RBD Reabold Resources Plc

31 May 2024

 

Reabold Resources plc

 

("Reabold" or the "Company")

 

Full Year Results for the year ended 31 December 2023

 

Reabold Resources plc, the investing company focussed on developing strategic gas projects for European energy security, today announces its audited financial results for the year ended 31 December 2023 and the Annual Report is publicly available at www.reabold.com/investors/reports-presentations/.

 

Reporting period ended 31 December 2023 Highlights

 

Portfolio developments

·    Acquisition of a 26.1% interest in LNEnergy Limited ("LNEnergy"), built in stages throughout 2023 for a total consideration of £4.3m (£1.9 million of which was in cash and the balance in 1,297,297,298 new Reabold shares). LNEnergy's primary asset is an exclusive option over a 90% interest in the Colle Santo gas field, a highly material gas resource with an estimated 65bcf of 2P reserves, with two production wells already drilled and a development-ready field, subject to approvals and permits. Financing and approvals are progressing well for the liquified natural gas ("LNG") field development.

 

Balance sheet and capital allocation

·      Cash of £5.4 million as at 31 December 2023; net assets of £42.2 million

·      Cash proceeds of £5.2 million received during the financial year for second tranche proceeds from the sale of Corallian

·      £263,000 returned to shareholders through share buybacks as part of the distribution of Corallian sale proceeds, with a further £75,000 returned post period end.

Post Period End Highlights

 

·     Final tranche cash proceeds of £4.4 million for the sale of Corallian, received from Shell in January 2024; Reabold net cash of £8.2 million as at 30 April 2024

·   At West Newton, a Gas Export Feasibility study completed by independent energy consultants, CNG Services Limited, concluded that as a precursor to the intended West Newton full field development, an initial single well development and gas export plan can accelerate production and cash flow whilst requiring limited capital expenditure, giving the joint venture the ability to drill future wells out of cash flow. See Review of Operations section for further details.

·  Execution of a non-binding Heads of Agreement between Gunvor International B.V. ("Gunvor") and LNEnergy for the purchase of LNG by Gunvor from LNEnergy from the Colle Santo gas field. 

 

ENDS

 

 

For further information, contact:

 

Reabold Resources plc Sachin Oza Stephen Williams	c/o Camarco +44 (0) 20 3757 4980
Strand Hanson Limited - Nominated & Financial Adviser James Spinney James Dance Rob Patrick   Cavendish - Broker Neil McDonald Pearl Kellie	+44 (0) 20 7409 3494           +44 (0) 20 7220 0500
Camarco Billy Clegg Rebecca Waterworth Sam Morris	+44 (0) 20 3757 4980

 

Notes to Editors

 

Reabold Resources plc has a diversified portfolio of exploration, appraisal and development oil & gas projects. Reabold's strategy is to invest in low-risk, near-term projects which it considers to have significant valuation uplift potential, with a clear monetisation plan, where receipt of such proceeds will be returned to shareholders and re-invested into further growth projects. This strategy is illustrated by the recent sale of the undeveloped Victory gas field to Shell, the proceeds of which are being returned to shareholders and re-invested.

 

 

Strategic Report

 

Chair's letter

In the financial year ended 31 December 2023, Reabold continued with its strategy of identifying, investing in, maturing and monetising undeveloped gas discoveries with significant resources and near-term production potential. Our emphasis is on investing in UK and European gas assets to enhance domestic energy supply and security, which has been exposed in recent years by the Ukraine war. The sale of the Victory strategic gas project to Shell U.K. Limited ("Shell") in late 2022 reaffirmed our view that there is further opportunity for value creation by applying our strategy to similar assets. Portfolio activity undertaken in 2023 reflects this approach; Reabold reinvested some of the proceeds from the Victory transaction into a significant new opportunity in Italy, the Colle Santo onshore gas field, and continued to commit resources to and develop the attractive prospects of the PEDL183 onshore licence at West Newton in the UK. Other investments in the Reabold portfolio, such as the Romanian licences, continue to hold attractive optional value in the long-term but were not a capital allocation priority in 2023.

At West Newton, we were pleased to receive approval permits from the Environment Agency, a key step forward in enabling further licence activity. We were however disappointed with the delay in drilling of the first development well, which had been targeted for the second half of 2023. Rathlin, the site operator, was unable to resolve funding for its own share in 2023, which we believe is a consequence of the fiscal and political instability in the UK. With a strong balance sheet throughout the year and £8.2 million of cash as at 30 April 2024, Reabold has more than sufficient funding for its direct share of the planned drilling on the licence. And having confirmed a materially lower phased capital expenditure plan for a single well development and early cash flow from production, ahead of the full field development longer-term, we now look forward to an enhanced level of interest and the resolution of Rathlin's funding situation in 2024 through a potential farm-out arrangement or other sources of capital. As a Board, we remain confident in the prospects for West Newton and are fully focused on realising the asset's significant value potential for shareholders.

Outside the UK, we took the decision to build a significant stake (26.1% by the end of 2023) in LNEnergy for a total cost of £4.3 million (£1.9 million in cash and £2.4 million via the issuance of 1,297,297,298 new ordinary shares). We were attracted to LNEnergy because of the exclusive option it has over a 90% interest in the Colle Santo gas field, a highly material onshore gas resource in central Italy, with two production wells already drilled and a field that is development ready, subject to the approvals process. The primary focus for this asset in 2023 was to progress the necessary regional and national approvals required to begin operations. We are encouraged by the favourable momentum in this approvals process throughout 2023 and into the current financial year, helped by the political desire to improve domestic energy security. LNEnergy is working towards securing all necessary permits in the near future. It is also pleasing to report that LNEnergy has secured a well-known, highly experienced technical partner, Italfluid, to act as contract operator and, since the period end, has signed a Heads of Agreement with Gunvor, a leading global LNG trader, for the purchase of LNG from the Colle Santo production facility. 2024 will be an important year in gaining all the formal approvals and operationalising the site to start producing first gas and generating early cash flow, currently targeted for 2025.

From a corporate and governance perspective, 2023 was a year of mixed fortunes and outcomes. The Board and management team had to deal once again with the unwelcome distraction of a second unsuccessful general meeting requisition, driven by Kamran Sattar of Portillion Capital. This consumed valuable time and resource from our efforts to progress our two key assets in the UK and Italy, as described above. With the cash proceeds from the Victory asset sale on our balance sheet, we initiated a share buyback programme - returning £263,000 to shareholders in 2023 and a further £75,000 post period end. Our net assets on the balance sheet were £42.2 million, well above the market capitalisation of the Company at the time of writing. It is now our duty to ensure the full potential and value of Reabold's portfolio is delivered to shareholders. As a Board, we remain confident that this can be achieved, and we look forward to updating you on our progress throughout the year.

