Reabold Resources PLC (AIM:RBD) can potentially advance the Colle Santo gas project without too much threat of dilution - that’s according to analysts a Cavendish
The AIM-quoted firm this week announced transactions that will consolidate and simplify the ownership of the Italian gas field – with the LN Energy Ltd entity is acquiring LNEnergy Srl, which holds a 90% interest in Colle Santo, with a total deal value of $11 million (with a low initial cost of $100,000).
Cavendish analyst James McCormack, meanwhile, noted that Colle Santo is now at the latter stages of the regulatory approval process, after Reabold noted the recent site visit by the authorities (the VIA Commission).
VIA Commission approval is the final milestone ahead of a full production concession being granted, the analyst noted.
“With the potential for vendor financing and government grants, it is foreseeable that the Colle Santo gas project could be financed with limited additional capital from Reabold,” McCormack said.
“LNEnergy estimates that the field has the potential to generate €11-12m of gross post-tax cash flow per annum.”
Cavendish, which has a 0.49p target price (versus today’s market price of 0.05p), highlighted that ‘development ready’ Colle Santo is estimated to contain some 65 billion cubic feet of reserves (gross ‘proved and probable’ / 2P), and it is amenable to development as a ‘micro-LNG’ project.
Reabold co-CEO Stephen Williams, in Wednesday's statement, commented: “This project holds significant gas reserves, at a time when there is an increased focus on the energy transition and energy security in Europe.”
He added: “LNG is a transition fuel which has a central role to play in Italy's energy transition plan, and the strong environmental credentials of the Colle Santo project underline its potential to directly enhance the energy transition, and energy security, in the near term.”