Reabold Resources PLC (AIM:RBD) has agreed a low transaction cost acquisition of Simwell Resources Limited, a company which holds interests in four North Sea licences, including one operated by Shell PLC (LSE:SHEL, NYSE:SHEL) that has some near-term promise.
Simwell owns 30% of licence P2332 which is operated by Shell and is positioned adjacent to the licence hosting the Pensacola well – where Shell and AIM-quoted Deltic Energy are testing a significant gas target.
Pensacola is due to spud in October, testing a 309bn cubic feet (BCF) gas resource, and, according to Reabold, the prospects in the Simwell-held acreage would be derisked if the Pensacola well is a success.
That Shell has already laid out plans to drill a further exploration partnership with Deltic - Selene, a 318bcf target, slated for 2023 - bodes well for the Simwell-held prospects too. It is, meanwhile, noted by Reabold that Shell is committed to fund 100% of the exploration costs until a ‘drilling election’ is made following a 2019 3D seismic campaign.
As well as the Shell partnership, Simwell also holds 10% interests in three North Sea licences operated by Horizon Energy Partners. These exploration assets were the subject of a 3D seismic survey in 2019, identifying multiple prospects.
"We are delighted to be able to acquire this set of highly prospective assets at a compelling valuation,” said Stephen Williams, Reabold co-chief executive.
“This extends our significant position in the emerging Zechstein play into the offshore, and at an exciting time for the play ahead of the drilling of Pensacola."
Reabold is to pay an initial deal consideration of £361,840, paid in shares (134.1mln shares priced at 0.27p) plus it will satisfy certain creditors of Simwell with a further issue of shares worth £305,157 (113mln shares at 0.27p) and £333,001 in cash.
A further contingent payment of £150,000 will be payable to the sellers, paid in shares, if Shell commits to drill a well with a defined work programme.