TIDMLBE
RNS Number : 5271M
Longboat Energy PLC
22 September 2021
Longboat Energy plc
("Longboat Energy", the "Company" or "Longboat")
Interim Results to 30 June 2021
London, 22 September 2021 - Longboat Energy, the emerging
full-cycle North Sea E&P company with a portfolio of
significant, near-term, low-risk exploration assets, is pleased to
announce its unaudited interim results for the period to 30 June
2021.
Highlights
-- Secured three bilateral transactions to acquire a significant,
near-term, low-risk exploration drilling programme on the Norwegian
Continental Shelf ("NCS")
-- Seven firm wells drilling over the next 18 months
-- Net mean resource potential of 104 mmboe(1)
-- Total net upside case potential of 324 mmboe(1)
-- Completed GBP35 million equity raise and NOK 600 million (GBP50
million) Exploration Finance Facility
-- Fully funded through the seven well drilling programme(2)
-- Qualified as licence holder on the NCS
-- One of only 38 companies qualified on the NCS (versus >130
on the UKCS)
-- New status removes transaction hurdles, positioning Longboat
for further value accretive M&A
Operations
-- Drilling has already commenced on two exploration wells: Rødhette
(Longboat 20%) and Egyptian Vulture (Longboat 15%)
-- Mugnetind (Longboat 20%), expected to commence drilling by the
end of September
-- Drilling at Ginny/Hermine (Longboat 9%) expected to commence
in December
-- Rig confirmed for Kveikje (Longboat 10%) and Cambozola (Longboat
25%) wells, to be drilled in 2022
-- Copernicus well site survey to be acquired shortly, to facilitate
2022 drilling, following well commitment decision
Financial Summary
-- Cash reserves of GBP38.7 million (31 Dec-20 GBP7.0 million)
with no debt at period end
-- 2020 tax refund received of GBP0.7 million
-- Loss for the period GBP0.9 million
Helge Hammer, Chief Executive Officer of Longboat Energy,
commented:
" I am pleased that we are already under way with exploration
drilling so soon after the completion of our first transactions
last month. We expect to be drilling three wells over the next few
weeks with the Rødhette and Egyptian Vulture wells already under
way and Mugnetind expected to spud shortly, in an extremely busy
and exciting time for the Company. Drill results from these first
three wells are expected before the end of the year and have the
potential to create significant shareholder value.
"The exploration programme over the next 18 months offers
shareholders a unique opportunity to gain exposure to a drilling
portfolio of seven wells targeting net mean prospective resource
potential of 104 mmboe(1) with an additional 220 mmboe(1) of upside
which provides the potential to create a Net Asset Value of over $1
billion based on precedent transactions in the Norwegian North Sea
for development assets."
This announcement does not contain
inside information
Enquiries:
Longboat Energy via FTI
Helge Hammer, Chief Executive Officer
Jon Cooper, Chief Financial Officer
Stifel (Nomad) Tel: +44 20 7710 7600
Callum Stewart
Jason Grossman
Simon Mensley
Ashton Clanfield
FTI Consulting (PR adviser) Tel: +44 20 3727 1000
Ben Brewerton
Ntobeko Chidavaenzi longboatenergy@fticonsulting.com
Notes :
1 ERC Equipoise estimates, using a conversion factor of 5,600
scf/stb
2 Under both existing and proposed Norwegian tax legislation,
the latter assuming that the Exploration Finance Facility is
amended as described in the interim report below
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 2020.
Review by Qualified Person
The technical information in this release has been reviewed by
Helge Hammer, Chief Executive Officer, who is a qualified person
for the purposes of the AIM Guidance Note for Mining, Oil and Gas
Companies. Mr Hammer is a petroleum engineer with more than 30
years' experience in the oil and gas industry. He holds a degree in
Petroleum Engineering from NTH University in Trondheim and an MSc
in Economics from the Institut Français du Pétrole in Paris.
Glossary
mmboe Millions of barrels of oil equivalent
scf Standard cubic feet
stb Stock tank barrel
CEO Introductory Statement
I am delighted that the groundwork that Longboat put in during the
period of subdued industry activity in 2020 has paid-off. In June,
the Company announced three bilaterally negotiated farm-in transactions,
which combined represent an attractive initial portfolio of seven
material, near-term, exploration wells on the Norwegian Continental
Shelf ("NCS"). Together with the substantial equity and debt financing
in support of the transactions, Longboat is poised for an active
and exciting period ahead.
Sourced through our excellent industry relationships, the vendors
of these exploration interests, Equinor, Spirit and Idemitsu, are
all leading NCS participants. Equinor, a vendor in seven out of
the eight licences, is the largest operator in Norway and has an
industry leading exploration track record. All the vendors are retaining
stakes in all-but-one of the licences, which clearly demonstrates
that the key driver for the deals were capital allocation and not
lack of attractiveness of the drilling opportunities.
