REG - Longboat Energy PLC - Acquisition of initial production assets in Norway

Longboat EnergyAnnouncement

03/07/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230703:nRSC6555Ea&default-theme=true

RNS Number : 6555E  Longboat Energy PLC  03 July 2023

3 July 2023

Longboat Energy plc

("Longboat Energy", the "Company" or "Longboat")

 

Acquisition of initial production assets in Norway

 

Longboat Energy, an emerging full-cycle E&P company with activities in
Norway and Malaysia, is pleased to announce the acquisition of a 4.80%
unitised interest in the Statfjord Øst Unit and a 4.32% unitised interest in
the Sygna Unit (together, the "Statfjord Satellites") located on the Norwegian
Continental Shelf ("NCS"), through its subsidiary Longboat Energy Norge AS
("Longboat Norge"), from INPEX Idemitsu Norge AS ("INPEX Idemitsu"). Longboat
Norge will shortly become a joint venture between Longboat Energy and Japan
Petroleum Exploration Co., Ltd ("JAPEX") on completion of the investment into
Longboat Norge by JAPEX announced on 2 May 2023.

 

The acquisition represents Longboat's first producing assets.

 

Transaction highlights:

 

·    Acquisition of long-term cash flow, fields expected to produce until
late 2030s

·    Production of ~300 boepd net to Longboat Norge (based on NPD figures
to 30 April 2023)

·    Production anticipated to approximately double in 2024 following a
five well in-fill drilling programme, which is currently underway, and
gas-lift installation which is complete

·    Acquisition price equivalent of US$8.2/2P boe, in-line with recent
NCS transactions

·    Audited 2P reserves of 1.55 mmboe net to Longboat Norge, of which
approximately 77% is oil and NGLs

·    Cash consideration of $12.75 million

·    Anticipated payback on the transaction in under two years

·    Consideration to be fully funded by JAPEX's investment in Longboat
Norge

 

The Company will make a short presentation on this acquisition via the
Investor Meet Company platform. The online presentation will take place at
11:00 am on Wednesday, 5 July 2023 and is open to all existing and potential
shareholders. Those who wish to attend the online presentation should register
in advance via this link:
https://www.investormeetcompany.com/longboat-energy-plc/register-investor
(https://www.investormeetcompany.com/longboat-energy-plc/register-investor)

 

A copy of the presentation is available on the Company's website
(www.longboatenergy.com).

Helge Hammer, Chief Executive of Longboat, commented:

"We are pleased to announce our first production acquisition in Norway, the
next step in realising our growth ambitions on the Norwegian Continental
Shelf. The Statfjord Satellites are two high-quality, long-life assets
undergoing an exciting and transformative redevelopment led by Equinor.

Longboat's ability to secure this acquisition through a bilateral negotiation
continues to demonstrate the Company's deep relationships in Norway and is an
important next step in creating a full cycle E&P company.

We would also like to thank our new joint venture partner, JAPEX, with whom we
have worked in close cooperation to execute this important transaction. The
Statfjord Satellites help position the enlarged business for future success
and proves the benefits of joint venture concept."

 

Transaction detail

Longboat Norge has signed a sale and purchase agreement ("SPA") with INPEX
Idemitsu to acquire a 9.60% interest in PL 089, equating to a 4.80% unitised
interest in the Statfjord Øst Unit and a 4.32% unitised interest in the Sygna
Unit, for cash consideration of US$12.75 million (the "Transaction"). In
addition, Longboat Norge has entered into a decommissioning security agreement
with INPEX Idemitsu and will pay a further deferred, post-tax consideration of
US$1.75 million in equal stages over the next 18 months, which will be
returned to Longboat Norge after the successful decommissioning of the
Statfjord Satellites, currently anticipated in the late 2030s. The Transaction
effective date is 1 January 2023.

 

In addition to the customary regulatory, lender and partner approvals, the
Transaction is subject to the successful carve-out of Statfjord Øst and Sygna
from PL 089 and the completion of the investment by JAPEX in Longboat Norge,
announced on 2 May 2023. Completion of the acquisition of the Statfjord
Satellites is anticipated prior to the end of 2023.

Assets overview

Statfjord Øst is located seven kilometres to the northeast of the Statfjord
field in a maximum water depth of 190 metres. Statfjord Øst produces oil and
gas from good quality, Middle Jurassic sandstone in the Brent Group.

Statfjord Øst began production in 1994 from two subsea production templates
and one water injection template tied-back to the Statfjord C platform. The
Ministry of Petroleum and Energy approved a redevelopment plan in 2021 to
drill five new production wells into potentially undrained areas of the field
while also adding gas-lift to increase production levels. This in-fill
drilling programme is currently underway and anticipated to last until the end
of 2023 and result in a material uplift to production in 2024. The field is
currently anticipated to produce until the late 2030s.

In the period to 30 April 2023, Statfjord Øst had gross production of ~5,200
boepd from one well, equivalent to ~250 boepd net to the acquired INPEX
Idemitsu working interest.

The Statfjord Øst Unit partners are Equinor Energy AS (43.25%, op), Petoro AS
(30.00%), Vår Energi ASA (20.55%), INPEX Idemitsu Norge AS (4.80%) and
Wintershall Dea Norge AS (1.40%).

The Sygna field is located just northeast of the Statfjord Nord field in 300
metres water depth. Sygna produces oil and gas from good quality, Middle
Jurassic sandstone in the Brent Group. Originally discovered in 1996, the
field began production in 2000 from three production wells tied-back via a
subsea template to the Statfjord C facility. A long-reach water injection well
was also drilled from the Statfjord Nord template. The field is currently
anticipated to produce until the early 2030s.

In the period to 30 April 2023, Sygna had gross production of ~1,300 boepd
from one well, equivalent to ~60 boepd net to the acquired INPEX Idemitsu
working interest.

