Longboat Energy, the full cycle emerging E&P business, announces its results for the 12 months ended 31 December 2023.
Highlights
Corporate Activity
- Transformational transaction in Norway to form joint venture with JAPEX (July 2023):
- Japan Petroleum Exploration Co., Ltd (JAPEX) acquired a 49.9% interest in the Company's Norwegian subsidiary to create a new joint venture company Longboat JAPEX Norge AS ("Longboat JAPEX")
- JAPEX made a total equity investment of US$20 million in two tranches, US$16 million in 2023 and US$ 4million post the period end
- In addition, JAPEX has provided a five-year, US$100 million Acquisition Finance Facility to finance acquisitions and associated development costs
- Acquired SE Asian management team and assets (September 2023):
- Longboat acquired Topaz Number One Limited, increasing its working interest in the Production Sharing Contract over Block 2A offshore Sarawak, Malaysia to 52.5% and simplifying the process to farm-down the high impact exploration block ahead of a drilling commitment
- Topaz team of James Menzies and Pierre Eliet joined the Company bringing extensive expertise and an established network in SE Asia
Operations Summary (including post-period events)
- First production acquisition of the Statfjord satellites, by Longboat JAPEX, was completed (in January 2024):
- Demonstrates the ability of the Longboat JAPEX joint venture to access and transact opportunities
- By end-March 2024, initial production of c. 300 boepd net to Longboat JAPEX had doubled to c. 600, following the completion of drilling and gas-lift installation on three of the five new Statfjord Øst wells brought on stream since the acquisition
- The remaining two new wells require some minor work which is expected to be completed in the coming months
- While the Statfjord satellites infill drilling project was successfully executed technically, there have been delays, in both the development programme and production ramp up, and cost overruns which together have had a significant negative impact on the joint venture's projected working capital. After the period end, Longboat JAPEX drew down US$17 million on the Acquisition Finance Facility to fund the Statfjord satellites acquisition and provide additional working capital
- Exploration well drilled in Norway on the Velocette prospect (Longboat JAPEX 20%) discovered subcommercial quantities of gas.
- Kveikje Area:
- In a prolific area North West of the Troll field, Longboat JAPEX has established a portfolio of assets including the Kveikje discovery and the Kjøttkake/Lotus licence(awarded in January 2023)
- Kveikje, contains 3.5-6 million boe (2C-3C) net to Longboat JAPEX, the operator Equinor is maturing plans for a multi-field cluster development
- Kjøttkake/Lotus has gross mean prospective resources of 27 mmboe with an upside of 44 mmboe and a chance of success is 56% (Company APA application) The well will be drilled using the semi-submersible Deepsea Yantai and is expected to spud in Q3 2024
- In December, Longboat JAPEX announced a 2:1 farm down for a full carry on the dry hole costs of Kjøttkake/Lotus, reducing its interest in the well to 15%, which completed in 2024
- The Company entered Malaysia in the Malaysian Bid Round 2022 by winning operatorship of a Production Sharing Agreement for Block 2A (Longboat 36.75% (subsequently increased to 52.5% following Topaz acquisition)):
- Exploration block offshore Sarawak in deep water covering an area of more than 12,000 km2 with material exploration opportunities
- Low initial cost obligation and with up to three years until a drill decision
Financial Summary
- Cash balance of £3.7 million as at 31 December 2023 (31 December 2022: £12.1 million) with no consolidated exploration finance facility (EFF) borrowings due to the balances of Longboat JAPEX no longer forming part of the consolidated balance sheet
- The continuing operations loss after taxation for the period, excluding other comprehensive income, was £9.3 million (2022: £2.6 million), with a profit on discontinued operations being £5.1 million (2022: loss of 12.9 million) resulting in a loss for the period of £4.2 million
Cost cutting
In light of and pending the successful execution of the Company's twin jurisdiction M&A and operational strategy, there is limited ability to make a material reduction in general and administrative expenditure in the immediate future. However, the Company is mindful of the need to reduce costs to the extent possible, and the Company is reviewing where savings can be made
Board Rotation
Brent Cheshire and Jorunn Saetre have confirmed their intention to stand down from the board as Non-Executive Directors and will not put themselves forward for re-election at the forthcoming Annual General Meeting. Brent and Jorunn have been with the Company since its inception and have provided strong guidance and challenge at all times and will be very much missed. We thank them for all of their hard work over the period. The Company has no immediate plans to replace the Non-Executive Directors that are standing down
Outlook
- The Company's strategy remains unchanged, to build Longboat into a full-cycle E&P company with Norway remaining the core area, with a focus on SE Asia
- The Company is actively pursuing opportunities in Norway to deliver material production volumes, primarily on a bilateral basis but is also actively participating in sales proceeses. Longboat will make use of the Acquisition Financing Facility provided by JAPEX which puts Longboat JAPEX in a much stronger position in these processes
- The Lotus exploration well, where Longboat has a 15% retained and fully carried interest, is expected to spud in Q3. The well will be targeting analogous injectite sands to the sand encountered in Kveikje.
Helge Hammer, Chief Executive Officer of Longboat Energy, commented:
'In 2023, Longboat made a transformational transaction with JAPEX to create a new joint venture in Norway. The JV is now in prime position to pursue opportunities and deliver on our plans to grow production and reserves in high quality assets in Norway.
Longboat also made further inroads into the Southeast Asian region, increasing our working interest in Block2A in Malysia, and welcoming James Menzies and Pierre Eliet to the team - both of whom have extensive experience and established networks in the region.
Our strategy remains unchanged and in 2024, we seek to build cashflow generating E&P portfolios in both Norway and Southeast Asia with the full confidence that we will deliver considerable growth and create substantial shareholder value.'
Source: Longboat Energy