By building the initial portfolio through the three farm-in transactions,
we have taken years off the timetable, compared to building the
portfolio organically through licensing rounds, and hence are delivering
firm wells in a short timeframe and reducing risk for the Company
and its shareholders.
The farm-ins provide the Company with a bespoke, material, near-term
drilling programme, including seven wells over the next 18 months
with further appraisal drilling likely on success. The prospects
are gas weighted and are all located in tie-back distance to existing
infrastructure, with an overlap between exploration partners and
infrastructure owners, providing a portfolio with a clear low-cost
route to monetisation and the potential for developments which can
contribute positively to decarbonisations, well aligned to Longboat
Energy's ESG targets.
Exploration continues to be a key value driver on the NCS, with
Norway enjoying record geological exploration success rates at c.
50% so far in in 2021. Furthermore, the Norwegian Petroleum Directorate
reports nearly US$200 billion of value creation since 2000 with
an average return on investment of 2.5 times since 2010. The Norwegian
tax regime remains supportive despite recently proposed changes
with significant tax rebates under the temporary tax regime introduced
in 2020, and the buyer pool for discoveries in Norway continues
to be strong with approximately US$1.4 billion of discovery transactions
since 2018 and an average transaction value exceeding US$4/boe.
Longboat Energy is committed to delivering energy responsibly and
strongly supports the energy transition, whilst acknowledging the
place that hydrocarbon exploration and production will continue
to have in the global markets for the foreseeable future. As part
of the Company's sustainability strategy, Longboat Energy has undertaken
to be corporate 'Net Zero' on a Scope 1 and 2 basis by 2050, with
exploration success near existing infrastructure being crucial to
reducing carbon intensity in order maximise the use of existing
facilities and pipelines. The farm-ins are well aligned to these
principles given their proximity to existing infrastructure, nature
of the licences and gas weighted resource base and the commitment
to decarbonisation on the NCS evidenced through multiple initiatives
underway, including power-from-shore, power from offshore windmills
and carbon capture and storage projects.
The Company believes that the completed farm-ins have launched Longboat
Energy as an exciting and unique new North Sea oil and gas company,
with the initially acquired assets providing a material and attractively
located licence package, significant upside potential, in a favourable
fiscal environment for exploration in Norway, and a well-managed
and balanced risk profile.
Directors Statement
The Directors are pleased to present to shareholders the interim
report and financial statements of Longboat Energy plc for the six-month
period ended 30 June 2021.
On 9 June 2021, the Company announced that it had executed farm-in
agreements, subject to certain conditions precedent, with Equinor
Energy AS and Spirit Energy Norway AS with a third transaction with
Idemitsu Petroleum Norge AS announced on 10 June 2021. The three
transactions closed on 31 August 2021 post the period end. To finance
these farm-ins the Company also announced that it had successfully
raised gross proceeds of GBP35 million by means of a share placing
and subscription of 46,666,666 new ordinary shares at a price of
75 pence each on 24 June 2021. In addition, as part of the financing
of the farm-ins, Longboat also entered into a NOK 600 million (GBP50
million) Exploration Finance Facility or EFF with SpareBank 1 SR-Bank
ASA and ING Bank N.V.
Together, the share placing and EFF enable Longboat to pursue a
significant, near-term, low-risk exploration drilling programme
on the NCS across seven wells targeting net mean prospective resource
potential of 104 MMboe (1) and an additional 220 MMboe (1) of upside
and follow-on prospectivity. The cost of the carry element of the
farm-ins is fully eligible for the Norwegian tax refund system reducing
the net cost to the Company to $7.8 million on a post-tax basis
($35 million pre-tax), however noting that a new tax was recently
proposed by the Norwegian Government where the exploration tax refund
could be replaced by a more general tax refund arrangement.
Net mean prospective resources across the licences have been estimated
by ERC Equipoise at 104 MMboe (1) with total upside potential of
324 MMboe(1) . The Company has created a portfolio with an attractive
risk and reward balance, with the chance of success for each well
in the 22 to 55 per cent range for all-but-one high-impact prospect.
All mean volumes for the Target Assets are estimated to be in excess
of Minimum Economic Field sizes, as calculated by Longboat Energy.
The Company has created a bespoke and well-balanced portfolio of
opportunities, with working interest positions ranging from 9 to
25 per cent., and prospect risk levels generally considered low
to medium for exploration wells, with the exception of the Cambozola
well, and a diverse range of resource size and upside potential
across the assets. Under the current attractive Norwegian fiscal
regime for explorers, the Company is eligible for a 78 per cent.
tax rebate on exploration spending. The expected average pre-tax
dry hole cost per well is approximately US$6 million. In the case
of success, additional costs would be expected for further formation
evaluation testing in the order of US$1 to 2 million per well, with
additional optional geological side-tracks or well tests which could
add a further US$3 to 6 million per well. The Company is currently
undertaking a review of the proposed changes to the Norwegian fiscal
regime, more detail of which can be found below. As drafted, the
changes are not anticipated to have a material impact on the post-tax
well cost.
