Reabold Resources (LSE:RBD) claims another success in its California drilling campaign with the successful testing of the VG-4 well. Production, limited by a choke, came in at 480 barrels of oil per day (bopd) and an average 742,000 cubic feet per day of gas (scf/d). The well produced oil rates as high as 1,024 bopd over a 19-hour testing period in which a total 371 barrels of oil was produced.
The well is situated on the West Brentwood field, in which Reabold holds a 50% interest and follows the previously successful drilling of VG-3. VG-3 delivered an initial production rate of 200 bopd and 60,000 scf/d. VG-4 will now be prepared for production and the company will look ahead to the next drill, which is expected to be Monroe Swell.
Stephen Williams, Co-CEO of Reabold, commented:
“VG-4 flow tested above our highest expectations and fully supports our strategy of accelerating cash flow from the West Brentwood field. The high productivity of oil and gas from VG-4 will deliver exceptional returns for our shareholders.”
While Co-CEO Sachin Oza, added: “Whilst longer-term production rates have inherent uncertainty, we are delighted with the test rates from VG-4 and look forward to the drilling across the rest of Reabold’s California prospects. It is quickly becoming an important building block in our portfolio and future growth.”
The company 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.
In August 2018, Reabold announced that all four wells on the workover programme at Monroe Swell are indicating production of good oil and were put onto production. Further drilling at Monroe Well was originally planned to precede the drilling of VG-4 but was postponed due to severe weather conditions.
The total value of the California assets has a combined Net Present Value (NPV) of up to $235m net to Reabold according to the contract operator, Integrity Management Solutions.
The positive news today follows less favourable news two weeks ago concerning some of Reabold’s UK interests. Operator Corallian, in which Reabold holds a 32.9pc position, announced the Wick well would be abandoned after its primary target was found to be water-bearing. However, as Reabold’s Sachin Oza subsequently highlighted “we considered Wick to be the highest risk prospect in our portfolio and not representative of the typical Reabold appraisal target.”