LONDON (ShareCast) - (Sharecast News) - Oil and gas investor Reabold Resources announced its intention to enhance its stake in LNEnergy by 0.8% on Friday.
The AIM-traded firm said the move was being made through a partial exercise of the second option, involving the subscription of 11 new ordinary shares in LNEnergy's capital for £0.15m in cash.

Reabold said it would finance it through its existing cash resources, with the transaction resulting in it holding 18.4% of LNEnergy's expanded share capital.

Furthermore, Reabold said it retained the discretionary right to invest an additional £1.65m under the second option, as announced on 9 May and 12 September.

The option would increase Reabold's interest in LNEnergy's enlarged share capital to 26.1% if exercised.

LNEnergy's primary asset is an exclusive option for a 90% interest in the Colle Santo gas field.

The field is a significant resource, boasting an estimated 65 billion cubic feet of 2P reserves.

It already has two production wells that have been drilled and flow-tested, positioning the field for development.

LNEnergy saw the potential to generate €11m to €12m in gross post-tax free cash flow annually from the field.

The cash proceeds generated from the partial exercise would be channelled towards accelerating the work program at the Colle Santo gas project.

"We are delighted once again to be able to further increase our interest in LNEnergy, and therefore our exposure to the Colle Santo gas project," said co-chief executive officer Sachin Oza.

"Colle Santo holds significant gas reserves and can be a valuable source of domestic energy supply for Italy.

"We are pleased with the progress that has been made so far, including the recent letter of intent signed between LNEnergy and the Italian EPC company to provide vendor financing for the project, thereby substantially reducing the upfront capex for the development."

At 1113 GMT, shares in Reabold Resources were flat at 0.1175p.

Reporting by Josh White for Sharecast.com.

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