Four of the committed wells are either in the course of drilling
or are about to commence as follows:
Rodhette Exploration Well: the drilling of the Rodhette prospect
(Company 20%), operated by Var, commenced on 13 September 2021 using
the deep water Scarabeo 8 semi-submersible drilling rig. This is
a proven Jurassic Play in the Hammerfest Basin with a potential
30km tie-back distance to the Goliat Field for early potential monetisation.
The Rodhette prospect is estimated to contain gross mean prospective
resources of 41mmboe (1) with further potential upside to bring
the total to 81 MMboe(1) . The geological chance of success associated
with this prospect is 41%(1) with the key risk being related to
fault seal and oil column thickness.
Egyptian Vulture Exploration Well: the Egyptian Vulture well (Company
15%) well operations, operated by Equinor, commenced on 20 September
using the West Hercules semi-submersible drilling rig. The well
is targeting gross mean prospective resources of 103mmboe(1) with
further potential upside to bring the total to 208 MMboe(1) . The
Geological Chance of Success associated with this prospect is 25%
(1) with the key risk being related to reservoir quality/thickness.
The well is expected to take up to four weeks to drill with a pre-carry
net cost to Longboat of c.$5 million (c.$1m post tax). Upon success,
there is the potential to provide low-CO(2) blending gas to the
nearby Equinor operated infrastructure (Åsgard) allowing for
the possibility of rapid monetisation.
Mugnetind Exploration Well: the drilling of the Mugnetind prospect
(Company 20%) is scheduled to commence in September using the Maersk
Integrator jack-up drilling rig. The Mugnetind prospect is located
in licence PL906, which lies in the Central Graben area, 11 km to
the west of the Ula Field. The prospect is up-dip from Well 7/11-6
which is a dry well with shows in the Ula Formation and is defined
as a four-way dip closure with a structural component towards the
north where there is fault seal. The Munetind prospect is estimated
to contain gross mean prospective resources of 24mmboe(1) with further
potential upside to bring the total to 47mmboe(1) . The geological
chance of success associated with the Mugnetind prospect is 51%(1)
with the key risks being reservoir presence/quality.
Ginny/Hermine Exploration Well: the drilling of the Ginny and Hermine
prospects (Company 9%) is scheduled to drill in late Q4 using the
West Hercules semi-submersible drilling rig. The Ginny prospect
is interpreted as a hanging-wall half graben adjacent to the Bremstein
High, with faults which subdivide the prospect into three segments:
Ginny North, Central and South. The Hermine prospect lies beneath
Ginny and they will both be drilled by the planned exploration well.
The Ginny/Hermine prospects are estimated to contain gross mean
prospective resources of 41mmboe(1) for Ginny and 27mmboe(1) for
Hermine with further potential upside to bring the total to 84mmboe(1)
and 45mmboe respectively. The geological chance of success associated
with the Ginny prospect is 27%(1) and for Hermine 22%(1) with the
key risks being related to faulty seal and phase risk.
There are now three further committed wells to follow including
two key wells in one of Norway's most active and prolific exploration
and production areas with Cambozola and Kveikje. These prospects
provide acreage in the most prolific hydrocarbon province in Norway,
near Statfjord, Snorre, Gullfaks and Troll with numerous recent
discoveries (Atlantis, Dugong, Equino, Basto) being made as operators
focus on infrastructure-led exploration opportunities to utilise
mature infrastructure and reduce CO(2) emissions. Multiple nearby
tie-back options exist for both Cambozola and Kveikje on either
a standalone basis or as part of wider regional developments. This
area is also expected to be key for a number of energy transition
projects. Longboat was recently informed by Equinor, the operator,
that the semi-submersible drilling rig Deepsea Stavanger has been
contracted for these two wells which are anticipated to start drilling
back-to-back in H1 2022.
Longboat was also pleased to recently announce that the parties
to the Copernicus joint venture, Equinor and PIGNiG, have also committed
to a firm well on this prospect (Company 10%). Copernicus lies on
the Utgard High in the Vøring Basin region of the Norwegian
Sea and the prospect is a combination trap with mapped stratigraphic
pinch out down-dip and a small structural component at the apex.
The Copernicus prospect is estimated to contain gross mean prospective
resources of 254mmboe(1) with further potential upside to bring
the total to 471mmboe(1) . The geological chance of success associated
with the Copernicus prospect is 25%(1) with the key risks being
reservoir presence/quality and trap
The farm-ins were classified as a reverse takeover under the AIM
Rules for Companies. On 13 August 2021 the Company was approved
by the Ministry of Petroleum and Energy as a licence holder of oil
and gas assets on the NCS and completed the farm-ins on 31 August
2021 with the reverse takeover occurring on 2 September 2021.
