Reabold Resources (LSE:RBD) fell 2.2pc to 0.7p on Monday morning despite revealing that the severe weather conditions impacting its California drill programme have now passed. The firm said that its 50pc-owned Monroe Swell drilling site has now dried out following a ‘prolonged period’ of bad weather.
Drilling equipment was delivered to the well pad throughout last week, and a well called Burnett 2A was spudded on Saturday. This marks the first of two wells at Monroe Swell that Reabold will fund in exchange for earning to a 50pc position in the acreage.
Reabold first announced that it had been forced to change its drilling schedule due to the problematic conditions back in December. Its US contract operator Integrity Management Solutions said access to Monroe Swell had been hindered, preventing it from spudding a well in the area.
As a result, Integrity mobilised its rig to another of Reabold’s US prospects called West Brentwood. Here it drilled a well called VG-4, where ‘significant’ hydrocarbon shows were announced at the beginning of January. This followed the successful drilling of another well called VG-3 in 2018. VG-3 delivered an initial production rate of 200bopd and 60,00scf/d.
At the end of January, Reabold said its production tests at VG-4 was ‘ahead of expectations’ at 480bopd and an average 742,000scf/d of gas. The well produced oil rates as high as 1,024bopd over a 19-hour testing period in which a total of 371 barrels of oil was produced.
On Monday, Reabold’s co-chief executive Sachin Oza said: ‘We are delighted that improved weather has now allowed us to commence drilling at Monroe Swell and pursue the significant potential resource at that field. In the meantime, we continue to be impressed by the performance at West Brentwood, and we are actively considering the potential for additional wells to further accelerate the already impressive cashflow.’
Reabold entered the US in June last year 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 assets have a combined value of up to $235m net to Reabold according to Integrity.
Elsewhere, Reabold enjoyed some positive progress in the UK towards the end of last month. Corallian Energy, in which the business owns a large stake, said it had encountered a ‘bonus’ oil discovery at the Colter prospect in the UK’s Wessex Basin.
The company said its Colter well had been drilled as a vertical well to a depth of 1,870m in the Sherwood Sandstone at the prospect. However, it added that it unexpectedly remained on the southern side of Colter’s bounding fault. As operator, Corallian is now spearheading efforts to side-track the well, drilling directionally to a Sherwood Sandstone target on the northern side of the bounding fault. This will enable it to assess Colter fully and is expected to complete this month.