 

 

 

Jeremy Edelman
Chair
30 May 2024

 

 

 

Strategy and business model 

Reabold is an investing company focussed on developing strategic European gas assets to secure European gas supply and energy security. Reabold has a diversified portfolio of gas assets comprised of development, appraisal and exploration projects. Reabold aims to generate shareholder value by making disciplined and focused investments to grow our business. Reabold's strategy is to invest in existing undeveloped gas discoveries with significant resources and near-term production potential, which have considerable valuation uplift potential and a clear monetisation plan. Proceeds from monetisation events are balanced between shareholder returns and re-investment into new and existing projects.

We are preparing for the future and responding to the increased focus on energy security brought about by the rise in geopolitical conflict and instability in the region, and globally. Concern about energy shortages and vulnerability to geopolitical events has prompted many governments to prioritise access to more domestically produced energy and reduce their dependency on imported gas. Reabold aims to contribute to Europe's energy security by unlocking potential sources of near-term domestic gas supply, at a time when the continent is exposed to potentially significant gas supply disruptions.  In this regard, the Company identified, matured and sold the strategic Victory gas project in the UK to Shell for £32.0m (£12.7m net to Reabold).

We are focused on the disciplined allocation of capital to deliver on our strategic objectives. Reabold's current focus is on its two key gas assets that have strong parallels with Victory: West Newton (UK onshore) & Colle Santo (Italy onshore). Similar to Victory, both assets are highly material, undeveloped gas discoveries in Europe. Full details of these operations are included in the Review of Operations.

Key performance indicators (KPIs)

 

The Group's main business is to invest in direct and indirect interests in exploration and development gas projects. Reabold's long-term strategy is to re-invest capital generated through monetisation of its investments into new projects in order to grow the Company and create value for its shareholders. The Company tracks its new business development objectives through the building of a risk-balanced portfolio of assets. The Company reviews its KPIs on an ongoing basis as it moves through the lifecycle of its strategy to ensure they continue to serve as a useful measure of our strategic performance.

 

The Board assesses the performance of the Group across measures and indicators that are consistent with Reabold's strategy and investor proposition.

 

 

The KPIs are:

 

KPI	Definition	Performance
KPI 1	Portfolio enhancements Grow value through material investments, project delivery and commercial discoveries	·      Accumulated a 26.1% interest in LNEnergy in 2023 whose primary asset is an exclusive option over a 90% interest in the Colle Santo gas field onshore Italy. The Colle Santo gas field is a highly material gas resource with an estimated 65Bcf of 2P reserves, with two production wells already drilled and flow-tested, making the field development ready. LNEnergy believes that the field has the potential to generate an estimated €11-12m of gross post-tax free cash flow per annum.
KPI 2	Future financial prosperity Liquidity events, and successful fundraising	·      Reabold received £5.2 million in cash in 2023 which represented the second tranche of the consideration from the Corallian disposal, following Shell's decision to continue to pursue the development of the Victory gas field. A further £4.4 million was received in January 2024.
KPI 3	Financial discipline Ensuring business is run to budget via accurate forecasting, maintaining significant cash buffer and resilient balance sheet	·      Cash position as at 31 December 2023 was £5.4 million (£8.2 million at 30 April 2024). Reabold is fully funded for all intended activities and commitments in 2024.  ·      Net assets as at 31 December 2023 were £42.2 million.
KPI 4	Growth in NAV per share	·      Broker risked NAV remains unchanged at 1.2p/sh
KPI 5	Total shareholder return over a calendar year	·      The share price started the year at 0.21p and finished the year at 0.11p
KPI 6	Risk and controls Zero recordable incidents, ethical misconduct, breaches of laws or regulations, penalties. Accurate and compliant financial resources data	·      The Company did not have any recordable incidents or injuries in 2023. There were no instances of misconduct, breaches of laws or regulations, regulatory actions or penalties. The Company was compliant with all its financial reporting deadlines.

 

Co-Chief Executive Officers' Review of Operations

In 2023, it became even clearer that Europe needs a secure, affordable and lower carbon energy system. The Russia-Ukraine war continued in 2023 and renewed conflict in the Middle East has raised political tensions. Reabold's strategy is to improve Europe's energy security by unlocking potential sources of near-term domestic gas supply, at a time when Europe is exposed to potentially significant gas supply disruptions. In this regard, the Company identified, matured and sold the strategic Victory gas project to Shell for £32.0m (£12.7m net to Reabold).

The last few years were about generating options. In 2024, and as we drive to 2025, we will focus on our two key gas assets that have strong parallels with Victory, namely West Newton in the UK and Colle Santo in Italy, where the Company plans to apply the same successful strategy demonstrated with Victory.  We will discuss the details of each project below. 

 

UK Onshore

Rathlin Energy (UK) Limited and West Newton - PEDL183

 

West Newton is an onshore hydrocarbon discovery located north of Hull, England. To date, three successful wells have been drilled at West Newton (A-1, A-2 and B-1z) confirming a major discovery - potentially one of the largest hydrocarbon fields discovered onshore UK. Rathlin Energy (UK) Limited ("Rathlin") is the operator of the licence in which it holds a 66.67% interest.  Reabold has a 59.5% shareholding in Rathlin and a direct 16.67% interest in the licence, giving the Company an aggregate c. 56% economic interest in West Newton. The other co-venturer on the licence is Union Jack Oil with a 16.67% direct interest.

A Gas Export Feasibility study completed by CNG Services Limited in the first half of 2024, concludes that, as a precursor to the intended West Newton full field development, an initial single well development and gas export plan can accelerate production and cash flow whilst requiring limited capital expenditure. With the industry currently suffering from a lack of available development capital, the ability to achieve early production with limited capex is strategically extremely valuable. Initial gas production will be from a single horizontal well, processed through a modular plant, tied in from the A site to the National Transmission System at an existing above ground installation via a pipeline. The single well development plan benefits from early cash generation with the ability to drill future wells out of cash flow. Drilling of the next well at West Newton is subject to Rathlin funding and regulatory approval. Following drilling and testing of this horizontal well, first gas is expected 18 months later with an associated development capex estimated to be c.£12 million. Although early production from the single well development demonstrates highly attractive standalone economics and would support future wells being drilled from cashflow, it is envisaged that it will be a precursor to the full field conceptual development plan which had an associated pre-tax NPV(10) of US$222 million, net to Reabold, based on the PEDL183 CPR effective 30 June 2022.

