WTI (Nov) $61.69 +81c, Brent (Dec) $65.47 +94c, Diff -$3.78 +14c.

USNG (Nov) $3.36+4c, UKNG (Nov) 85.67p +3.32p, TTF (Nov) €33.5 +€0.92.

Oil price

Oil is quiet today after a modest rise yesterday on the back of the Opec lower than expected increase in quotas, the Saudis also held prices to Asian customers. The joke IEA have also reduced their US renewables numbers….

Ukraine has been hitting Russian refineries who in return were hitting gas infrastructure, European gas prices are a bit better but it may be that the LNG market might be the beneficiary as we head through the autumn. 

And Shell upped their guidance today, very solid and production is up, LNG good, refining margins (up from 8.9 to 11.6) and refinery utilisation very high, (Range now 94-98% was 88-96%) and trading is good too and will get better on the above LNG news.

Reabold Resources

Reabold has announced that it has entered into a binding, conditional agreement  with Beacon Energy PLC  in relation to a significant strategic investment in LNEnergy Limited.

As part of the Proposed Transaction, Reabold is selling its total interest in LNE to Beacon for a €16 million earn out mechanism (the “Earn Out”) pursuant to which Reabold will receive 25% of its pro rata share of the net cash flow from the Colle Santo project once on production. Additionally, Reabold will receive new shares in Beacon, and will subscribe for additional shares as part of the Placing (as defined below), to take it’s shareholding to approximately 29% of the enlarged capital of Beacon. The Proposed Transaction will complete in two phases, as detailed below.

Stephen Williams, Co-CEO of Reabold, commented: 

“Through this transaction, Reabold has successfully crystallised value from the Colle Santo gas project, both through the Earn Out mechanism and the receipt of Beacon shares, whilst protecting Reabold shareholders from any further funding requirement, increased development costs or dilution in the asset. The Earn Out, which has a value of up to €16 million, offers Reabold and its shareholders a significant uplift in value from initial investment and ensures that Reabold shareholders will continue to benefit from the attractive cash flow generated from the project.

“In a similar way to the Victory project, which recently came onstream as an important supplier of indigenous gas to the UK, this is the Reabold strategy in action; unlocking strategic gas discoveries which have considerable valuation uplift potential by securing funding to bring projects to the next stage of development.

“We are pleased to partner with Beacon, which recognises the value of the Colle Santo project and its strategic importance in Italy in securing national gas supply.

“As previously announced, a number of funding solutions are being progressed by LN Energy to enable the development of Colle Santo, including the prepay and offtake agreement with Gunvor, vendor financing agreements with Italfluid, and the potential for Italian government grants.  With the positive regulatory decision announced last month, we are confident that the project will be brought into production with first gas in 2027.”

The more I look at this deal the more I like it, Reabold’s management has protected shareholders investment by successfully crystallising the value from the Colle Santo gas project, both through the Earn Out mechanism alongside the holding in Beacon. 

At this stage Reabold had been aware that LN Energy still needs funding, despite the recent very good news from the VIA commission which I read as the most positive step forward, there is more to do. This deal means that Reabold retains flexibility, less exposure to upcoming LNE funding, increased costs and thus eradicate any dilution of the asset that having to raise itself at current prices would mean. 

Over recent months there have been announcements with regard to offtake terms in the Gunvor HoA and discussions with regard to the EPC contract with Italfluid are ‘progressing well’. With Beacon taking up the reins in order to fund this next stage and the production concession an increasingly likely step to FID, probably mid 2026, RBD has significant optionality.

I also like the way that this investment is unfolding in a similar manner to that of the Victory project, itself only recently onstream and which showed the Reabold model operating in the best possible light. Done with incredible timing, Victory is now a strategic gas discovery producing thanks to Reabold early stage investment.

At Colle Santo I see what in Italy is a designated transition project and where the the Italian Government actually realise the value of its strategic domestic hydrocarbons and its positive effect on the Exchequer, the expert workforce and the balance of payments. No Net Zero Commissars to stifle and strangle the industry there, just the realisation that it’s good for the country.

Back to optionality what I probably like most of all is the way this deal is structured, in particular the earn out mechanism whereby Reabold will get €16m via its pro rata 25% of its share of the net cash flow from the Colle Santo project once on production. I see this as being an asset on its own and can be seen as fully fungible and thus commanding a significant value.

