Reabold Resources PLC (LON:RBD) Co Chief Executive Officer Sachin Oza caught up with DirectorsTalk for an exclusive interview to discuss the progress of their California assets and the next steps for the coming months.
Q1: Can you please provide a bit of background on your California assets in general and how it fits in with Reabold’s strategy more broadly?
A1: The asset portfolio that we have in California really plays to the overall company strategy which is looking for low technical risk, free cash flow assets where the capital we provide gets near-term activity moving. On success, we can convert that into value creation or monetisation and in California specifically, that has meant getting the asset into production. Finally, we’d also like to highlight that we really look for significant upside potential in these free cash flow assets just because of the nature of these types of assets in the market backdrop currently.
So, that’s our strategy and the California assets fit into that strategy really really nicely and the success that we’ve had has really demonstrated and vindicated that strategy.
Q2: So, what kind of activity has been going on there?
A2: The activity that has taken place so far has been across 2 license areas, the first is West Brentwood and we announced late last year discovery wells there called VG-3 and VG-4, we have put VG-3 into production and tested VG-4, it tested at an exceptionally high flow rate and we were very very pleased with that. Really, the activity from here is getting the VG-4 asset into production.
On the Monroe Swell field, a separate field in California, we’ve drilled 2 successful wells and that’s the Burnett 2A and the Burnett 2B well, the one that we announced today. They were ahead of pre-drill expectations and we were really pleased with those results and I think it bodes well for future activity that we will be carry out in the license area.
Q3: As you mentioned, this morning there was the announcement of your successful drilling at Burnett 2B, but can you provide us with a bit more information on the 2 wells, Burnett 2A and 2B?
A3: I think in the past, we’ve mentioned that the gross volumetrics at this field is approximately 4 billion barrels of oil recoverable, I think the fact that we had paid was ahead of expectations bodes really well for that number and we’re very pleased with that.
Just to get a sense, and maybe differentiate the Monroe Swell field from the West Brentwood field in California that I mentioned earlier is that the Monroe Swell field is aerially more extensive than the West Brentwood field. What that means is it allows us to have more drilling locations and greater running room that we do on the West Brentwood field so the success that we have here, the future activity should lead to an accelerated programme of drilling on that field, on Monroe Swell.
Again, just to give an indication here, there’s a nearby field, of similar aerial expanse, and that had over 10 producing wells on it so it just gives a sense of scale of drilling locations and activity that we might be able to have on the Monroe Swell field.
Q4: What will be the immediate next steps?
A4: Ok, so I kind of gave an idea of what the potential is there but in order to get the pathway to that potential from where we are today, there’s a series of elements of the programme that we need to execute first.
The first of that will be putting a production test on the 2B well and the 2A well, what that will then allow us to do is really deign the optimal permanent production facilities for those 2 fields. We’ll then evaluate those results in terms of drilling locations for the next set of wells on Monroe Swell. I think it’d be fair to say we are looking quite carefully at what that means for our drilling activity this year and could potentially mean we do accelerate that activity versus what we’ve been communicating to the market so far on Monroe Swell.
So, that gives you a sense of the immediate next steps, but I do also want to emphasise that all of that is playing into that bigger longer term potential I mentioned in your previous question associated with the field.
Q5: What’s the plan for Reabold Resources in California in the medium term?
A5: We ran through those immediate next steps alongside the future production on Monroe Swell so we clearly have those targets in mind, and we will be evolving that plan going forward.
It’s worthwhile highlighting that we also have the Grizzly Island well that we’ll be drilling later this year and that’s a big gas well, it’s on a completely separate license area to West Brentwood and Monroe Swell and we’re excited about that opportunity.
So, what that means is we have a nice mix of assets within California and we will evaluate and look at those assets in terms of creating value for our shareholders, primarily in this case through the acceleration of cash flow from improved production, from drilling new locations, from Monroe Swell and potentially from West Brentwood as well as Grizzly Island.
That’s the medium term plan from existing assets we have in California but we’re obviously also constantly looking for complimentary assets within the region that can really add further value to our shareholders.
