Shares in Reabold Resources (LSE:RBD) jumped 5.6pc to 0.6p on Monday after the firm revealed that its Romanian investee company has secured a funding partner for a critical seismic programme.
Danube Petroleum, in which Reabold owns a 33pc position, has signed a deal with Australia’s Parta Energy that will see the latter fund the $1.5m programme on Danube’s 100pc-owned Parta exploration licence. Once the work has completed, Parta Energy will take a 50pc position in the permit, which is based in onshore Romania.
Danube expects Parta Energy to meet all of its farm-in funding conditions by the end of June. It then hopes to begin planning the seismic programme in Q3 2019 with a view to the work actually taking place in the final quarter of the year.
The business has previously acquired c.100km of 2D seismic and 50km2 of 3D seismic and has licenced an area of approximately 200km2 for future 3D seismic acquisition within the licence. The latest programme is expected 100km2 of 3D seismic to this collection to provide low-risk, high-reward exploration follow-up drilling locations for Danube.
Monday’s news marks a welcome development for the asset following the withdrawal of previous partner Rohöl-Aufsuchungs Aktiengesellschaft last month.
On Monday’s news, Reabold’s co-chief executive Stephen Williams said: ‘This is a highly encouraging development for Danube and we are also encouraged to see additional interest in putting capital to work in Romania. With RAG making the decision to withdraw from all E&P activities, their 50pc equity position has effectively been swapped into an enthusiastic new entrant that is putting an additional US$1.5 million into the asset, to further develop the Licence.
‘Whilst the focus in Romania has always been on the imminent appraisal programme, a key attraction of our Danube position has always been the additional prospectivity and running room within the licence area. This seismic programme is a key step towards further unlocking that potential and building an E&P business of scale in Romania, without any additional capital required from Danube or Reabold.’
The latest farm-in excludes Danube’s 100pc-owned Parta Appraisal Programme Area, where it expects to drill an appraisal well called IM-1 in the current quarter. As announced in March, this has come later than scheduled because Danube wishes to drill it from within the Ieca Mare licence. To do this, it had to transfer the licence formally from a business called Amromco – a process that began last October – before Romania’s government could issue a drilling permit. What’s more, despite the Amromco licence acquisition completing around six months ago, the full data for prospect evaluation and planning was not handed to contract operator ADX until late December.
Danube believes it can put IM-1 onto production in a relatively short timeframe. The well is targeting multiple pay zones, including established appraisal potential from wells drilled in the 1980s. These were tested but never produced. Reabold said the well also has exploration potential defined on recently acquired 3D seismic data. An independent report last year assessed contingent and prospective resources potential of 18.8bcf on a P50 basis for the well.
Meanwhile, the second well in the programme – IM-2 – is found within the Parta exploration permit but is based outside of the Ieca Mare licence. Including deeper exploration potential, the two wells have been assigned contingent and prospective resource potential of 49.9bcf.