 

In May 2024, Reabold commissioned GaffneyCline to perform a carbon intensity study for the West Newton field. The GaffneyCline study highlighted the following:

·      The West Newton project has an AA rating for Carbon Intensity for its potential upstream gas and condensate production, the lowest possible carbon intensity rating category on GaffneyCline's scale

·      The West Newton field has a Carbon Intensity significantly lower than the UK average and onshore and offshore analogues. It is also significantly lower than the average imported LNG, based on the NSTA Natural Carbon Footprint Analysis published in July 2023

·      Based on the study, GaffneyCline estimates that West Newton could produce the equivalent of just 2.87 grams of CO2 per megajoule of energy developed (gCO2eq./MJ)

·      As the development proceeds and project knowledge increases, there is potential to improve the Carbon Intensity by further reducing fugitive, flaring and venting emissions and by gas-to-grid development, reducing on site gas and condensate processing, and using the shortest possible route to the National Grid

The AA rating demonstrates the low carbon credentials of the West Newton project and is an example of the opportunities available in the UK to power the country through lower carbon, home grown energy, rather than relying on expensive and more carbon intensive imports. For more information, please see the ESG section of this report on pages 15-17.

 

The joint venture has a commitment to the North Sea Transition Authority ("NSTA") to drill and test a new Kirkham Abbey deviated or horizontal well by June 2024 and to recomplete or sidetrack and test one of the existing wells in that same timeframe. As mentioned above, drilling of the first development well is subject to Rathlin securing funding. There is an active process underway to assess options to source funding for Rathlin's share of the cost, including through a farmout, or through further investment from Reabold, which, following the receipt of the proceeds from Shell, the Company could potentially provide, in addition to funding its own share. As a result of Rathlin's funding shortfall, drilling of the first development well will not be completed prior to June 2024. Rathlin, as operator, has initiated discussions with the NSTA to defer the deadlines for these commitments.

 

Italy - LNEnergy

Colle Santo Gas Field

In May 2023, Reabold acquired a 3.1% interest in LNEnergy for cash consideration of £250,000 and received options to acquire, at its sole discretion, further shares in LNEnergy. In June 2023, Reabold exercised certain of these options to increase the Company's stake in LNEnergy to 16.2% through a cash consideration of £500,000 and the issuance of 810,810,811 new ordinary shares as consideration for the increased investment. In September 2023, Reabold increased its stake in LNEnergy to 17.6% for a further cash consideration of £250,000. In November 2023, Reabold increased its interest in LNENergy by 0.8% to 18.4% through a partial exercise of the remaining option for a cash consideration of £150,000. In December 2023, Reabold exercised the remainder of the final option to increase its stake in LNEnergy to 26.1% through a cash consideration of £750,000 and the issuance of 486,486,487 new ordinary shares as consideration for the increased investment. 

LNEnergy's primary asset is an exclusive option over a 90% interest in the onshore Colle Santo gas field in Abruzzo, Italy. With 65bcf of 2P reserves, as estimated by RPS as of 30 September 2022, this is a highly material undeveloped onshore gas resource. Reabold believes this is the largest onshore proven undeveloped gas field in mainland Western Europe. The field is development ready subject to permits and approvals. Two wells have already been drilled and are available for production, with no additional drilling being required. The development will consist of a small-scale LNG facility to produce initially at 10mmcf/d from the existing two wells with over 20 years of ultimate production. LNEnergy believes that the field has the potential to generate an estimated €11-12m of gross post-tax free cash flow per annum. First gas is targeted for 2025.

Demand for LNG is expected to continue to grow. LNG is critical to the energy transition and plays an important role in enabling countries to replace coal-fired power generation with a less carbon-intensive alternative, and provides grid stability alongside wind and solar power in electricity generation. The Italian government has recently approved a decree, which was converted into law in February 2024, to boost the country's renewable energy production and energy security. The decree provides incentives to build plants for energy production from renewable sources, such as the liquefaction of natural gas; the release of new licences for the exploitation of gas fields aimed at providing gas to industries with high gas consumption, at competitive prices; incentives for LNG terminals and incentives for carbon dioxide storage programmes.

In August 2023, Reabold announced that LNEnergy had received a letter from the head of the Italian National Bureau of Hydrocarbons and Georesources ("UNMIG"), the minerals division of Italian Ministry of Environment and Energy Security ("MASE"), giving permission to carry out well integrity and well service testing on the two existing wells and to start work on the installation and commissioning of the monitoring network at the Colle Santo gas field. The letter is a positive indication of support for the development of the Colle Santo gas field and the next stage is to receive a formal decree from MASE to conduct the work.

In December 2023, LNEnergy reported that it had filed the Environmental Impact Study ("EIS") for the new small-scale LNG development plan at the Colle Santo gas field with MASE. This is a further step towards achieving the granting of a production concession at Colle Santo. The study was performed on behalf of LNEnergy by its technical partner Italfluid, and various subsidiary companies of Italfluid, along with several independent technical specialists.

 

The Company also notes that LNEnergy's application for concession has been recognised by MASE, as a project that meets the requirements of the Italian government's National Integrated Plan for Energy and Climate and National Plan for Economic Recovery, for which €12 billion in grants and economic incentives have been made available by executive decree.

On 2 May 2024, Reabold announced the execution of a non-binding Heads of Agreement ("HoA") between Gunvor and LNEnergy for the purchase of LNG by Gunvor from LNEnergy from the Colle Santo gas field. The HoA provides the terms on which Gunvor will purchase LNG from LNEnergy at its planned small-scale LNG production facility at the Colle Santo gas field. Gunvor will purchase approximately 44,000 tonnes of LNG per annum. The point of sale will be the truck loading flange at the small-scale LNG plant, and the LNG will then be delivered by truck in Italy. The price for the LNG will be aligned with the Italian PSV price. The contract term will be for an indefinite period with a minimum term of five years.

The HoA also provides for a potential prepayment by Gunvor for a portion of the first five years of deliveries, with such amounts subject to prepayment being a total of approximately 66,000 tonnes of LNG, or 999,000 MWh. The average forward Italian PSV gas price for the years 2025-2030 is currently approximately €30 / MWh. The prepayment is conditional on agreeing definitive transaction documentation and LNEnergy obtaining the required permits to construct and operate the LNG production facility.