Another value creation is the investment in Beacon where RBD will invest and end up with 29% of the enlarged capital of Beacon once they have raised the necessary funds after all documentation has taken place. I understand that in the long run this stake will also be fungible, more optionality in order to hold, distribute or sell, after any lock-up process has been completed.

So, as I started off, I see this as a validation of the Reabold business model in action, a la Victory deal which they passed on in the nick of time, now they are doing the same thing in Italy. The shares are doing well, up 56% on six months and 14% today but actually I think that there is considerable upside from here after this most exciting deal. 

Highlights

·      Earn Out value of up to €16 million

·    Attractive cash flow stream: Reabold will receive 25% of its pro rata share of cash flow from the Colle Santo project once on production, capped at €16 million

·     Near-term monetisation: Active work programme designed to achieve FID in mid-2026 and first gas in 2027

·   Advanced financing plan: Additional financing options are in place with non-binding funding agreements with Italfluid for a vendor financing agreement and Gunvor through a prepay and offtake agreement; potential government grants are also being explored

Beacon will be seeking to admit its shares to trading on AIM and to carry out a placing to new and existing investors (“Placing”) to raise approximately £3.5 million to finance the Colle Santo project through FID and towards first production, as well as the associated required working capital. Reabold has agreed to support the Placing by participating with an investment of £750,000. The Directors of Beacon also intend to participate in the Placing.

Transaction Structure

Under the terms of the Agreement, Beacon will acquire all of Reabold’s interest in LNEnergy, which is currently 46.2%, in two phases.

Beacon will initially acquire approximately 49% of Reabold’s holding in LNEnergy (“First Acquisition”). The First Acquisition is anticipated to complete in November 2025 and is conditional upon, inter alia, the following:

·      Beacon and Reabold entering into a placing agreement as part of Beacon’s Placing; and

·     Beacon successfully readmitting its shares to trading on AIM with the resolutions relating to the Proposed Transaction and to its readmission having been passed at Beacon’s general meeting.

The First Acquisition long stop date is 4 months from the execution of the Agreement, which can be extended by mutual agreement between Reabold and Beacon.

Beacon will subsequently acquire the balance of Reabold’s holding in LNEnergy (“Second Acquisition”). The Second Acquisition is anticipated to complete in mid-2026 and is conditional upon, inter alia, the following:

·     Granting of the Colle Santo production concession; and

·    Granting of approval by the relevant Italian ministry, if required, in relation to the indirect change in control of LN Energy S.r.l. (LNEnergy’s 100% owned Italian subsidiary with rights to the Colle Santo concession) resulting from the Second Acquisition.

The Second Acquisition long stop date is 12 months from the execution of the Agreement, which can be extended by mutual agreement between Reabold and Beacon.

Upon completion of the Second Acquisition, Beacon, as the largest shareholder in LN Energy, intends to make funding available to the company to finance the Colle Santo project, with such funding anticipated to be provided through future subscriptions by Beacon for new shares in LNEnergy.

Consideration

Reabold will receive contingent consideration, in the form of the Earn-Out, based on the future net cash flow of LNEnergy. The Earn-Out is calculated as 25% of Reabold’s pro-rata share of net cash flow from Colle Santo, subject to a cap of approximately €16 million.

In addition, under the terms of the SPA, Reabold will receive new shares in Beacon equal to approximately 29% of the enlarged share capital of the Company. Of the approximate 29%, approximately 14% relates to Consideration Shares and 15% relates to Reabold’s participation in the Placing.

The Consideration Shares held by Reabold on admission to AIM will be subject to both lock-in terms and a relationship agreement, full details of which will be set out in the Beacon’s Admission Document. 

Beacon Energy

Beacon Energy plc (AIM: BCE), is pleased to announce that the Company has entered into a binding, conditional share purchase agreement (the “SPA“) with Reabold Resources plc (“Reabold“) in relation to a significant strategic investment in LNEnergy Limited (“LNEnergy”), (the “Proposed Transaction”).

This Proposed Transaction is considered by the Board of Beacon Energy (the “Board“) to represent a transformational, value enhancing transaction for shareholders, which is fully aligned with Beacon Energy’s growth strategy.

