REG - Seascape Energy Asia - Interim Results

Seascape Energy AsiaAnnouncement

30/09/2024 07:00

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RNS Number : 1960G  Seascape Energy Asia PLC  30 September 2024

THIS ANNOUNCEMENT DOES NOT CONTAIN INSIDE INFORMATION FOR THE PURPOSES OF
ARTICLE 7 OF REGULATION 596/2014 AS AMENDED AND TRANSPOSED INTO UK LAW IN
ACCORDANCE WITH THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR").

 

30 September 2024

 

Seascape Energy Asia plc

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

Interim Results to 30 June 2024

Seascape Energy, an E&P company focused on Southeast Asia, is pleased to
announce its unaudited interim results for the six-month period to 30 June
2024.

 

Nick Ingrassia (CEO) and James Menzies (Executive Chairman) will host a live
presentation for investors via Investor Meet Company at 11.00 BST today. A
copy of the presentation can also be found on the Company's website.

 

Investors can sign up to the presentation via:
https://www.investormeetcompany.com/longboat-energy-plc/register-investor
(https://www.investormeetcompany.com/longboat-energy-plc/register-investor) .
Investors who follow Seascape (previously Longboat Energy) on the Investor
Meet Company platform will automatically be invited.

 

Nick Ingrassia, CEO of Seascape, commented:

 

"The first half of 2024 has been a period of considerable change for the
Company culminating in a strategic pivot to refocus the business on Southeast
Asia. This transitional period is reflected in our interim results.

 

Looking forward, we are excited about the opportunity to use our competitive
advantages in the region, including an experienced team with excellent
long-term relationships, to grow and diversify our portfolio.

 

We remain focused on delivering several significant value inflection points in
the near-term as we seek to grow the business under our refreshed and
reinvigorated brand for the benefit of all our stakeholders."

Ends

 Enquiries:

 Stifel (Nomad and Joint Broker)                   Tel: +44 20 7710 7600
 Callum Stewart                                    SNELSeascape@stifel.com (mailto:SNELSeascape@stifel.com)

 Jason Grossman

 Ashton Clanfield

 Cavendish Capital Markets Limited (Joint Broker)  Tel: +44 20 7397 8900
 Neil McDonald

 Pete Lynch

 Leif Powis

Standard

Estimates of reserves and resources have been carried out in accordance with
the June 2018 SPE/WPC/AAPG/ SPEE/SEG/SPWLA/EAGE Petroleum Resources Management
System ("PRMS") as the standard for classification and reporting. A summary of
the PRMS can be downloaded
from:-https://www.spe.org/en/industry/petroleum-resources-management-system-2018/.

Review by Qualified Person

The technical information in this release has been reviewed by Dr Pierre
Eliet, EVP Corporate & Business Development, Country Chair Malaysia, who
is a qualified person for the purposes of the AIM Guidance Note for Mining,
Oil and Gas Companies. Dr Eliet is a geologist with more than 25 years'
experience in the oil and gas industry. Dr Eliet has a BA Degree in Earth
Sciences from Trinity College, Dublin and PhD in Geology from Manchester
University, UK.

Glossary

"bcf" means billion standard cubic feet

"GIIP" means Gas Initially In Place

"kboepd" means thousand barrels of oil equivalent per day

"m" means meters

"mmboe" means million barrels of oil equivalent

"mmscfd" means million standard cubic feet per day

 

 

SEASCAPE ENERGY ASIA PLC (FORMERLY LONGBOAT ENERGY PLC)

 

STRATEGIC REPORT

 

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

 
STRATEGY AND OUTLOOK

 

Following a detailed review of its areas of geographic operation during the
period, the board and management of the Company decided on 17 June 2024 to
exit Norway and focus on building a full-cycle E&P business in Southeast
Asia.  We see significantly more potential in Southeast Asia for a small
company than Norway and believe the Company's existing positioning and access
to opportunities provide excellent value-creation potential.

 

Recent structural changes to the Norwegian upstream industry have favoured an
increasingly small group of very large companies with long-term investment
horizons and access to low cost of capital. This left the Company at a
significant competitive disadvantage and, despite enormous efforts and
attempts to secure opportunities with shareholder value upside, the Company
has been unable to establish a meaningful growth platform in Norway.

 

In contrast, the Company entry into Malaysia last year coincided with a
proliferation of opportunities across Southeast Asia and a positive and
supportive attitude of the host governments towards small-and-medium sized
companies which are now viewed as crucial to maximizing value from their
maturing basins. Furthermore, this positive industry sentiment is set against
a macro backdrop of growing economies with increasing energy demands, benign
operating environments, a structurally lower cost base and an opportunity to
help reduce carbon emissions through the development of indigenous gas
resources to displace coal fired power generation.

 

The Company has competitive advantages in the region, including an experienced
team with excellent long-term relationships and networks established across
Southeast Asia. In addition, its growing portfolio already includes
sought-after acreage and operatorship of a licence in one of the most exciting
basins in the region, as well as visibility on accessing many additional
opportunities to diversify and grow materially its asset position.

