Malcy’s Africa Oil Week blog, from Cape Town – Oil price, Arrow Exploration-Erratum & Reabold Resources

WTI (Nov) $87.76 +$1.24, Brent (Dec) $93.37 +1.57, Diff -$5.61 +33c.

Author @mgrahamwood

USNG (Nov) $6.93 +9c, UKNG (Nov) 330.84p +54.96p, TTF (Nov) €180.525 +€17.01.

Oil price

Yesterday as I was writing the blog I suggested that a cut of $1.80 might be in the Opec+ minds, actually it turned out to be the full $2. I don’t think you can read too much into this deal, as I said they are just doing what the cartel does best and managing expectations, in this case they weren’t going to let crude oil drift down to $75 or less. The only really irritating part is that for those who can’t make the quota they will make more moola without having to cut production, leading this group is Russia…

Adding to the strength were the IEA inventory stats,, crude drew by 1.356, gasoline fell by a substantial 4.728 b’s and distillates were down by 3.443m. The SPR sale is scheduled to end soon but that may be reconsidered at least until after the mid-term elections….

Arrow Exploration-Erratum

In my note yesterday I mistakenly wrote that production had grown from 550 boe/d to 1,000 boe/d when in fact I was fully aware that production is now 1,500 boe/d. My apologies as it slipped through my normally rigorous proof reading.

No change to valuation or TP as I was using the 1,500 boe/d number.

Reabold Resources

Reabold has provided the following update on the conditional sale of its investee company, Corallian Energy Limited to Shell U.K. Limited, further to its announcement of 14 September 2022.

Reabold is pleased that Shell and Corallian have executed a Sale and Purchase Agreement (“SPA”) for the conditional purchase of the entire issued share capital of Corallian by Shell. The key terms of the SPA are as detailed in the Company’s announcement of 14 September 2022 and Reabold intends to use the net proceeds received to advance development of its existing assets, including West Newton, and assess potential further acquisition opportunities.

Further to Reabold’s announcements of 15 September 2022, at the time of completion of the purchase of the entire issued share capital of Corallian by Shell, Corallian’s only asset will be licence P2596, which contains the Victory gas development opportunity.

Corallian expects that completion of the SPA and, therefore, the initial gross consideration payment of £10 million (c. £3.2 million net to Reabold), will take place during Q4 of 2022.

Stephen Williams, Co-CEO of Reabold, commented:

“We are very pleased that Shell has acquired Corallian, and therefore the Victory asset. We believe such a transaction validates Reabold’s strategy of creating value for shareholders by identifying, funding and monetising underappreciated, strategically important assets. The net proceeds to be received will provide Reabold with improved financial flexibility to consider further acquisition opportunities and develop its existing assets. 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.”

I wouldnt normally make a comment on a completion statement but Reabold deserves a moment in the sun on a day that the share price has actually gone up! This is a really good deal for them and is just what the model is supposed to do. 

The opinions expressed here are those of the author

Author @mgrahamwood

Disclaimer: Malcy’s Blog is provided general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third-party comment in the blog

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