Key Highlights of the Proposed Transaction and the Colle Santo Project

·      Material gas asset: The Colle Santo project, located onshore Italy in the Abruzzo region, is a material and substantially de-risked development ready gas field (subject to final regulatory consent), incorporating a material and fully appraised 2P reserve base of 65 BCF (equivalent to approximately 11 mmboe)

·      Clear development pathway: A near-term active work programme designed to achieve Final Investment Decision (“FID”) in mid-2026 and first gas in H2 2027

·      Experienced development team: LNEnergy and its major contractor, Italfluid, bring a proven track record of development and production operations coupled with a strong HSE record and a firm commitment to environmentally responsible hydrocarbon production

·      Attractive Economics: The Board considers the project to be commercially and economically attractive, with an assessed NPV10 valuation of approximately €50 million from the development and production of the 2P reserve base

·      Advanced Financing Plan: A highly credible financing plan is in place with non-binding funding agreements with Italfluid (major contractor) and Gunvor (offtaker)

·      Strategic Regional Entry: This Proposed Transaction marks Beacon Energy’s entry into a region with significant potential for growth, where the Company believes a substantial business can be built

Beacon Energy will be seeking to carry out a placing to new and existing investors (“Placing”) to raise approximately £3.5 million (gross) to finance the Colle Santo project through FID and towards first production and required working capital. Reabold has agreed to support the Placing by participating with an investment of £750,000. The Directors of Beacon Energy also intend to participate in the Placing.

Transaction Structure

Under the terms of the SPA Beacon Energy will acquire from Reabold up to 100 per cent of the shares in a special purpose vehicle company (the “Target“) which is to hold an approximate 48 per cent shareholding in LNEnergy.

Beacon will acquire an initial tranche of 49% of the shares in the Target (representing an approximate 24 per cent indirect shareholding in LNEnergy) from Reabold (“First Acquisition“) at Completion (anticipated in November 2025). Beacon Energy will then acquire the balance of the shares in the Target (representing an approximately 24 per cent additional indirect shareholding in LNEnergy and, in aggregate, an approximately 48 per cent indirect interest in LNE Energy) (“Second Acquisition“) upon certain conditions being satisfied, including the project being awarded a Production Concession (anticipated in mid 2026).

On completion of the Second Acquisition, Beacon Energy will become the largest shareholder in LNEnergy. Beacon intends to use the proceeds of the Placing to finance the Colle Santo project through FID and towards first production, as well as for required working capital. It is anticipated that such funding will be provided through future subscriptions for new shares in LNEnergy.

Consideration

Under the terms of the SPA, Reabold will receive new shares in the Company equal to approximately 29 per cent of the enlarged share capital of the Company. Of the approximate 29 per cent, 14 per cent relates to Consideration Shares and 15 per cent relates to Reabold’s participation in the Placing.

In addition, Reabold will receive contingent consideration based on the future Free Cash Flow of LNEnergy (the “Earn-Out”). The Earn-Out comprises a contingent consideration in cash, calculated as 11.55 per cent of annual post-tax, post-financing cash flow of LNEnergy, subject to a cap of €16.17 million (assuming both the First Acquisition and the Second Acquisition complete).

The Consideration Shares held by Reabold on admission to AIM will be subject to both lock-in terms and a relationship agreement, full details of which will be set out in the Company’s Admission Document. 

Reverse Takeover Process

The Proposed Transaction is classified as a reverse takeover pursuant to the AIM Rules for Companies. The Company’s ordinary shares will remain suspended from trading on AIM until such time as the Proposed Transaction is completed, which is anticipated will be the second business day following the satisfaction or waiver of the final condition which the SPA is subject to.  In the event that the Proposed Transaction does not proceed, the Company’s shares will remain suspended from trading as Beacon Energy has been a cash shell on AIM for more than 6 months. Completion of the Proposed Transaction is subject to, inter alia:

·    the publication of a positive opinion by the VIA Commission related to a Colle Santo development;

·    finalisation of the Placing;

·    the publication of an AIM Admission Document; and

·    approval by Beacon Energy’s shareholders at a general meeting to be convened in due course (“General Meeting”)

The Admission Document, which will include a notice of General Meeting, is expected to be issued in due course.  

Commenting on the signing of the SPA, Beacon Energy CEO, Stewart MacDonald, said:

“This strategic investment in LNEnergy and the Colle Santo project marks a pivotal moment for Beacon Energy, aligning with our stated growth strategy of seeking opportunities to build a self-funding business to underpin organic growth while delivering significant value for our shareholders. The Colle Santo project, with its material, de-risked 2P reserves and clear path to production, is a highly attractive, value-accretive and cash-generative asset that will provide a strong foundation for future expansion.