On the basis of the HoA, LNEnergy and Gunvor intend to negotiate a fully-termed LNG sale and purchase agreement over the next six months. During such time, LNEnergy will exclusively discuss the sale and purchase of LNG from Colle Santo with Gunvor, whilst concurrently focusing its efforts on obtaining the required permits to construct and operate the LNG production facility.

 

 

UK Offshore

Victory contingent consideration receivable

Following the receipt of the initial £3.2 million net to Reabold      in November 2022, for the sale of Corallian, Reabold received a further £5.2 million in December 2023. In January 2024, Reabold received the final tranche payment, following Shell's receipt of development and production consent for the Victory gas field from the North Sea Transition Authority, taking Reabold's final proceeds for the sale of its 49.99% interest in Corallian to £12.7 million.

Licences retained - P2605, P2504 (both 100%) and P2486 (10%)

In 2023, Reabold relinquished interests in five North Sea licences: (P2464 and P2493 (both 100%), P2332 (30%), P2329 and P2427 (10%)). Reabold relinquished its 36% interest in licence P2478 in March 2024.

Discussions to farm down Reabold's remaining North Sea licences to help fund the de-risking and value creation process continues, however, the energy profits levy and political uncertainty in the UK has created difficulties for the farmout process.

 

Romania - Danube Petroleum Limited

Reabold has a 50.8% equity position in Danube Petroleum Limited ("Danube"), with ASX listed ADX Energy Ltd ("ADX") holding the remaining 49.2%. Danube has a 100% interest in the Parta exploration and Iecea Mare production licence in Western Romania, which include the IMIC-1 discovery and the IMIC-2 prospect.

During the reporting period, following several positive meetings with the governing authority, ADX has submitted technical and financial documents in relation to the Parta Exploration Licence to the relevant Romanian authorities for the possible extension of the current licence period (note: the validity of the Iecea Mare production licence is 20 years and not affected). The governing authority is the National Agency for Mineral Resources (NAMR) which is supporting the extension which can be granted through a government process. ADX is currently providing several reports to assist NAMR with documenting the extensive past activity with the objective of receiving a de facto waiver on the fulfilment of the obligatory work programme.

With regards to the Iecea Mare Production Licence, ADX has forwarded the 2024 work programme to the government agency and is reviewing options to convert part of the licence into a geothermal prospecting area.

 

 

USA - Daybreak

Reabold has a 42% shareholding in Daybreak Oil and Gas Inc ("Daybreak"). Daybreak is an OTC traded oil and gas company engaged in the exploration, development and production of onshore crude oil and natural gas, primarily in California. Further details on Daybreak can be found on its website at www.daybreakoilandgas.com/.

 

Sachin Oza	Stephen Williams
Co-Chief Executive Officer	Co-Chief Executive Officer
30 May 2024

 

 

 

 

Financial review          

Group Income Statement

The Group's loss for the year ended 31 December 2023 was £7.2 million (2022: £45,000).

The Group incurred a loss of £2.7 million on financial assets (2022: £1.9 million) The loss primarily arose from a decline in the market value of Daybreak's shares (£3.5 million), partly offset by an increase in the fair value of contingent consideration receivable (£0.8 million) from the sale of Corallian in 2022.

 

Reabold's share of loss of associates was £0.6 million (2022: £1.6 million). The decrease was largely due to the absence of non-cash impairment charges which Corallian had incurred in 2022. See Note 15 for more information.

Reabold received cash proceeds of £5.2 million in 2023 related to the sale of Corallian to Shell in 2022, however the gain on this sale was recorded in 2022, when the sale completed, and as such no gains were recorded in the income statement in 2023.  In 2022, the net gains on sale of businesses of £5.0 million related to the gain on sale of Corallian (£7.3 million) offset by a loss on disposal of Reabold California (£2.3 million).

Exploration expenses of £1.6 million were incurred in 2023 (2022: £74,000). The increase in 2023 was principally related to exploration expenditure written off as a result of the relinquishment of several North Sea licences. See Notes 7 and 13 for further details.

Administrative expenses for the year were £2.2 million (2022: £1.7 million). The increase was mainly driven by an increase in legal fees in relation to the step acquisitions of LNEnergy, as well as inflationary impacts across the majority of suppliers.

In 2023, Reabold incurred £190,000 (2022: £191,000) in legal and professional fees, which Rebold has classified as non-underlying items, in relation to the successful defence from a second attempt, from a group of beneficial shareholders, to remove the entire Board of Directors of Reabold and replace them with four new directors. All resolutions proposed by the requisitioning shareholders were rejected at a general meeting held in January 2024 (2022: rejected at a general meeting held in November 2022).

 

Group Balance Sheet

Exploration and evaluation assets increased by £0.2 million from £6.8 million at 31 December 2022 to £7.0 million at 31 December 2023. Additions at West Newton of £0.3 million and the acquisition of four Southern North Sea licences for £1.2 million as part of the acquisition of Simwell Resources were offset by exploration write-offs of £1.4 million.   

Investments in associates increased from £22.3 million at year end 2022 to £26.1 million at year end 2023, primarily as a result of the step acquisitions of LNEnergy during the year. See Note 15 for further information.

 

Other long-term investments decreased by £3.5 million as a result of the decline in value of Daybreak's shares. Other short-term investments decreased from £8.7 million to £4.4 million following the receipt of £5.2 million of contingent consideration for the sale of Corallian to Shell in 2022. The movement in short-term investments also included favourable movements of £0.8 million due to the fair value accounting of contingent consideration. See Note 16 for further information.

The increase in share capital from £9.0 million to £10.6 million arose from shares issued as consideration for the acquisition of Simwell Resources Limited (£0.2 million) and shares issued as part of the investment into LNEnergy (£1.3 million). The decrease in the share premium account from £29.0 million to £1.1 million relates to a capital reduction of £29.4 million, offset by the premium on shares issued as part of the consideration for Simwell Resources Limited (£0.4 million) and the premium on shares issued as part of the investment in LNEnergy (£1.1 million). The capital reduction ensures the Company has sufficient distributable reserves to make distributions to shareholders.

Overall, net assets decreased from £46.5 million at 31 December 2022 to £42.2 million at 31 December 2023.

 

Group cash flow statement

Net cash used in operating activities was £2.2 million in 2023, compared with £1.8 million in 2022. The net cash used in operating activities was primarily driven by administration expenses of £2.2 million.

Cash flow from investing activities was an inflow of £2.3 million, compared with an inflow of £2.4 million in 2022. The cash flow from investing activities in 2023 included cash capital expenditure of £2.9 million (compared with cash capital expenditure of £0.7 million in 2022). The increase in cash capital expenditure was primarily driven by the acquisition of Simwell Resources Limited and the step acquisitions of LNEnergy. Divestment proceeds in 2023 were £5.2 million compared with £3.2 million in 2022 - both amounts relate to cash receipts from the sale of Corallian to Shell in 2022.  