Norwegian Fiscal Stimulus and potential Norwegian tax changes
The Company is currently benefiting from the Norwegian government
temporary tax reforms introduced in June last year to mitigate the
effect of the Covid pandemic for the offshore oil and gas industry
whereby tax losses incurred during 2021 are paid out early by way
of negative instalment tax payments "terminskatt". During the period,
the Company received GBP705,857 in negative tax instalments with
a receivable of GBP1,089,367 at 30 June 2021. The company amended
its estimates of expenditure for 2021 following the agreement to
acquire the exploration licences and therefore will receive higher
negative tax instalments in the second half of 2021.
On 30 August 2021 the Government and the Ministry of Finance announced
proposals for potential changes to the Norwegian petroleum taxation
system from 2022 onwards. The feedback on the consultation proposal
is due by 3 December 2021 with the final changes anticipated to
be enacted during the spring of 2022.
The key element of these proposals is the immediate expensing of
investments with the intention of improving the neutrality of the
tax system between the government and the industry by aligning the
pre-versus-post-tax economics.
The proposals can be summarised as follows: -- The total marginal tax rate remains the same at 78 per cent;
-- The Special Petroleum Tax ("SPT") will increase to 71.8 per
cent (from 56 per cent) but Corporation Tax (22 per cent) will
become fully deductible from the SPT and the uplift on investments
will be removed;
-- The current exploration refund at 78% will cease to exist and
the Company will instead receive the tax value of losses (including
exploration costs) refunded in cash at the revised SPT (71.8
per cent) in the year after incurrence (to the extent these
generate tax losses);
-- The remaining corporation tax element (6.2 per cent) will be
carried forward to be set off against future profits from production;
and
-- There are no changes proposed to the temporary tax regime introduced
in 2020 and effective until the end of 2021
Based on the consultation feedback, and explicit statements made
by the Norwegian Government, the authorities will consider including
a system for pledging tax loss settlements to the lending banks
in a similar arrangement as is currently in place for the exploration
tax cost refund scheme.
The Company has made a preliminary assessment of the impact of the
proposed tax changes, which effectively increase the equity funding
requirement of exploration costs from 22 to 28.2 per cent, and believes
the Company remains funded for its exploration programme. In reaching
this conclusion, the Company has assumed that the Exploration Finance
Facility shall be amended to reflect the proposed new tax regime
enabling the Company to borrow against the proposed tax refund in
the same ratio as the existing exploration tax refund, and to pledge
the same in favour of the lenders.
Financial Results
The share issue to fund the farm-ins raised GBP32.4 million net
of fees, resulting in a period end cash position of GBP38.7 million,
with no debt (30 June 2020: GBP8.1 million). The loss for the period
was GBP0.9 million after receiving a 2020 tax refund in Norway of
GBP0.7 million in the period. GBP2.6 million of costs relating directly
to the sale of shares was charged to the share premium reserve.
A NOK600 million Exploration Finance Facility was secured to finance
the Norwegian Government's tax rebate, and the arrangement fee of
GBP579 k was debited to pre-payments in the balance sheet and will
be released over the term of the funding.
Salaries and pension costs in the six month period were GBP516k
(30 June 2020 GBP402 k). Other significant costs were those associated
with the analysis and review of the farm-in transactions, such as
technical consultant costs of GBP477 k (30 June 2020 GBP273 k) which
were capitalised against the exploration licences acquired. Legal
and professional fees of GBP242 k (30 June 2020 GBP161k) and outsourced
accounting fees were GBP50 k (30 June 2020 GBP69 k). The IFRS2 non-cash
charge for the period in relation to the Founders' Incentive Plan
and the Long Term Incentive Plan was GBP47 k (30 June 2020 GBP52
k).
Outlook
We are excited to be drilling our first exploration wells and can
now look forward to a busy period of almost continuous drilling
and frequent value catalysts during the next 18 months with a combined
upside value potential in excess of $1 billion.
Exploration activity in Norway is picking up and during the first
six months of 2021, a total of 14 exploration and appraisal wells
have been completed, resulting in 9 discoveries. With four wells
anticipated to be drilled by Longboat during the second half of
2021, a discovery at any one of the wells would add contingent resources
and give the Company significant monetisation opportunities.
Our plan remains to build Longboat in to a full-cycle, North Sea
E&P company. We believe the momentum built by the initial acquisitions
will enable us to take advantage of the increasing number of opportunities
we are seeing in the market.
On behalf of the board
..............................
Helge Ansgar Hammer
Director
.........................
1. ERC Equipoise estimates
The latest set of principal risks facing the Company were set
out in the Company's Re-admission document of 1 June 2021. Although
no new risks have emerged, now that the Company is operational
the 'risks relating to the oil and gas industry' are of greater
significance and in addition, following the announcement of the
proposed chances to the Norwegian petroleum taxation system, the
risks associated with 'fiscal risks relating to tax rebates in
Norway', are of particular relevance.
On behalf of the board
..............................
Helge Ansgar Hammer
Director
21 September 2021
The directors are responsible for preparing the interim report
in accordance with applicable law and regulations.
