The Press and Journal (Aberdeen and Aberdeenshire)
£32m deal struck for Corallian stake
An unnamed “oil and gas major” has struck a £32 million deal to acquire a controlling stake in West of Shetland operator Corallian Energy.
Corallian’s current owner – London-listed Reabold Resources – announced the deal, which will net the investment company proceeds of £12.7m, giving it “improved financial flexibility”.
Only three oil majors operate in the UK, and only one has direct infrastructure near Corallian’s West of Shetland Victory discovery – TotalEnergies.
Neither Reabold nor TotalEnergies have disclosed whether the latter is involved in the conditional deal, which is subject to shareholder approval and a successful asset sale to Reabold.
There are also conditions around development and production consent for Victory being secured from the North Sea Transition Authority on or before December 1 2023.
As it stands a tie-back to the French supermajor’s Laggan-Tormore pipeline is the preferred development option for Victory.
The field is estimated to hold mid-case recoverable resources of 179 billion cubic feet of gas.
If and when the deal completes, Reabold will continue to hold 195,000 shares in Corallian, having sold 3.5 million.
The company will also acquire all of Corallian’s working interests in its portfolio, apart from the West of Shetland Victory licences.
It was announced in May that Reabold had received a “sufficiently attractive” offer for its 49.99% stake in Corallian.
Reabold has invested £7.5m in the business since late 2017.
Terms of the deal with the unnamed major would see Reabold acquire licence areas with prospects near to existing oil and gas infrastructure for £250,000.
Reabold highlighted “excellent opportunities” to fund, progress and monetise assets, including the onshore West Newton prospect near Hull.
Stephen Williams, cochief executive, Reabold, said: “The board is delighted with the value uplift and improved financial position this transaction brings to Reabold.
“We will continue in our mission to identify, fund and monetise low-risk, under-valued, strategically important oil and gas assets where their development benefits from being near existing infrastructure.
“We also recognise our role of improving the UK’s energy security, by unlocking the potential of currently underappreciated assets.
“With the enhanced capital resources this transaction brings, the board will continue its strong oversight of the company’s capital allocation policy. There remains tremendous potential to drive further value for shareholders through recycling the Corallian proceeds across the portfolio, initially focused on West Newton’s first development well in 2023.”
Once the deal is signed off, the North Sea exploration and appraisal licences that will transfer to Reabold are P2396, P2464, P2493, P2504 and P2605 (all at 100% working interest) and P2478, (36% working interest).
Corallian would be left with just licence P2596, which contains Victory.
Plans were submitted to the UK Government last year to develop the field, which is valued at around £193m, based on a historic average gas price of 50p per therm.