The Sygna Unit partners are Equinor Energy AS (43.425%, op), Petoro AS
(30.00%), Vår Energi ASA (20.995%), INPEX Idemitsu Norge AS (4.32%) and
Wintershall Dea Norge AS (1.26%).

Reserves and production

In conjunction with the Transaction, Longboat commissioned ERCE ("ERCE") to
produce an independent, competent persons report ("CPR") in relation to the
Statfjord Satellites, a summary is provided below:

The ERCE CPR values Longboat Norge's net entitlement 2P reserves in the
Statfjord Satellites at NPV10 of US$15.3 million, based on a long-term Brent
oil price assumption of US$75.7/bbl (real 2023) and an NBP gas price of 108.4
p/therm. A full copy of the CPR can be found on Longboat's website
(www.longboatenergy.com (http://www.longboatenergy.com) ).

Longboat anticipates the full year 2023 production to be in-line with the
levels during the first four months of the year. Production is anticipated to
approximately double in 2024 following the completion of the in-fill drilling
programme, subject to ultimate well deliverability and success of the gas-lift
project. It is Longboat's intention to provide a more detailed update on 2024
production outlook towards the end of 2023 once the drilling programme is
substantially complete.

Profits

For the year ended 31 December 2022, Longboat has estimated the profits to the
Company associated with the Transaction to be £5.6 million. Going forward,
the Transaction is expected to unlock material tax synergies within Longboat
Norge associated with historic corporation tax losses which ceased to be
refunded by the Norwegian government following tax changes implemented in
2022. Based on Longboat Norge's internal estimates, at current commodity price
levels the Transaction is anticipated to reach payback in under two years.

Financing

The Transaction and subsequent capital expenditures on the Statfjord
Satellites will be funded by a combination of existing cash on hand in
Longboat Norge and the pending investment by JAPEX, made up of the initial
US$16 million base investment (less repayment of the intercompany loan to
Longboat of approximately US$4.75 million) and the additional US$4 million
contingent payment previously agreed with JAPEX which will be triggered by the
Transaction. A portion of the US$100 million Acquisition Bridge Facility,
provided by JAPEX in relation to its investment into Longboat Norge, is also
available should it be needed.

The information contained within this announcement is considered to be inside
information prior to its release.

 

 Enquiries:
 Longboat Energy                                  via FTI
 Helge Hammer, Chief Executive Officer
 Jon Cooper, Chief Financial Officer

 Nick Ingrassia, Corporate Development Director

 Stifel (Nomad)                                   Tel: +44 20 7710 7600
 Callum Stewart

 Jason Grossman

 Ashton Clanfield

Cenkos Securities plc (Joint Broker)
 
         Tel: +44 20 7397 8900

Neil McDonald

Pete Lynch

Leif Powis

 

 FTI Consulting (PR adviser)  Tel: +44 20 3727 1000
 Ben Brewerton                longboatenergy@fticonsulting.com (mailto:longboatenergy@fticonsulting.com)

 Rosie Corbett

 

Background

 

Longboat Energy was established at the end of 2019 to create a full-cycle
E&P company through value accretive M&A and near-field exploration.
Since June 2021, Longboat has entered a series of four transactions to acquire
interests in a portfolio of nine, gas-weighted exploration wells drilling on
the Norwegian Continental Shelf close to existing infrastructure. To date,
eight of these wells have been drilled resulting in five hydrocarbon
discoveries, representing a technical 63% success rate.

 

In February 2023, Longboat entered Malaysia through the award of a Production
Sharing Contract for Block 2A, offshore Sarawak. Block 2A covers approx.
12,000km(2) and is located in water depths of between 100-1,400 metres where a
number of large prospects across multiple plays have been identified, with
significant volume potential representing multiple trillions of cubic feet of
gas.

 

In May 2023, the Company announced that agreement had been reached with Japan
Petroleum Exploration Co., Ltd ("JAPEX") to make a significant investment into
its Norwegian subsidiary, Longboat Energy Norge AS ("Longboat Norge"), to form
a joint venture.  Under this agreement, JAPEX will make a cash investment of
up to US$50 million for 49.9% of Longboat Norge and provide the Joint Venture
with a US$100 million Acquisition Financing Facility to finance acquisitions
and associated development costs.

 

Longboat's activities remain focused on creating a portfolio with a clear
low-cost route to monetisation and low-carbon drilling and development
opportunities, well aligned to Longboat's ESG targets which includes a
corporate 'Net Zero' on a Scope 1 and 2 basis by 2050.

Standard

Estimates of reserves and resources have been prepared in accordance with the
June 2018 Petroleum Resources Management System ("PRMS") as the standard for
classification and reporting with an effective date of 31 December 2022.

Review by Qualified Person

The technical information in this release has been reviewed by Hilde Salthe
(Managing Director Longboat Energy Norge AS), who is a qualified person for
the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Ms
Salthe is a petroleum geologist with more than 20 years' experience in the oil
and gas industry. Ms Salthe has a Master's Degree from Faculty of Applied
Earth Sciences at the Norwegian University of Science and Technology in
Trondheim.

Glossary

 "1P"      Proved reserves

 "2P"      Proved plus probable reserves

 "3P"      Proved plus probable plus possible reserves

 "boe"     Barrels of oil equivalent

 "boepd"   Barrels of oil equivalent per day

 "Bscf"    Billion standard cubic feet

 "mmboe"   Million barrels of oil equivalent
 "NBP"     National Balancing Point

 "NCS"     Norwegian Continental Shelf

 "NPV10"   Net present value at a 10% discount rate
 "scf"     Standard cubic feet
 "stb"     Stock tank barrels

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQEAEXAESFDEAA