Reabold Resources (LSE:RBD) was trading down 2.8pc to 0.6p this morning after announcing that drilling has started on its latest well in California.
US contract operator Integrity Management Solutions has started work on well VG-4 at Reabold’s onshore West Brentwood licence. The work follows the successful drilling of another well called VG-3 at West Brentwood earlier this year. VG-3 delivered an initial production rate of 200bopd and 60,000scf/d.
Reabold originally intended to drill a well at its Monroe Swell licence area before beginning VG-4. However, severe rainfall prevented it from spudding in the area. As a result, Integrity mobilised its rig to West Brentwood. Here, a pad and access road allow for severe winter conditions. Once it has completed VG-4, Integrity expects to return to Monroe Swell immediately.
On today’s news, Reabold’s co-chief executive Sachin Oza said: ‘The success of VG-3 was a significant moment for Reabold, providing the company with cash flow from the West Brentwood field. We are delighted that IMS has commenced drilling operations at the follow up well, VG-4, which we hope will prove to be just as successful.’
Reabold entered the US in June when it acquired US-focused oil and gas firm Gaelic Resource for £3m. This gave it the option to participate in West Brentwood, Monroe Swell, and another lease called Grizzly Island. It is estimated that the sites have a total value of $235m net to Reabold.
Meanwhile, in a recent RNS, Reabold provided an update on its 33pc position in Danube Petroleum. It said Danube had made progress on appraisal drilling and development operations at its Parta licence in Romania. Progress suggests all relevant permits will be granted in Q1 next year.
The company also updated investors on its recent investment into Rathlin Energy. Rathlin has begun work at its West Newton A site ahead of drilling a well early next year.
Finally, Reabold also owns a large stake in Corallian Energy. Corallian is due to the drill its highly anticipated Wick and Colter prospects, based in the UK, over coming months.
We interviewed Oza and his fellow co-chief executive Stephen Williams in October when they told us that Reabold was entering an ‘intense period of activity’ across its whole portfolio. Williams added:
‘It will be hectic in both the US – where we are confident we will be able to demonstrate further success– and in the UK and Romania, via our operator stakes. That will be the most fundamental driver for our shares and market cap, but on top of that, we now have the balance sheet capabilities and firepower to execute further transactions. We think these will be exciting and believe the market will also like them.’
‘Our job now is to start filling in drilling slots for 2019. I think investors really appreciate this constant stream of wells and we would like to continue that indefinitely.’