 

In order to reflect this change in strategic focus, the Company has now been
renamed and rebranded as Seascape Energy Asia plc ("Seascape").

 
OPERATIONS AND ACTIVITY

 

Norway

 

As announced on 17 June 2024, the Company agreed the sale of its 50.1%
interest in Longboat JAPEX Norge AS ("LJN") to Japan Petroleum Exploration Co.
Ltd ("JAPEX") for £1.9 million ($2.5 million in cash). In addition, JAPEX
assumed all current and future financial obligations associated with LJN,
which included £13 million ($17 million) of debt, £6.5 million ($8.5
million) of which being formerly attributable to the Company.

 

This decision followed the continuing scarcity of acquisition opportunities
suitable for the Company, the disappointing performance of the Statfjord
Satellites (comprised of a 4.80% unitised interest in the Statfjord Øst Unit
and a 4.32% unitised interest in the Sygna Unit) and slow progress on
monetising the Kveikje discovery (LJN, 10%), all of which contributed to a
near-term projected working capital shortfall in LJN which could have resulted
in the Company forfeiting some or all of its shares in LJN.

 

However, the principal catalyst that led to the exit from Norway was the
working capital pressures caused by the poor performance of the Statfjord
satellites. While the Statfjord satellites infill drilling project had been
executed successfully technically, there were delays, in both the development
programme and production ramp up, and these in addition to the cost overruns
had a significant negative impact on LJN's projected working capital.

 

While this departure from Norway was not anticipated when the joint venture
was set up last year, LJN, renamed JAPEX Norge, will continue under JAPEX's
ownership as a full-cycle business with an exceptional team, providing an
excellent platform for a large company with access to significant low-cost
capital to build long-term success on the Norwegian Continental Shelf.

 

Southeast Asia

 

The Company entered Malaysia in the Malaysian Bid Round 2022 by winning
operatorship of a Production Sharing Agreement for Block 2A (the Company
36.75% (subsequently increased to 52.5% following the Topaz acquisition,
completed in December 2023)). This deep-water exploration block, offshore
Sarawak, covers an area of more than 12,000 km(2) and contains material
exploration opportunities with an associated low initial cost obligation with
up to three years until a drill decision.

 

Block 2A contains the giant Kertang prospect and the Company commissioned ERCE
to undertake a competent persons report ("CPR") to confirm the potential size
and risk associated with Kertang, believed to be one of the largest undrilled
structures in Malaysia. The CPR, which was completed in June 2024, confirmed
the giant scale of the Kertang prospect assigning total gross, unrisked mean
prospective resources of 9.1 TCF plus 146 mmbbls of Natural Gas Liquids
("NGLs") across the four target horizons.

 

Following recent increased interest levels in exploration for world-scale
fields, multiple large companies have approached the Company regarding Block
2A. Having consulted with PETRONAS, the Company has commenced a farm-out
process to identify a suitable partner.

 

In addition, an Area of Mutual Interest ("AMI") in Shallow Water Sarawak was
signed at the end of 2023, between the Company and another international
E&P company active in Malaysia, to pursue discovered resource
opportunities ("DROs") being offered by PETRONAS. In June 2024, the Company
announced that it had provisionally been granted an award, subject to the
successful negotiation of certain key contractual terms, for acreage in
shallow water offshore Sarawak containing several material, undeveloped gas
fields capable of near-term development. These resources are an important
addition to the Company's growing Asian portfolio and it is expected that an
announcement giving details of this award will be made shortly.

 

Cost Base

 

The strategic pivot to Southeast Asia has given the Company the opportunity to
streamline and reduce its cost base. These actions include reducing the
management team and board of directors to ensure both remain fit-for-purpose
without compromising management's ability to properly govern the day-to-day
operation of the business.

 

The operational cost reduction measures taken will not be visible until the
second half of 2024 but will result in annual savings of ~$2 million from the
start of 2025. These savings, together with the cash proceeds from the LJN
sale, are forecast to provide sufficient capital through to the end of Q1
2025.

 

With its smaller organisation after exiting Norway, the Company will continue
to ensure its cost base remains streamlined to maximise the capital directed
towards value-accretive growth opportunities.

 

Financial Results

 

At 30 June 2024 the Group had net cash reserves totalling £1.3 million (1H
2023: £2.1 million) excluding £1.9 million in cash that was received
post-period end following the completion of the sale of its 50.1% interest in
LJN to JAPEX.

 

Exploration and evaluation assets of £676k (1H 2023: £nil) represented
capitalised expenditures incurred on Block 2A in Malaysia and were deemed
fully recoverable at the balance sheet date.

 

Net assets with respect to LJN totalled £1.9 million (1H 2023: £11.1
million) following the impairment of the carrying value on disposal as noted
below. Included within net assets were £308k (June 2023: £nil) of amounts
due to the Group from LJN.