The directors have elected to prepare the financial statements
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the United Kingdom. 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 the 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 accounting estimates that are reasonable
and prudent;
-- state whether they have been prepared in accordance with IFRSs
as adopted by the United Kingdom, subject to any material departures
disclosed and explained in the financial statements; 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. 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.
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for
the six months ended 30 June 2021 which comprises the consolidated
statement of comprehensive income, consolidated statement of financial
position, consolidated statement of changes in equity, consolidated
statement of cash flows and notes to the consolidated interim financial
information.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors responsibilities
The interim report, including the financial information contained
therein, is the responsibility of and has been approved by the directors.
The directors are responsible for preparing the interim report in
accordance with the rules of the London Stock Exchange for companies
trading securities on AIM which require that the half-yearly report
be presented and prepared in a form consistent with that which will
be adopted in the Company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity", issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified
in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in
the half-yearly financial report for the six months ended 30 June
2021 is not prepared, in all material respects, in accordance with
the rules of the London Stock Exchange for companies trading securities
on AIM.
Material uncertainty related to going concern
We draw attention to note 1.2 to the half-yearly financial report
which indicates the Directors considerations concerning the Group's
ability to continue as a going concern. The matters explained in
note 1.2 highlights that the continued availability of suitable
Exploration Finance facility or an amended facility cannot be guaranteed
given the proposed revisions to the Norwegian tax regime. As stated
in note 1.2, these events or conditions, along with other matters
as set out in note 1.2, indicates that a material uncertainty exists
which may cast significant doubt over the Group's ability to continue
as a going concern. Our conclusion is not modified in respect of
this matter.
Use of our report
This report is made solely to the Board of Directors, as a body.
Our audit work has been undertaken so that we might state to the
Board those matters we are required to state to them in an auditor's
report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other
than the Company and the Company's Board as a body, for our audit
work, for this report, or for the opinions we have formed.
BDO LLP
Chartered Accountants
London
21 September 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
6 months 6 months
ended 30 ended to Year to
June 30 June 31 December
2021 2020 2020
unaudited audited audited
Notes GBP GBP GBP
Administrative expenses (1,513,958) (1,118,850) (2,399,204)
Operating loss 6 (1,513,958) (1,118,850) (2,399,204)
Investment revenues 5 3,963 10,719 18,736
Loss before taxation (1,509,995) (1,108,131) (2,380,468)
Income tax income 8 645,117 - 754,289
Loss for the period (864,878) (1,108,131) (1,626,179)
Items that may be reclassified to profit
or loss
Currency translation differences (11,731) (3,440) 524
Total items that may be reclassified to
profit or loss (11,731) (3,440) 524
Total comprehensive loss (876,609) (1,111,571) (1,625,655)
Loss per share 9
Basic and diluted (7.70) (11.08) (16.26)
Loss per share is expressed in pence per share.
The income statement has been prepared on the basis that all operations
are continuing operations.
30 June 30 June 31 December
2021 2020 2020
unaudited audited audited
Notes GBP GBP GBP
Non-current assets
Property, plant and equipment 10 25,685 8,545 11,798
Current assets
Trade and other receivables 11 1,368,540 74,383 75,807
Current tax recoverable 12 1,089,367 - 777,823
Cash and cash equivalents 38,729,643 8,123,612 7,021,105
41,187,550 8,197,995 7,874,735
Total assets 41,213,235 8,206,540 7,886,533
Current liabilities
Trade and other payables 15 1,707,404 203,542 351,610
Net current assets 39,480,146 7,994,453 7,523,125
Non-current liabilities
Deferred tax liabilities 16 372,709 - 431
Total liabilities 2,080,113 203,542 352,041
Net assets 39,133,122 8,002,998 7,534,492
Equity
Called up share capital 13 5,666,665 1,000,000 1,000,000
Share premium account 14 35,570,410 7,808,660 7,808,660
Other reserves 14 450,000 450,000 450,000
Currency translation reserve 14 (11,182) (3,415) 549
Share based payment reserve 144,587 52,185 97,763
Retained earnings (2,687,358) (1,304,432) (1,822,480)
Total equity 39,133,122 8,002,998 7,534,492
The financial statements were approved by the board of directors
and authorised for issue on ......................... and are signed
on its behalf by:
..............................
