Reabold agreed £32m deal with anonymous ‘oil and gas major’ for stake in Corallian

An unnamed “oil and gas major” has struck a £32 million deal to acquire the controlling stake in West of Shetland operator Corallian Energy. 

Corallian’s owner, London-listed Reabold Resources (LON: RBD), announced the deal, which will net the investment company proceeds of £12.7m, giving it “improved financial flexibility”.

Only three oil majors operate in the UK, and only one has direct infrastructure near Corallian’s West of Shetland Victory discovery – TotalEnergies.

Neither Reabold or TotalEnergies have disclosed whether the latter is involved in the deal.

As it stands a tieback to the French supermajor’s Laggan-Tormore pipeline is the preferred development option for Victory.

The field estimated to hold mid-case recoverable resources of 179 billion cubic feet of gas (bcf).

Rewards for Reabold

Once the deal completes, Reabold will continue to hold 195,000 shares in Corallian, having sold 3.5 million.

It will also acquire all of the Corallian’s working interests in its portfolio, apart from the West of Shetland Victory licences.

It was announced in May that Reabold had received a “sufficiently attractive” offer for its 49.99% stake in the company.

Sale of Victory marks a “significant uplift” for Reabold, which has invested £7.5m in Corallian since late 2017.

Remaining licenses to go to Reabold

Reabold will acquire the remaining North Sea licences – which have prospects located near existing oil and gas infrastructure – currently owned by Corallian for £250,000.

And the company says there are “excellent opportunities” to fund, progress, and monetise its assets, including the onshore West Newton prospect near Hull.

© Reabold

Stephen Williams, co-chief executive of Reabold, said: “The Board is delighted with the value uplift and improved financial position this transaction brings to Reabold.

“We will continue in our mission to identify, fund, and monetise low-risk, under-valued, strategically important oil & gas assets where their development benefits from being near existing infrastructure.

Part to play in improving energy security

“We also recognise our role of improving the UK’s energy security, by unlocking the potential of currently under appreciated assets.

“With the enhanced capital resources this transaction brings, the Board will continue its strong oversight of the company’s capital allocation policy. There remains tremendous potential to drive further value for shareholders through recycling the Corallian proceeds across the portfolio, initially focussed on West Newton’s first development well in 2023.”

Once the deal is signed off, 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).

Reabold intends to seek appropriate farm-out opportunities for the six licenses in order to “de-risk and monetise the prospects”.

Corallian would be left with just licence P2596, which contains Victory.

Plans were submitted to the UK Government last year to develop the field, which is valued at around £193 million, based on a historic average gas price of 50p per therm.