Reabold Resources PLC (AIM:RBD) said it has exercised its option to increase its stake in LNEnergy Limited by a further 13.2%, paying £500,000 in cash and issuing 810,810,811 new ordinary shares as consideration for the transaction.
The move brings its total equity interest in LNEnergy to 16.2% following Reabold's initial subscription in May 2023, where it acquired a 3.1% interest for £250,000.
LNEnergy holds an exclusive option for a 90% interest in the onshore Colle Santo gas field in Abruzzo, Italy. The gas field is a significant asset with 65bn cubic feet (Bcf) of 2P reserves. The development of the field is nearly ready, pending necessary approvals and permits. Two production wells have already been drilled, and the company aims to begin gas production by early 2025.
Reabold has conducted extensive due diligence work since the initial agreement, which has increased its confidence in securing the necessary permits for field development. The company is considering a revised small-scale LNG development plan, which has a smaller land footprint and strong environmental credentials. A two-year long-term production test is currently under review, and full production concession approval is expected in 2024, enabling over 20 years of gas production.
In a statement, Stephen Williams, co-CEO of Reabold, expressed enthusiasm about the investment, commenting: "The potential in the Colle Santo gas field presents an exciting opportunity for Reabold to pursue its investment strategy. Our detailed work and analysis in recent weeks have increased our confidence that development of the field will ultimately be approved."
Williams highlighted the significant interest Reabold has acquired in the project and pledged to keep shareholders updated on the project's progress throughout the year.
Reabold's investment in LNEnergy aligns with its strategy of funding low-risk projects with near-term cash flow potential. The Colle Santo gas field is expected to generate an estimated €11-12mln of post-tax free cash flow per year, further contributing to Reabold's growth and returns.