Helge Ansgar Hammer
Director
Company Registration No. 12020297
Share Share Currency Share Other Retained Total
capital premium translation based reserves earnings
account reserve payment
reserve
Notes GBP GBP GBP GBP GBP GBP GBP
Balance at 1 January
2020 1,000,000 7,808,660 25 - 450,000 (196,301) 9,062,384
Period ended
30 June 2020
Loss and total
comprehensive income
for
the period - - - - - (1,108,131) (1,108,131)
Credit to equity for
equity settled
share-based
payments - - - 52,185 - - 52,185
Other
comprehensive
income:
Currency translation
differences (3,440)
Balance at 30 June
2020 1,000,000 7,808,660 (3,415) 52,185 450,000 (1,304,432) 8,002,998
Period ended
31 December
2020
Loss for the period - - - - - (518,048) (518,048)
Credit to equity for
equity settled
share-based
payments - - - 45,578 - - 45,578
Other
comprehensive
income:
Currency translation
differences - - 3,964 - - - 3,964
Total comprehensive
income for the period - - 3,964 45,578 - (518,048) (468,506)
Other
comprehensive
income:
Balance at 31 December
2020 1,000,000 7,808,660 549 97,763 450,000 (1,822,480) 7,534,492
Share Share Currency Share Other Retained Total
capital premium translation based reserves earnings
account reserve payment
reserve
Notes GBP GBP GBP GBP GBP GBP GBP
Balance at 1 January
2021 1,000,000 7,808,660 549 97,763 450,000 (1,822,480) 7,534,492
Period ended
30 June 2021:
Loss and total
comprehensive income
for
the period - - - - - (864,878) (864,878)
Issue of share capital 4,666,665 27,761,750 - - - - 32,428,415
Share issue costs - (2,571,584) - - - - (2,571,584)
Credit to equity for
equity settled
share-based
payments - - - 46,824 - - 46,824
Other comprehensive
losses:
Currency translation
differences - - (11,731) - - - (11,731)
Balance at 30 June
2021 5,666,665 35,570,410 (11,182) 144,587 450,000 (2,687,358) 39,133,122
30 June 31 December
30 June 2021 2020 2020
unaudited audited audited
Notes GBP GBP GBP
Cash flows from operating activities
Cash absorbed by operations 19 (919,329) (1,081,261) (2,164,648)
Tax refunded/(paid) 12 705,850 - (23,533)
Net cash outflow from operating
activities (213,479) (1,081,261) (2,188,181)
Investing activities
Purchase of property, plant
and equipment 10 (17,331) (7,254) (12,359)
Purchase of investments in
exploration assets (477,015) - -
Interest received 5 3,963 10,719 18,736
Net cash (used in)/generated
from investing activities (490,383) (3,465) 6,377
Financing activities
Proceeds from issue of shares
(gross of issue costs) 34,999,999 - -
Share issue costs (charged
to Share premium reserve) (2,571,584) - -
Net cash generated from/(used
in) financing activities 32,428,415 - -
Net increase/(decrease) in cash
and cash equivalents 31,724,553 (1,077,796) (2,181,804)
Cash and cash equivalents at beginning
of period 7,016,199 9,204,257 9,197,479
Effect of foreign exchange
rates (11,733) (3,440) 524
Cash and cash equivalents
at end of period 38,729,019 8,123,021 7,016,199
Relating to:
Bank balances and short term
deposits 38,729,643 8,123,612 7,021,105
Bank overdrafts and credit
cards (624) (591) (4,906)
1 Accounting policies
Company information
Longboat Energy plc is a public company limited by shares incorporated
in England and Wales. The registered office is 5th Floor, One
New Change, London, EC4M 9AF. The Company's principal activities
and nature of its operations are disclosed in the directors'
report.
1.1 Accounting convention
The consolidated interim financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as adopted for use in the United Kingdom.
The same accounting policies, presentation and methods of computation
are followed in the interim consolidated financial information
as were applied in the Group's latest annual audited financial
statements except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2021, and will be adopted in the 2021
annual financial statements.
This interim financial information does not constitute statutory
accounts within the meaning of section 434 and of the Companies
Act 2006. The information for the year ended 31 December 2020
included in this report was derived from the statutory accounts
for that year, which were prepared in accordance with International
Financial Reporting Standards ('IFRSs') issued by the International
Accounting Standards Board ('IASB') and interpretations issued
by the International Financial Reporting Interpretations Committee
('IFRIC') of the IASB, as adopted by the EU up to 31 December
2020, a copy of which has been delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified,
included a material uncertainty paragraph in respect of going
concern and did not contain a statement under 498(2) 498(3) of
the Companies Act 2006.
The financial statements are prepared in sterling, which is the
functional currency of the company. Monetary amounts in these
financial statements are rounded to the nearest GBP.
The financial statements have been prepared under the historical
cost convention.
The Group interim financial statements consolidate the financial
statements of the parent company and its subsidiary undertakings
drawn up to 30 June 2021. The results of subsidiaries acquired
or sold are consolidated for periods from or to the date on which
control passed.
1 Accounting policies
1.2 Going concern
The Directors have completed the going concern assessment, including
a review of cash flow forecasts to December 2022, to assess whether
the Group is a going concern. The base case, which included conservative
scenarios in terms of well success rates, contingencies and associated
costs, demonstrates sufficient liquidity headroom. The forecasts
have been further subject to stress testing, focused on further
increased exploration cost levels, which demonstrated headroom
under the current facilities.
