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Reabold Resources Q&A: Romania project update (LON:RBD)

Reabold Resources PLC (LON:RBD) Co Chief Executive Officer Stephen Williams caught up with DirectorsTalk for an exclusive interview to discuss the operational update at the IM-1 well in Romania, the significance of the discovery to their portfolio and what attracted them to the Romania project.

Q1: The operational update with regards to the IM-1 well in Romania, can you just talk us through that?

A1: Bottom line, all very positive so far, we’re extremely happy with what we’re seeing there. This is a well that was always targeting multiple wells, we’ve seen gas shows throughout large parts of the well so lots of hydrocarbon which is obviously fantastic.

Crucially, we’ve seen very strong gas shows coincident with very good quality reservoir rock in the primary target so we’ve got a very high level of confidence that this is going to be a successful well and we saw various other zones as potential pay as well so all looking very good versus pre-drill expectations.

Particular interest, we’ve seen heavier hydrocarbons in the samples, there’s indications here that there may be a liquids play in some of the deeper zones that we’ve gone through so far. Of course, that would be extremely interesting, the gas was always the primary target here but finding liquids just adds substantially to both the value and the ability to quickly monetise this well.

So, extremely interesting results, very positive so far and we look forward to continuing to analyse this well and seeing exactly what we’ve got here.

Q2: So, what will be the forward plan now for this asset?

A2: On this particular well, the IM-1 well, firstly we’ve got to do the drilling for the deepest exploration targets that are also part of this well so that’s ongoing now.

Once we’ve done that and we’ve got the whole thing ready, we can subsequently go on to test the zones of the most interest. So, we’ve already said we’ve got several zones already in this well that we’ll be looking to test and we’ll see what we’ll get in the very deepest targets as well so that’s something we’ll be doing in the near future.

On top of that, this is an appraisal and exploration well but this well has been designed to be a producer so given what we’ve seen so far, we’re very confident that this well will be producing hydrocarbons going forwards.

On top of that, we’re ready to drill again here pretty soon so when we were going through the permitting process for IM-1, our permits were also put in place for the other well in the campaign, IM-2. So, we should be in a position where it’s possible to drill that well pretty quickly too so we’ll have the 2 wells both tested.

Beyond that, the next step is to shoot some seismic so there’s seismic campaign that will be underway in the not too distant future. We’ll then be able to put together all the data from the wells and the seismic and that should open up multiple additional targets on the Parta licence going forward.

Q3: How significant could this discovery be to Reabold Resources in the context of the Reabold portfolio?

A3: Yes, I think this could be very significant. Clearly, we’ve already got some very impressive assets in the portfolio so to stand up against the likes of West Newton is not easy but we really believe that Parta will be at that sort of scale.

The future of the Parta asset has always been and continues to be that we’d expect to see multiple pools of gas, and hopefully oil as well, across the licence of which this is actually just the first.

So, the idea here is we drill what we thought was probably the lowest risk target first, we have a success which we appear to have and we shoot additional seismic as well. Once you’ve got your eye in from the initial successful drilling and you can combine that with all the additional seismic you shoot, we fully expect to open up substantial running room across this licence area.

When you tie all of that data together, we hope to get to the position where we can identify very large quantities of resource which can be drilled out on a step by step basis and really, it’s something that can be very sizable.

Q4: Can you remind us what attracted Reabold Resources to the Romanian project initially and how that investment case has impacted by this result?

A4: I guess, going back to what I said on the last one, one of the most attractive things here is the running room associated with it. What we’ve also got here is the ability to drill multiple targets that we see into assets that really fit in to the general company strategy, which is trying to find assets which, although they’re pre-cash flow, are considerably de-risked by historical activities. They’re in an area where there’s been lots of oil and gas activity, therefore there’s lots of data. The IM-1 well is essentially twining an old well that made a discovery many years ago so we had a very good feeling that this was going to be successful and we were going to find something.

That is sort of the main characteristic of this play and that’s why we were so attracted to it and why we continue to be so interested in it. It’s the ability to drill these low-risk wells in a region that they’re very monetizable, lots of oil and gas infrastructure around, an established industry. Once you get to that point of making the discovery and fully de-risking the subsurface, you can get into production and realise value from quite quickly.

How has that impacted by what we’ve said today? Well, essentially, it’s just improved that investment based on the basis that we’ve further de-risked the entirety of the licence by getting the data set from this well and of course, being successful as a well in its own right.

We really feel we have the ability to build a business of real scale in Romania and actually, potentially broadly more across Central and Eastern Europe where we see similar characteristics there across the whole region.