Assuming West Newton is successful, how does Reabold plan to monetise the project? Might this be in the form of dividends, a capital return on sale or a divestment? Does the JV have the firepower to take this through to production?

We are currently keeping all options open and it is difficult to be specific prior to knowing the extent of success at West Newton and the state of both capital and asset markets going forwards. The upcoming well tests are critical for the project and have the potential to alter the future of the field.

We would note that capital markets have been supportive of the West Newton partners and also that we expect the project to be extremely attractive to potential industry buyers given its economic potential and its location (including its position relative to the Zero Humber Carbon concept).


What time scale do you have in mind for monetisation of West Newton and California?

It is difficult to put a time scale on the monetisation of assets as this depends on many variables, however we plan to generate the highest possible return for shareholders in the shortest possible time period.

California has been generating cash for the last few reporting periods due to strong drilling results and low production costs per barrel, meaning this is already a contributor to Reabold’s balance sheet. The extent of the running room across Reabold California and continuous cash generation have to be considered against any decision to sell any of the assets.

In respect of West Newton, we are keeping our options open, with the immediate focus being on Rathlin’s progression of West Newton A and West Newton B.


Will Rathlin drill West Newton C, West Newton D, Ellerby and Spring Hill or will the license be sold beforehand?

Rathlin is currently focussing on progressing activity at West Newton A and West Newton B, the results of which could be transformational for the project, particularly given the extremely encouraging results so far. A project of the scale we believe West Newton to be is likely to require multiple wells from multiple sites over time.  Rathlin has therefore submitted Screening Requests for two new well sites, West Newton C and West Newton D.


What do you have planned in California?

We continue to focus on generating cash across our California portfolio, particularly given our low cost per barrel, resulting in profitable production even at low oil prices. Although production was affected by the COVID-19 pandemic, all wells are now back on production and, given the self-funding nature of Reabold California, the rising oil price is supportive of further drilling activity in the future.

Success at VG-6 in West Brentwood unlocked more running room on the license than we had previously anticipated meaning we are working up further follow-on targets at both West Brentwood and Monroe Swell.


What do you see happening to the oil price over the next year or so? How much do changing commodity prices affect production in California?

Reabold’s portfolio has been designed to operate effectively in a low oil price environment so, while clearly lower oil prices affect the margins of production, we remain profitable in California at current levels – the recent low oil prices highlighted the excellent economics of our operations here given that fluctuating oil prices do not affect production across California. Nonetheless, the rising oil prices are encouraging given our self-funding model.


What is the latest with Corallian?

We were delighted to see Corallian offered the Victory project in the 32nd license round. The Victory project is already appraised, and Corallian expects to be able to progress this project through the FDP stage without the need for additional drilling, and therefore at significantly reduced capital outlay in the near term. This is therefore a meaningful project that can be progressed in the current environment, whilst the exploration and appraisal projects within the Corallian portfolio will hopefully attract more interest as conditions improve. Further detail on Victory can be found here:


Are you still looking to invest in other opportunities?

Our focus currently is very much on progressing our current investments, notably West Newton. However, we are constantly appraising new investment opportunities where we see the prospect of near-term, high-impact activity which can deliver a return for our shareholders.


Can you comment on the current funding position?

Reabold is fully funded for all of its upcoming work programme requirements. It is important to remember that we do not consolidate cash invested into the portfolio companies such as Rathlin (and held on their balance sheets) into our own balance sheet. Therefore, the bulk of our economic interest at West Newton, which is held via our Rathlin ownership, is funded from the Rathlin balance sheet as opposed to Reabold’s.


Updated on 22 February 2021