The Company notes the proposed changes to the Norwegian tax regime
announced on 31 August 2021 which remain subject to public consultation
and approval by parliament anticipated during the first half
of 2022. The directors have reviewed the potential impact based
on the information available and believes the Company will remain
fully funded for its planned exploration programme should these
changes be adopted into law.
However, the proposed changes would require certain amendments
to the Company's Exploration Finance Facility ("EFF") in order
to reflect both changes to the tax rate calculation methodology
and security structure in favour of the lenders. Based on explicit
statements made by the Norwegian Government on seeking to protect
the security structure of the tax refunds the Board believes
that the EFF will be amended satisfactorily.
As we are in the early stages of both the consultation process
and discussions with our lenders and given the uncertainty surrounding
the timing and nature of any changes to the tax regime, which
impacts the industry as a whole, the ability to secure any necessary
amendment to the EFF or otherwise secure alternative appropriate
facilities cannot be guaranteed. This circumstance represents
a material uncertainty that may cast significant doubt on the
Company'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.
2 Adoption of new and revised standards and changes in accounting
policies
The accounting policies adopted in the preparation of the consolidated
financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements
for the year ended 31 December 2020, except for the adoption of
new standards effective as of 1 January 2021. The Group has not
early adopted any standard, interpretation or amendment that has
been issued but is not yet effective.
Several amendments and interpretations apply for the first time
in 2021, but do not have an impact on the interim financial statements
of the Group.
3 Critical accounting estimates and judgements
In the application of the Group's accounting policies, the directors
are required to make judgements, estimates and assumptions about
the carrying amount of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised, if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Shared based payments
Estimation was required in determining inputs to the share based
payment calculations including share price volatility as detailed
in the annual accounts for the year to 31 December 2020.
Under the Founder Incentive Plan, judgment was required in determining
the point at which the Company and recipients had a shared mutual
understanding of the terms of the awards. Whilst the awards were
legally granted in July 2020, the Board consider that the IPO
Admission Document provided such a shared mutual understanding
given the detailed disclosure of the terms of the scheme. Accordingly,
the estimated fair value of the awards was determined in FY 20
has been spread over the vesting period which commenced at IPO.
A charge of GBP44,091 has been recorded in the period.
Under the Long Term Incentive Plan, judgement was required in
determining the fair value of the shares awarded. The Board has
taken advice from external parties and has determined the fair
value per share in FY 20, which results in a charge of GBP2,733
in the period.
4 Employees
The average monthly number of persons (including directors) employed
by the Group during the period was:
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2021 2020 2020
Number Number Number
Executive Directors 2 2 2
Non-Executive Directors 4 4 4
Staff 2 1 2
Total 8 7 8
4 Employees
Their aggregate remuneration comprised:
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
Wages and salaries 391,440 298,814 646,485
Share based payment 46,824 52,185 97,763
Social security costs 51,753 33,160 82,826
Pension costs 25,510 17,655 41,782
515,527 401,814 868,856
The Executive Directors entered into service agreements with
the Company on 28 November 2019, the date of Admission to AIM.
Nick Ingrassia joined the Board on 1 June 2021 and entered into
an updated service agreement on 9 June 2021.
Pursuant to letters of appointment dated 28 November 2019, the
Non-executive Directors of the Company were appointed as of that
date and on an ongoing basis. Each Non-executive Director is
entitled to an annual fee, including in respect of any service
on any Board committee.
In accordance with the statement made at the time of Admission
to AIM in November 2019, in parallel to the Company's first acquisitions
entered into on 9 and 10 June 2021, the Remuneration Committee
undertook a benchmarked review of executive remuneration and
made adjustments accordingly as disclosed in the Re-admission
document of 10 June 2021. These adjustments came into effect
following the approval of these acquisitions by shareholders
on 28 June 2021 but were subject to their completion, which occurred
after the period end on 31 August 2021.
5 Investment Income
Six month Six month
period ended period ended Year ended
30 June 30 June to 31 Dec
2021 2020 2020
GBP GBP GBP
Interest income
Bank deposits 3,963 10,719 18,736
Total interest income for financial assets that are not held at
fair value through profit or loss is GBP3,963 (2020: GBP10,719).
6 Operating loss
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
Operating profit/(loss) for the period is stated after charging/(crediting):
Exchange losses 47,249 74,120 28,037
Fees payable to the company's auditor
for the audit of the company's financial
statements - 16,000 16,000
Depreciation of property, plant and
equipment 3,483 954 2,807
Share-based payments 46,824 52,185 97,763
7 Auditor's remuneration
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2021 2020 2020
Fees payable to the company's auditor GBP GBP GBP
and associates:
For audit services
Audit of the financial statements of
the company - 16,000 32,000
Audit of the financial statements of
the company's subsidiaries - - 4,170
- 16,000 36,170
For non-audit services
Interim review 16,000 - -
Other services 110,000 - -
Total non-audit fees 126,000 - -
During the period the auditor provided non-audit services of
GBP110,000 in their role as Reporting Accountant in relation
to work carried out for a working capital model, and also undertook
a review of the interim accounts. There were no non-audit services
provided in the six months to 30 June 2020. In the year to 31
December 2020, they provided additional services for the audit
of the interim financial statements.