 

On 14 June 2024, the Company sold its 50.1% interest in its Norwegian
subsidiary LJN to JAPEX. The transaction completed on 12 July 2024, however,
as the key condition precedent was met on 26 June 2024 (Government consent),
all of the losses with respect to the joint venture sale have been recognised
in discontinued operations during the period, including writing the investment
carrying value down to its deemed fair value, the carrying value of £8.7
million exceeded the recoverable amount of £1.9 million, leading to an
impairment charge of £6.8 million (2023: £nil).

 

During the period, the Group recognised other income of £719k (2023: £nil)
with respect to management service charges to LJN, and time writing to the 2A
Operatorship.

 

Administrative costs for the period totalled £3.5 million (2023: £2.0
million) with the increase primarily related to the cost of a new venture
opportunity which failed to transact of £900k (2023: £nil) and increased
wages and salaries during the period of £1.4 million (2023: £700k) with
respect to the new Malaysia team in 2024 along with certain head office
restructuring costs.

The total loss for the period was £12.5 million (2023: £6.2 million) and
comprised £2.7 million (2023: £2.0 million) from continuing operations and
£9.8 million (2023: £4.1 million) from discontinued operations.

 

The total loss on discontinued operations of £9.8 million (2023: £4.1
million), comprised the Group share of

 

loss from the equity accounted joint venture of £3.0 million (2023: £4.1
million) and the impairment charge on the LJN investment of £6.8 million
(2023: £nil). The Group's share of the loss that related to the impairment of
the Statfjord Satellites licences was £2.0 million and is included within the
loss from the equity accounted joint venture of £3.0 million.

 

The total comprehensive loss for the period included currency translation
differences that were taken directly to reserves of £0.8 million (2023: £1.7
million) and totalled £13.4 million (2023: £7.9 million).

 

Going concern

 

The directors have completed the going concern assessment, including
considering cash flow forecasts up to the end of 2026, sensitivities, and
stress tests to assess whether the Company and its subsidiaries ("Group") are
a going concern. Having undertaken careful enquiry, the directors are of the
view that the Group will need to access additional funds during 2025 in order
to fund on-going operations and pursue growth opportunities. This is in line
with the Company's current activities of exploring, maturing its discoveries
and seeking acquisitions. In the absence of such funding, the Group is
forecasted to have limited or no liquidity by the end Q1 2025. It is
anticipated that these funds will be sourced through asset disposals / farm
downs, issuing new equity or a combination of these actions. To the extent
that growth opportunities will support debt, this will be considered where
appropriate for example to support production acquisitions.

 

The financial statements for the period to 30 June 2024 have been prepared
assuming the Group will continue as a going concern. In support of this, the
directors believe the liquid nature of asset market combined with historical
shareholder support, adequate funds can be accessed if and when required.
However, the ability to continue as a going concern is not guaranteed at the
date of signing these financial statements. As a consequence, this funding
requirement represents a material uncertainty that may cast significant doubt
on the Group's ability to continue as a going concern. The financial
statements do not include any adjustments that would result from the basis of
preparation being inappropriate.

 

 

 

 

On behalf of the board

 

 

 

NA Ingrassia

 

 

…………………………………………..

Nicholas Andrew Ingrassia

Director

 

30 September 2024

 

 

DIRECTORS RESPONSIBILITY STATEMENT

 

The directors are responsible for preparing the interim report in accordance
with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each
financial year. Under the AIM Rules for Companies of the London Stock Exchange
they are required to prepare the financial statements in accordance with UK
adopted international accounting standards.

 

Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and of the profit or loss of the Group for that period.
The directors are also required to prepare financial statements in accordance
with the rules of the London Stock Exchange for companies trading securities
on AIM.

 

In preparing these financial statements, the directors are required to:

 

·      select suitable accounting policies and then apply them
consistently;

·      make judgements and estimates that are reasonable, relevant and
reliable;

·      state whether they have been prepared in accordance with UK
adopted international accounting standards; and

·      prepare the financial statements on the going concern basis
unless it is inappropriate to presume that  the Company will continue in
business.

 

The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006.  They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.

 

Website publication

 

The directors are responsible for ensuring the annual and interim reports and
financial statements are made available on a website. Financial statements are
published on the company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the company's website is the responsibility of
the directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

 

 

 

*Restatement of the prior period is explained in detail in note 20.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

AS AT 30 JUNE 2024

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

 

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21    Events after the reporting date

 

 

On 15 July 2024, the Company completed the sale of its interest 50.1% interest
in LJN to JAPEX for cash consideration of £1.9 million ($2.5 million).

 

On 17 September 2024, the Company changed its name from Longboat Energy plc to
Seascape Energy Asia plc.

 

 

 22    Other information

     A copy of this interim report and financial statements is available on the
     Company's website www.seascape-energy.com (http://www.seascape-energy.com) .

 

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