Cash flow from financing activities in 2023 was an outflow of £0.3 million, compared with nil in 2022, due to the repurchase of shares in 2023.

 

Liquidity

Cash and cash equivalents were £5.4 million at 31 December 2023 (2022: £5.5 million). The Group has no debt.

 

Commitments

The Group does not have any signed contractual capital commitments as at 31 December 2023 (2022: nil), however the group does have obligations to carry out defined work programmes on its licences, under the terms of the award of rights to these licences. The Company is not obliged to meet other joint venture partner shares of these programmes.

PEDL 183

The joint operation between Rathlin, Reabold and Union Jack have a commitment to drill and test a new Kirkham Abbey deviated or horizontal appraisal well by June 2024. The joint venture has also committed to recomplete or sidetrack and test one of the WNA-1, WNA-2 or WNB-1Z wells in that same timeframe. The Company estimates its 16.67% share of costs for these commitments to be c.£2.2 million. Rathlin, the operator of PEDL183, is working with the NSTA to defer these commitments to allow the time necessary for Rathlin to obtain sufficient funding for its share of the commitments.

UK North Sea

Reabold estimates its share of firm exploration and appraisal work commitments on its North Sea portfolio to be c.£50,000 over the course of 2024. The Company has not yet taken a decision on whether to drill on any of its North Sea licences.

 

 

Principal risks and uncertainties

Reabold operates in an environment subject to inherent risks and uncertainties. The Board regularly considers the principal risks to which the Group is exposed and monitors any agreed mitigating actions. The overall strategy for the protection of shareholder value against these risks is to carry a broad portfolio of assets with varied risk/reward profiles, and to retain adequate working capital. The risks faced by the Company can, and are likely to, change with progress in the Company's strategy and developments in the external business environment.

The risks discussed below, separately or in combination, could have a material adverse effect on the implementation of our strategy, our business, financial performance, liquidity, prospects, shareholder value and returns and reputation.

 

Risks	Mitigation
Strategic, Commercial and Operational Risks
Investment Returns: Stock market support may be eroded, lowering investor appetite and obstructing fundraising if we fail to scale our business at pace, make poor investment choices or fail to sustain and develop a high-quality portfolio of assets.	·      Management regularly communicates its strategy to shareholders. ·      Focus is placed on building a diverse and resilient asset portfolio capable of offering prospectivity throughout the business cycle. The Group continually reviews its portfolio of assets to identify internal growth opportunities. ·      The Company seeks to limit its financial dependence on any one single asset by holding a diversified portfolio and re-investing capital generated through monetisation of its investments into new projects in order to grow the Company and create value for its shareholders. ·      The Group engages with a range of advisers and active competitor monitoring to provide a range of opportunities for screening. ·      The Group also engages third-party assurance experts to review, challenge and, where appropriate, make recommendations to improve the processes for project management, cost control and governance of projects. ·      The Directors regularly monitor the appropriateness of the strategy taking into account both internal and external factors, and the progress in implementing the strategy, and may modify the strategy based on developments.
Prices and Markets: Decreases in oil and/or gas prices could have an adverse effect on the demand for oil and/or gas. If these reductions are significant or for a prolonged period, we may have to write down assets and investments and reassess the viability of certain projects, which may impact future cash flows, profit, capital expenditure, the ability to work within our financial frame and maintain our investment programme.	·      Contingency is built into the evaluation, planning and budgeting process to allow for the downside movements in commodity prices.  ·      Reabold's business model is to invest in undervalued oil and gas assets that would be able to deliver profitably under current reasonable oil/gas price assumptions, are at the lower end of the industry cost curve and will be competitive against other sources of hydrocarbons.
Accessing, progressing and delivering hydrocarbon projects: Inability to access and progress hydrocarbon resources could adversely affect delivery of our strategy. Challenging operational environments and other uncertainties could impact drilling and production activities. Challenges include uncertain geology; the existence and availability of necessary technology and engineering resources; the availability of skilled labour; the existence of transport infrastructure; project delays; the expiration of licences; delays in obtaining required permits; potential cost overruns; and technical, fiscal, regulatory, political and other conditions.	·      The Group and its investee companies undertake extensive analysis of available technical information to determine work programmes. ·      Appraisal programmes are designed to de-risk the overall field development. Well and seismic data is continually reviewed to best allocate capital and make drilling decisions. ·      Downside risk can be reduced by entering into risk sharing arrangements.  ·      The Group retains working capital reserves to cover any delays or cost overruns
Liquidity, financial capacity and financial exposure: External market conditions can impact our financial performance. Insufficient liquidity and funding capacity of the Group and its investee companies could adversely impact the implementation of the Group's strategy and restrict work programmes due to lack of capital.	·      Management has a clear strategy for value realisation and creation as evidenced by the realisation of value from the Corallian sale in 2022. ·      The Group maintains a strong balance sheet by maximising cash to ensure sufficient liquidity within the business. The Group has no debt. ·      Cash forecasts are monitored including considering multiple scenarios. ·      The Company has demonstrated it can raise incremental capital if needed. ·      The Group continually monitors its capital allocation and will only pursue programs that are of appropriate size and risk relative to the Group's capital resources.
Joint arrangements: Most of our projects and operations are conducted in joint arrangements or with associates. This could reduce our degree of control and our ability to identify and manage risks. Varying levels of control over the standards, operations and compliance of our partners could result in legal liability and reputational damage.	·      For every project which is conducted via an associate, Reabold seeks to appoint a director to the board of the associate, whose responsibility is to manage performance and create and protect value for Reabold. With a director on the board, Reabold seeks to influence operators and other partners to adapt their practices in order to drive value appropriately and to mitigate identified risks. ·      The Group continually engages with its operating partners and closely monitors the operation of its assets. ·      The Group completes thorough due diligence reviews before entering future partnerships to ensure that their strategic and operational objectives are aligned with those of the Group.
Climate change: A global transition to alternative energy sources could have an adverse impact on demand for oil and gas, commodity prices and/or the Group's access to and cost of capital. Developments in policy, law, regulation, technology and markets including societal and investor sentiment, related to the issue of climate change and the transition to a lower carbon economy could increase costs, constrain our operations and affect our business plans and financial performance.	·      Management looks for opportunities to deliver low carbon intensity production into the UK market by using low carbon intensity facilities, including potential re-use of existing infrastructure. ·      The Group's "investment horizon" is considered to fall within time frames too short to be materially affected by the Paris Agreement 2˚C scenario.  ·      The Group's resources are weighted towards gas which is playing a key role in the national energy transition.
Talent and capability: Inability to attract, develop and retain people with necessary skills and capabilities could negatively impact delivery of our strategy.	·      Recruitment and retention of key staff through providing competitive remuneration packages and stimulating and safe working environment. Balancing salary with longer term incentive plans.
Geopolitical: Exposure to a range of political developments and consequent changes to the operating and regulatory environment (including events relating to the Russia-Ukraine conflict) could cause business disruption.	·      We continually monitor geopolitical developments. ·      Management maintains regular communication with regulatory authorities. ·      The Company aligns its standards and objectives with government policies as closely as possible. ·      The Group does not consider that it has a material adverse exposure to the geopolitical situation with respect to the sanctions imposed on Russia, although recognises the evolving situation is causing price volatility. The Group will continue to monitor its position to ensure it remains compliant with any sanctions in place.
Digital infrastructure, cyber security and data protection: Breach or failure of our third parties' digital infrastructure or cyber security, including loss or misuse of sensitive information could damage our operations, increase costs and damage our reputation.	·      The Group employs specialist support to detect and monitor threats using security protection tools. ·      We build awareness with our employees and share information for continuous learning
Compliance and control risks
Regulation: Changes in the law and regulation in countries in which Reabold has a presence with partners could increase costs, constrain our operations and affect our strategy, business plans and financial performance. Tax rates, particularly those applied to hydrocarbon activities tend to be high compared with those imposed on similar commercial activities. Governments may change their fiscal and regulatory frameworks in response to public pressure on finances resulting in increased amounts payable to them. The UKCS licensing regime under which some of Reabold's operational rights and obligations are defined may be subject to future change.	·      Our business seeks to identify, assess and manage legal and regulatory risk relevant to our operations, strategy, business plans and financial performance. To support this work, we seek to develop co-operative relationships with governmental authorities to allow appropriate focus on areas of potential risk or uncertainty while also protecting Reabold's interests within the law. ·      Management will utilise investment incentives where available
Reporting: Failure to accurately report our data could lead to regulatory action, legal liability and reputational damage.	·      Our finance team provide assurance of the control environment and are accountable for building control and compliance into finance processes and digital systems

 

 

Environmental, Social and Governance (ESG) Statement

Reabold is committed to the highest standards of environmental, social and governance processes and we incorporate these responsibilities into our operational decision-making and investments. We regularly review our approach, policies, and processes across key areas.

At present Reabold does not 'operate' any of the assets in its portfolio. Our operational assets are managed by our associate companies who are responsible for the adequacy of standards, operations and compliance. The Group does not have any assets that are yet in the development or production stage and therefore the business has no scope 1 or scope 2 greenhouse gas emissions.

 

Environment

Reabold is committed to preserving and protecting our natural environment for future generations.

Reabold complies with the standards of the international oil industry, environmental laws and regulations. We recognise and support the basis of the Paris Agreement to strengthen the global response to the threat of climate change.

We support a balanced energy transition where the world maintains a secure and affordable supply of energy, while building the clean energy system of the future. Our focus is on minimising carbon emissions and the environmental footprint of the projects we invest in, whilst continuing to contribute positively to the demand for energy and products that require hydrocarbons in the supply chain. The pace of transition to a lower carbon economy and cleaner fuels is uncertain, and will be heavily influenced by government policy, but oil and natural gas demand is expected to remain a key element of the energy mix for many years based on stated government policies, commitments and announced pledges to reduce emissions. The challenge is to meet the world's energy needs sustainably and efficiently, which requires managing and reducing harmful emissions.

Reabold actively encourages and expects its investee companies / operators of its oil and gas interests to respond to this by continuously striving to minimise the potential environmental impact of operations by:

·      Implementing controls to identify and prevent potential environmental risks

·      Implementing controls during operations to avoid accidental spills, or leaks of polluting materials

·      Managing water with due consideration

·      Targeting high energy efficiency levels in drilling and other activities

·      Limiting unnecessary wastage

·      Handling waste products in an environmentally responsible manner

·      Regularly assessing the environmental consequences of operations

 

The operators have developed systems, controls and processes to integrate climate related considerations, in order to meet these objectives. For example one can read the approach and policies of Rathlin Energy, operator of the West Newton PEDL 183 licence, on its website at www.rathlin-energy.co.uk, and of LNEnergy, operator of the Colle Santo project in Italy, on its website at https://www.sviluppocollesanto.it/.

 

Focus on energy efficient extraction and drilling to reduce carbon intensity

Reabold's assets are primarily small to medium sized, proven oil and gas fields at relatively shallow depth. As such, the intensity of drilling required is considered low relative to industry standards and we do not conduct energy intensive prospecting activities, reducing the impact on the environment. We encourage the operators of our assets to use the most energy efficient drilling methods.  As the energy mix evolves towards a higher percentage of renewables in the countries in which we operate, we anticipate a greater share of our energy consumption will be purchased from green sources.

 

United Kingdom

Our investee company sites in the United Kingdom are located close to areas with a high demand for energy. Consequently, we expect that hydrocarbons produced locally and consumed locally will displace imported hydrocarbons thereby resulting in lower carbon emissions overall. This will provide greater security of supply to the UK as well as providing jobs and supporting UK industry, compared to the alternative of importing fuel. The COVID-19 pandemic highlighted the importance of our critical national infrastructure and, more recently, the war in Ukraine has been a stark reminder that energy security cannot be taken for granted.

We believe that natural gas has an important role to play in the energy transition, bridging the gap on the journey from fossil fuels to a renewable, zero-carbon future and helping to supply stable and affordable energy to UK homes and businesses as part of a lower-carbon energy supply mix. To that end, we continue to explore ways to invest in gas projects such as the Victory project, which was subsequently sold to Shell in November 2022, and the Colle Santo gas project in Italy.

