Reabold Resources (LSE:RBD) dropped 0.75pc to 0.7p this morning despite revealing success at its new well in California. The business said VG-4 had encountered significant oil and gas shows in its targeted formation. Meanwhile, wireline logging has confirmed the presence of pay.
The well was spudded on Reabold’s 50pc-owned West Brentwood field in December by contract operator Integrity Management Solutions. It followed the successful drilling of another well called VG-3 earlier in 2018. VG-3 delivered an initial production rate of 200bopd and 60,00scf/d.
In today’s update, Reabold said it now plans to complete VG-4 and put it into production. The firm will then move on to the next target in its Californian drill campaign at a field called Monroe Swell. This was scheduled for drilling ahead of VG-4 but was postponed after severe weather conditions limited access.
Reabold’s co-chief executive Stephen Williams called today’s news a ‘great result’. He added that it increases cash flow from West Brentwood and confirms significant running room in the Californian portfolio.
‘We are looking forward to drilling additional wells in California this year, as well as to the results of multiple drilling events across our other projects in the coming weeks,’ he said.
Reabold entered the US in June when it acquired US-focused oil and gas firm Gaelic Resource for £3m. This gave it the option to participate in West Brentwood, Monroe Swell, and another lease called Grizzly Island. The sites have a total value of $235m net to Reabold.
Meanwhile, in a recent RNS, Reabold provided an update on its 33pc position in Danube Petroleum. It said Danube had made progress on appraisal drilling and development operations at its Parta licence in Romania. Progress suggests all relevant permits will be granted in the current quarter.
The company also updated investors on its recent investment into Rathlin Energy. Rathlin has begun work at its West Newton A site ahead of drilling a well early next year.
Finally, Reabold also owns a large stake in Corallian Energy. Corallian is due to the drill its highly anticipated Wick and Colter prospects, based in the UK, over coming months.
We interviewed Williams and his fellow co-chief executive Sachin Oza in October when they told us that Reabold was entering an ‘intense period of activity’ across its whole portfolio.
Williams added: ‘It will be hectic in both the US – where we are confident we will be able to demonstrate further success– and in the UK and Romania, via our operator stakes. That will be the most fundamental driver for our shares and market cap, but on top of that, we now have the balance sheet capabilities and firepower to execute further transactions. We think these will be exciting and believe the market will also like them.’
‘Our job now is to start filling in drilling slots for 2019. I think investors really appreciate this constant stream of wells and we would like to continue that indefinitely.’