Energy giant Shell yesterday made a multi-million-pound acquisition which displays another vote of confidence from the company in the future of the UK North Sea.
The decision to buy Corallian Energy from Reabold Resources gives it ownership of the Victory gas discovery west of Shetland.
Shell said the move was part of its broader intent to spend £20billion to £25billion on the UK energy system in the next decade, with the aim of investing 75% in development of low and zero-carbon products and services.
A spokesman for Shell added: "We believe the UK Continental Shelf will continue to have a critical role to play in delivering secure energy supplies to the UK and developments such as the Victory field fully utilise the advantages which the North Sea's existing infrastructure offers us."
The Corallian acquisition comes just a matter of weeks after Shell decided to develop the Jackdaw gas field in the UK North Sea.
It will comprise a wellhead platform, along with subsea infrastructure which will tie back to Shell's existing Shearwater gas hub.
Jackdaw development
The project is expected to come online in the mid-2020s, and at peak production rates could represent more than 6% of projected UK North Sea gas output.
Reabold says on its website that the Victory project is a relatively simple, subsea tie-back development which has been fully appraised and requires no additional pre-development drilling.
The find is located around 50 miles off Shetland and is about 10 miles from the closest pipeline infrastructure tie-in location - the Greater Laggan Area.
Corrallian has previously said first gas from the project is anticipated in 2024
Victory has been estimated to have 179billion cubic feet of gas technically recoverable.
Reabold, which focuses on investments in upstream oil and gas projects, announced in May an offer from an unnamed party for Corallian.
Net proceeds
And, in an update last month, Reabold said the deal with the unnamed oil and gas major was worth a total gross cash consideration of £32million, with Reabold's share of net proceeds being around £12.7million.
The remaining North Sea licences currently owned by Corallian are being acquired by Reabold for £250,000.
Stephen Williams, co-chief executive of Reabold, said yesterday: "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."
Reabold's long-term strategy is to re-invest capital made through its investments into larger projects in order to grow the company.
The firm aims to gain exposure to assets with limited downside and high potential upside, capitalising on the value created between the entry stage and exit point of its projects.