Reabold takes its commitment to responsible hydrocarbon production very seriously. In May 2024, Reabold commissioned GaffneyCline to perform a carbon intensity study for the West Newton field. The GaffneyCline study highlighted the following:

·      The West Newton project has an AA rating for Carbon Intensity for its potential upstream gas and condensate production, the lowest possible carbon intensity rating category on GaffneyCline's scale

·      The West Newton field has a Carbon Intensity significantly lower than the UK average and onshore and offshore analogues. It is also significantly lower than the average imported LNG, based on the NSTA Natural Carbon Footprint Analysis published in July 2023

·      Based on the study, GaffneyCline estimates that West Newton could produce the equivalent of just 2.87 grams of CO2 per megajoule of energy developed (gCO2eq./MJ)

·      As the development proceeds and project knowledge increases, there is potential to improve the Carbon Intensity by further reducing fugitive, flaring and venting emissions and by gas-to-grid development, reducing on site gas and condensate processing, and using the shortest possible route to the National Grid

The AA rating demonstrates the low carbon credentials of the West Newton project and is an example of the opportunities available in the UK to power the country through lower carbon, home grown energy, rather than relying on expensive and more carbon intensive imports.

We believe West Newton is an important strategic asset to the UK as the country looks to secure domestic energy supply for secure and affordable energy, at a time when the country is exposed to potentially significant gas supply disruptions. The study proves that the operator, Rathlin, is a responsible hydrocarbon producer complying with best environmental practice to produce much needed UK hydrocarbons in the most efficient and environmentally friendly way possible.

Reabold is committed to the highest standards of environmental processes and we incorporate these responsibilities into our operational decision-making and investments.

 

Italy

The development plan for Colle Santo involves converting gas to LNG directly onsite using a small modular LNG processing unit. The LNG will be trucked a short distance (7 km) to an entry point into the SNAM transmission grid. There will be no new drilling due to two existing wells already drilled and tested. There will be on-site CO₂ capture of 1,400 tonnes CO₂ equivalent per year, and connected hydrogen production facilities.

LNG provides energy security and flexibility because it can be easily transported to places where it is needed most. LNG is a critical fuel in the energy transition and plays an important role as a lower-carbon alternative to coal for industry, and provides grid stability alongside wind and solar power in electricity generation. It is the lowest-carbon fossil fuel, producing around 50% less carbon emissions than coal when used to generate electricity.

 

Daybreak, USA

Daybreak's production sites are located in California, a state with very high renewable energy generation which feeds into the energy required for hydrocarbon extraction. By industry standards, Daybreak's oil and gas activities require a very low level of energy to extract the hydrocarbons, ensuring it is one of the most energy efficient of its type in California.

 

Romania

Romania has a diverse energy mix, including coal, natural gas, nuclear, hydroelectric, and renewable sources. The largest share of electricity production historically came from coal and natural gas, followed by hydroelectric and nuclear power. In recent years, there has been a shift towards increasing the share of renewable energy sources, such as wind and solar. However, Romania supports natural gas in the long-term in the European Green Deal because it forecasts that this resource will remain an important tool in changing the energy sector and transitioning to a more sustainable and carbon-free economy. By developing and producing gas from the Parta site, Danube Petroleum Limited will be able to contribute to the country's efforts to implement this energy strategy. In addition, options to exploit the geothermal potential of the Romanian part of the Pannonian Basin are under investigation with the authorities in combination with a subsurface review of the likely prospectivity.

Managing our environmental footprint and reducing our emissions are important objectives for Reabold Resources. We regularly review and revise our policies, as necessary.

 

Health & Safety

Reabold wishes to build value through developing sustainable relationships with partners and the community.

We comply with all applicable legislation; and design and manage our activities to prevent pollution, minimize environmental and health impact and provide workplaces free of safety hazards.

The Company is committed to high standards of health, safety and environmental protection; these aspects command equal prominence with other business considerations in the decision-making process.

Health, safety and environmental protection are responsibilities shared by everyone working for the Company and the full support of all staff, partners and contractors is vital to the successful implementation of the policy. We ensure, as far as reasonably practicable, that all personnel are aware of their delegated health, safety and environmental responsibilities and are properly trained to undertake these.

We strive for continuous improvement in our HSE performance and measure this by setting objectives and targets consistent with the aims of this policy.

HSE performance is routinely monitored and reported regularly to the Board of Directors, which will ensure that the necessary resources are provided to support this policy fully.

 

Governance

As an AIM-quoted company, Reabold is required to apply a recognised corporate governance code, demonstrating how the Company complies with such corporate governance code and where it departs from it.

The Directors of the Company have formally applied the 2018 QCA Code. The Board recognises the principles of the 2018 QCA Code, which focus on the creation of medium to long-term value for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies, such as Reabold, have been created. Please see pages 25 to 30 for the Chair's corporate governance statement and how Reabold has applied the 10 principles of the 2018 QCA code.

 

Section 172(1) statement

In accordance with the requirements of Section 172 of the Companies Act 2006, the Directors consider that, during the financial year ended 31 December 2023, they have acted in a way that they consider, in good faith, would most likely promote the success of the Company for the benefit of the members as a whole, having regard to the likely consequences of any decision in the long term and the broader interests of other stakeholders, as required by the Act. The Board delegates day-to-day management of the business of the Company to the Co-CEOs, save for those matters which are reserved for the Board's approval. More information on how the Board has regard to the Section 172 factors are outlined below.

S172(1) (a) "The likely consequences of any decision in the long term" 

The Directors understand the business and both the evolving and challenging environment in which we operate, including the challenges of the global energy transition. The Board made decisions with regard to acquisitions and investments with consideration given to key stakeholders and the likely long-term impact of any decision. During the year, the Board reflected on the challenges to be faced by Reabold given the shifting macroeconomic and geopolitical context. Our strategy is intended to transition Reabold to an energy business focused on developing strategic European gas assets to secure European gas supply and energy security. The Board of Directors is collectively responsible for the decisions made towards the long-term success of the Company and the way in which the strategic, operational and risk management decisions have been implemented throughout the business is detailed in our Strategy and business model on page 4 and throughout the Strategic Report.

S172(1) (b) "The interests of the Company's employees" 

Reabold employees are fundamental and core to our business model and the delivery of our strategic ambitions. The future success of our business depends on attracting, retaining, developing and motivating talented employees.

We ensure that:

• Health, Safety and the Environment are considered paramount throughout the organisation.

• Annual pay and benefit reviews are carried out to determine whether all levels of employees are benefitting fairly and to retain and encourage skills vital for the business.

• There are freely available Company policies and procedures.

• Personal development reviews and work appraisals are conducted.

• Employees are informed of the results and important business decisions and are encouraged to feel engaged

• Working conditions are favourable

 

The Remuneration Committee oversees and makes recommendations of executive remuneration and any long-term share awards. In April 2023, we launched the Reabold Resources plc long-term incentive plan for our full-time senior management team. Reabold aims to invest in competitive rewards for our people.

