Shell Adds Another Asset West Of Shetland

Oil and gas supermajor Shell has increased its West of Shetland asset portfolio by acquiring Reabold Resources’ investee company Corallian Energy.

Reabold, which holds a 49.99 percent interest in Corallian, entered into a conditional sale and purchase agreement to acquire Corallian’s working interest in multiple licenses back in May 2022. This left leaving Corallian with only the P2596 which contains the Victory gas development.

In September, Corallian’s board of directors agreed to sell the entire issued share capital of the firm to Shell for a gross consideration of $36.7 million.

Corallian now expects that payment of the initial gross consideration of $11.5 million ($3.7 million to Reabold) will be made to Corallian and Reabold shareholders over the coming days. The remainder of the total consideration is expected to be made in 2023.

Reabold said in a statement that it intended to use the net proceeds received to advance the development of its existing assets, including the drilling of the key horizontal well at West Newton, and assess potential further acquisition opportunities.

"We are very pleased that we have been able to successfully sell the Victory project to Shell. This transaction validates Reabold's strategy of creating value for shareholders by identifying, funding, and monetizing underappreciated, strategically important assets. The net proceeds to be received will provide Reabold with the improved financial flexibility to consider further acquisition opportunities and develop our existing assets.”

“Furthermore, upon receipt of the second tranche, Reabold will be funded beyond its operational requirements and therefore intends to make a distribution of $4.6 million to shareholders. We will consult with shareholders on the mechanism of such a distribution, including dividends and share buybacks.”

“In addition, we believe this transaction will result in the production of indigenous natural gas resources that will enhance the UK's energy security position, and we are proud of Reabold's role in progressing Victory to this point," Stephen Williams, Co-CEO of Reabold, said.

Located in block 207/1a, some 50 miles northwest of the Shetland Isles, and 17 kilometers from the closest pipeline infrastructure, the Victory gas field is situated in the shallow water of 520 feet. Texaco discovered this field in 1977 and the environmental statement for its development was submitted in early July 2022.

Based on the existing plan for the field, it is expected to be developed via a single subsea well tied back via a new 10 miles, 14-inch pipeline to one of the hot tap tees installed in TotalEnergies’ existing Greater Laggan Area network infrastructure. The first gas is targeted for the fourth quarter of 2024.

To contact the author, email bojan.lepic@rigzone.com