, P2300 was relinquished by the partners in August 2020.
3D seismic from 2019 has offered a high-definition view of the Zechstein Hauptdolomite play, with Simwell estimating that P50 prospective resources could amount to 343 bcf of gas spread across five structures over the four licences.
Stephen Williams, Co-CEO of Reabold, said: “We are delighted to be able to acquire this set of highly prospective assets at a compelling valuation. This extends our significant position in the emerging Zechstein play into the offshore, and at an exciting time for the play ahead of the drilling of Pensacola.”
Panmure Gordon research director for oil and gas, Ashley Kelty, said the low-cost acquisition would add “longer term upside” and bolster Reabold’s position offshore UK.
The deal closely follows the sale of a controlling stake in Corallian Energy, another company held by Reabold.
The company announced that an unnamed “oil and gas major” had struck a £32 million deal to acquire the West of Shetland operator earlier this month, which will net Reabold proceeds of £12.7m, giving it “improved financial flexibility”.
Corallian holds a 100% interest in the Victory Gas discovery in the West of Shetland.
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