S172(1) (c) "The need to foster the Company's business relationships with suppliers, customers and others" 

Delivering our strategy requires strong mutually beneficial relationships with suppliers, customers, governments, and joint-venture partners. We aim to have a positive and enduring impact on the communities in which we operate, through partnering with national and local suppliers, and through payments to governments in taxes and other fees.  The Group values all of its suppliers and aims to build strong positive relationships through open communication and adherence to trade terms.  The Group is committed to being a responsible entity and doing the right thing for its customers, suppliers and business partners. The Board upholds ethical business behaviour across all of the Company's activities and encourages management to seek comparable business practices from all suppliers and customers doing business with the Company. We value the feedback we receive from our stakeholders and we take every opportunity to ensure that where possible their wishes are duly considered. The Board engages with stakeholders to understand their priorities and concerns through a range of engagement activities. Meeting commitments made to investors is critical to building trust and confidence with our external stakeholders. Back in 2022, management made a commitment to improve communication with shareholders with stakeholder engagements at least every two months. This has taken the form of corporate presentations, interviews with the Co-CEOs and investor events. In 2023, we published 12 new videos on the media section of our website, including operational updates, investor presentations and Q&As. In Q1 2023 the Company launched a new website so that shareholders and other stakeholders can more easily navigate Company updates and communications. The website includes a Q&A page which answers some of the most common investor questions.    

The Co-CEOs provide a comprehensive update to the Board on material business and external developments at each main Board meeting. This includes significant operational updates, e.g. partnerships, investments, divestments, projects, commercial highlights and political or regulatory developments.

S172(1) (d) "The impact of the Company's operations on the community and the environment" 

This aspect is inherent in our strategic ambitions, most notably on our ambitions to thrive through the energy transition and to sustain a strong societal licence to operate. As such, the Board receives information on these topics to provide relevant information for specific Board decisions.  Executive Directors conduct site visits of various investee company operations and hold external stakeholder engagements, where feasible.

At present Reabold does not 'operate' any of the assets in its portfolio. Our operational assets are managed by our associate companies who are responsible for the adequacy of standards, operations and compliance. Reabold seeks to influence how risk is managed in arrangements where we are not operator by ensuring we have a member of the executive team on the Board of our associate companies. This gives Reabold assurance that operations are and will be carried out in a sustainable and safe manner.

Further information can be found within our ESG Statement on page 15, and within the principal risks and uncertainties section on page 12. 

S172(1) (e) "The desirability of the Company maintaining a reputation for high standards of business conduct" 

The Company is incorporated in the UK and governed by the Companies Act 2006. The Company has adopted the Quoted Companies Alliance ("QCA") Corporate Governance Code 2018 (the "2018 QCA Code") and the Board recognises the importance of maintaining a good level of corporate governance, which together with the requirements to comply with the AIM Rules ensures that the interests of the Company's stakeholders are safeguarded. Please see the Chair's Corporate Governance statement on pages 25 to 30. 

Reabold aims to contribute to Europe's energy security by unlocking potential sources of near-term domestic gas supply in economically, environmentally and socially responsible ways. The Board periodically reviews and approves clear frameworks, such as Reabold's Code of Conduct, and specific Ethics & Compliance policies, to ensure that its high standards are maintained both within Reabold and the business relationships we maintain. This, complemented by the various ways the Board is informed and monitors compliance with relevant governance standards help ensure its decisions are taken, and that Reabold investee companies act, in ways that promote high standards of business conduct. 

S172(1) (f) "The need to act fairly as between members of the Company" 

The Directors consider which course of action best enables delivery of our strategy in the long-term interest of the Company. The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its shareholders - engaging with both retail and institutional holders during 2023. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. All shareholders are encouraged to attend the Company's Annual General Meeting and any general meetings held by the Company, which present an opportunity for shareholders to speak with the Executive Directors in a formal environment and in more informal one to one meetings.

The primary communication tool with our shareholders is through the Regulatory News Service ("RNS") on regulatory matters and matters of material substance. The Company's upgraded website, launched in March 2023, provides details of the business, investor presentations and details of the Board, changes to major shareholder information and 2018 QCA Code disclosure updates under AIM Rule 26. Changes are promptly published on the website to enable the shareholders to be kept abreast of Company's affairs. The Company's Annual Report and Notice of Annual General Meetings are available to all shareholders. The Interim Report and investor presentations are also available on our website. 

 

Investor events are held with shareholders throughout the year. By providing a variety of ways to communicate with investors the Company feels that it reaches out to engage with a wide range of its stakeholders. 

 

Principal decisions

The Board delegates day-to-day management of the business of the Company to the Co-CEOs. The responsibility for the execution of this delegation of authority, including regularly monitoring it, is retained by the Board. We outline some of the principal decisions made by the Board over the year, and how directors have performed their duty under Section 172.

 

Cash allocation including shareholder distributions

Following the completion of the sale of Corallian in November 2022 along with the receipt of the first tranche payment from Shell, the board considered cash flow, the macro environment and business performance in 2023. The Directors approved a share buyback programme in April 2023 with the aim of delivering value to shareholders. The Directors considered its ordinary shares to be undervalued and at a meaningful discount to conservatively estimated per-share intrinsic value.

A number of considerations underpinned the decision to commence the buyback programme including feedback from advisors and other stakeholders, the strength of the Company's balance sheet and the need to continue to invest in our assets. 

 

Investment in LNEnergy

Over the course of the year, the Board considered and approved new opportunities and investments. The Board reviewed various proposals and their alignment with Reabold's strategy.  During 2023, the Board approved the accumulation of a 26.1% interest in LNEnergy, whose primary asset is an exclusive option over a 90% interest in the Colle Santo gas field onshore Italy. The Board agreed the investment was in line with Reabold's strategy to develop high quality strategic European gas assets with near-term production potential that can generate shareholder value. LNEnergy's primary asset is an option over a 90% interest in the Colle Santo gas field, onshore Italy in the Abruzzo region. The Colle Santo gas field is a highly material gas resource with 65Bcf of 2P reserves, as estimated by RPS as of 30 September 2022, and subject to the necessary approvals and permits, is development ready with no additional drilling required. LNEnergy believes that the field has the potential to generate an estimated €11-12m of gross post-tax free cash flow per annum. On 1 May 2024 a non-binding Heads of Agreement between Gunvor and LNEnergy for the purchase of LNG by Gunvor from LNEnergy from the Colle Santo gas field was executed.  First production from the LNG project expected in 2025.

 

 

Strategic Report signed on behalf of the Board

 

Chris Connolly

Company Secretary

May 30, 2024