LNEnergy and its major contractor, Italfluid, bring a proven track record in development and production operations, coupled with a strong HSE record and a firm commitment to environmentally responsible hydrocarbon production – values that are directly aligned with Beacon Energy’s own. Furthermore, this strategic investment positions Beacon Energy in a region offering significant long-term growth potential.“

I think that I have covered the advantages of the deal plenty enough above so won’t add much, but it looks like Beacon, who have been waiting patiently for a deal to come along, has found something almost oven ready. 

With the play having been de-risked to a great degree, especially after the VIA ruling, they can raise the money, unlock the remaining approvals and head for FID in mid 2026. Beacon have a very good management team and have been waiting for this deal to come along, they deserve the backing.

United Oil & Gas

United has announced details of a conditional placing and a conditional subscription to raise approx. £2.33 million (before expenses) (the “Fundraising”) through the proposed issue of a total of 1,552,532,979 of new ordinary shares of £0.00001 each (“Ordinary Share”), subject to shareholder approval at a general meeting to be convened, in the capital of the Company (the “Fundraising Shares”). The Fundraising comprises a conditional placing of 1,481,866,313 new Ordinary Shares at a price of £0.0015 per Ordinary Share (the “Issue Price”) by Tennyson and Shard, acting as joint brokers (“Tennyson” and “Shard” together the “Joint Brokers”) who conditionally raised gross proceeds of approx. £2.22 million (the “Placing”). The additional approx. £0.1 million has been raised through direct subscriptions of 70,666,666 new Ordinary Shares at the Issue Price with the Company (the “Subscription”). The Fundraising was significantly oversubscribed. As part of the Fundraising, participants will be issued one warrant (“Fundraising Warrant”) to subscribe for one new Ordinary Share for every one Fundraising Share subscribed. Each Fundraising Warrant will be exercisable at £0.00225, valid for 12 months from date of issue.

Rationale for the Fundraising

Over the past few months, United has made significant progress in advancing the Walton Morant work programme. With the licence has now extended until 31 January 2028, and both the Environmental Permit and Beach Licence secured, the Company has a clear regulatory pathway to commence the next phase of technical work including sub-surface geochemical exploration and piston coring.

Following this progress, United commissioned an independent Risking Review study to assess the potential impact of including a Surface Geochemical Exploration (SGE) piston core survey in the work programme.

The findings were highly encouraging, and the review concluded that a successful piston coring programme could:

·    Increase the Geological Chance of Success (GCoS) at the Colibri prospect from 19% to 32%,

·    Increase the GCoS at the Oriole prospect from 13% to 21%, and

·    Deliver similar uplifts across other prospects within the Walton Morant licence where thermogenic hydrocarbons are detected.

This uplift represents a step change in predrill confidence, providing both a material value trigger for shareholders and a strong platform for ongoing farmout discussions. By executing the piston core programme directly, United can accelerate technical validation ahead of any potential farmin partnership.

Use of Proceeds

The net proceeds of the Fundraising are expected to provide the Company with cash resources through 2026 and will be used to advance the Piston Coring at the Walton Morant Licence, offshore Jamaica, including:

·      Securing and mobilising a suitable vessel for the piston coring and surface geochemical survey;

·      Funding associated technical, analytical, and operational costs related to the survey

·      General and Administrative expenses

The piston coring programme represents a critical step in United’s strategy to de-risk the Walton Morant Licence and enhances its attractiveness to potential farm-in partners. Successful execution of this survey will provide direct geochemical evidence of hydrocarbon generation and migration, materially strengthening the licence’s technical and commercial position.

United Chief Executive Officer, Brian Larkin commented:

“This fundraising is pivotal moment for United and funds the company through 2026. The piston core survey has the potential to materially de-risk the Walton Morant Basin, and we are determined to deliver it.

The recently published Risking Review Study by Iapetus Geoscience Limited has demonstrated the potential for a significant project value uplift in a success case. We have a short operational window in the coming months to secure a suitable vessel and complete the work. Acting now gives us control over timing, momentum, and the opportunity to capture that value as we progress our farm-out campaign.

The independent Risking Review demonstrated that a successful survey could increase the Geological Chance of Success at Colibri to 32%, a level rarely seen in frontier exploration. That kind of validation not only strengthens our technical case but positions us far better for ongoing farm-out discussions.

This is about driving tangible value for shareholders and ensuring United remains in the strongest possible position to move Walton Morant forward.”

There isn’t much to write about UOG as I’ve done it all recently and if this raise takes them ‘through 2026’ then there won’t be anything else to write about until farm-out day…

So let the piston core survey do its worst and let it materially de-risk the Walton Morant Basin.