Shell on road to Victory as it completes takeover of Corallian from Reabold

Supermajor Shell (LON: SHEL) has formally completed the acquisition of West of Shetland operator Corallian Energy.

Reabold Resources (LON: RBD) confirmed on Tuesday that the sale of its majority stake in its investee company to the oil giant, first announced in May, has concluded.

Corallian, which owns the Victory gas project, expects payment of the initial gross consideration of £10 million to be made to its shareholders over the coming days – £3.2m will go to Reabold.

Shell is expected to dish out the remaining £22m in 2023.

At that point, Reabold will receive £9.5m, taking its total proceeds from the sale to £12.7m.

The company plans to use the net proceeds to advance development of its existing assets, including the drilling of the key horizontal well at West Newton, and assess potential further acquisition opportunities.

Upon receipt of the £9.5m, just under half the cash (£4m) will be distributed to shareholders, the mechanism of which will be determined following consultation.

© Supplied by Reabold Resources

Stephen Williams, co-chief executive of Reabold, said: “We are very pleased that we have been able to successfully sell the Victory project to Shell. This transaction validates Reabold’s strategy of creating value for shareholders by identifying, funding and monetising underappreciated, strategically important assets.

“The net proceeds to be received will provide Reabold with improved financial flexibility to consider further acquisition opportunities and develop our existing assets. Furthermore, upon receipt of the second tranche, Reabold will be funded beyond its operational requirements and therefore intends to make a distribution of £4 million to shareholders.

“We will consult with shareholders on the mechanism of such a distribution, including dividends and share buy backs. In addition, we believe this transaction will result in the production of indigenous natural gas resources that will enhance the UK’s energy security position, and we are proud of Reabold’s role in progressing Victory to this point.”

Completion of the sale comes as Reabold tries to sweeten its shareholders ahead of a crucial vote later this month.

A showdown with minority shareholder group Pershing Nominees, which holds about 6.93% of the firm, has been set for November 16.

Pershing is trying to oust Reabold’s board, citing big losses and a desire to install “fresh blood”.

Meanwhile, Reabold bosses have accused the group of trying to “opportunistically” gain control of the company just as it receives significant cash.

They have urged shareholders to vote against all the tabled resolutions.

In a bid to persuade them to snub Pershing, Reabold announced plans yesterday to farm-in to a Shell North Sea licence, near the hotly-tipped Pensacola prospect.