8 Income tax expense
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
Current tax
UK corporation tax on
profits for the
current period - - -
Foreign taxes and
reliefs (1,017,401) - (754,289)
(1,017,401) - (754,289)
Deferred tax
Origination and
reversal of temporary
differences 372,284 - -
Total tax (credit) (645,117) - -
No deferred tax asset has been recognised in the UK because there
is uncertainty of the timing of suitable future profits against
which they can be recovered. The Company has losses carried forward
of GBP2,003,236 (June 2020: GBP345,870). A deferred tax asset
has been recognised relating to Norway, further details of which
can be found in Note 16.
Longboat Energy Norge AS received a tax refund under the temporary
tax measures introduced in Norway for the tax year 2020 & 2021.
9 Loss per share 30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
Number of shares
Weighted average number
of ordinary
shares for basic loss
per share 11,229,050 10,000,000 10,000,000
Losses
Continuing operations
Loss for the period from
continued
operations (864,878) (1,108,131) (1,625,179)
Loss for basic and
diluted loss per
share being net losses
attributable
to equity shareholders
of the company
for continued
operations (864,878) (1,108,131) (1,625,179)
Basic and diluted loss
per share (7.70) (11.08) (16.26)
Loss per share is expressed in pence per share.
10 Property, plant and equipment
Computers
GBP
Cost
At 1 January 2020 2,245
Additions 7,254
At 30 June 2020 9,499
Additions 5,106
At 31 December 2020 14,605
Additions 17,331
At 30 June 2021 31,936
Accumulated depreciation and impairment
Charge for the Six Month Period 954
At 30 June 2020 954
Charge for the Six Month Period 1,853
At 31 December 2020 2,807
Charge for the Six Month Period 3,483
Foreign currency adjustments (39)
At 30 June 2021 6,251
Carrying amount
At 30 June 2021 25,685
At 30 June 2020 8,545
At 31 December 2020 11,798
11 Trade and other receivables
30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
VAT recoverable 144,305 8,295 22,161
Prepayments and other receivables 1,224,235 66,088 53,646
1,368,540 74,383 75,807
12 Current tax receivable
30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
Current tax receivable 1,089,367 - 777,823
The temporary tax rules in Norway allow oil and gas companies
to reclaim 78% of their tax losses for the financial years 2020
and 2021. At the period end the current tax receivable was GBP1,089,367,
GBP1,017,401 relating to 2021 losses with GBP71,966 of a true
up element due for the tax year 2020.
13 Share Capital
GBP
Balance at 1 January 2020 1,000,000
Balance at 30 June and 31 December 2020 1,000,000
Additions 4,666,665
Balance at 30 June 2021 5,666,665
On 10 June 2021 46,666,665 Ordinary Shares were allotted at
a premium of 75p per Ordinary Share. This brought the total
share capital to 56,666,665 ordinary shares.
14 Other reserves
Other reserves Currency translation Share Premium
reserve
GBP GBP GBP
Balance at 1 January 2020 450,000 25 -
Additions - (3,440) -
Issue of share capital - - 270,000
Share buy-back and
cancellation of share
premium - - (270,000)
Initial Public Offering - - 8,550,000
Costs of share issue - - (741,340)
Balance at 30 June
2020 450,000 (3,415) 7,808,660
Additions - 3,964 -
Balance at 31 December
2020 450,000 549 7,808,660
Additions - (11,731) -
Initial Public Offering - - 30,333,334
Costs of share issue - - (2,571,584)
Balance at 30 June
2021 450,000 (11,182) 35,570,410
15 Trade and other payables
30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
Trade payables 823,780 50,275 129,713
Accruals 830,971 114,691 115,309
Social security and other taxation 48,946 36,552 94,850
Other payables 3,707 2,024 11,738
1,707,404 203,542 351,610
16 Deferred taxation
The following are the major deferred tax liabilities and assets
recognised by the company and movements thereon during the current
and prior reporting period.
GBP
Deferred tax liability at 1 January 2020 and 30 June 2020 -
Deferred tax movements
Differences in tax basis for depreciation in Norway 431
Deferred tax liability at 31 December 2020 431
Deferred tax movements
Differences in tax basis for depreciation in Norway 372,278
Deferred tax liability at 30 June 2021 372,709
Deferred tax assets and liabilities are offset in the financial
statements only where the company has a legally enforceable right
to do so. In Norway, deferred tax assets and liabilities occur
mainly because of prepayment of Exploration spend. Exploration
spend is fully tax deductible refundable when incurred.
17 Other leasing information
Lessee
Amounts recognised in profit or loss as an expense during the
period in respect of lease arrangements are as follows:
Six month Six month
period ended period ended Year ended
30 June 30 June
2021 2020 31 Dec 2020
GBP GBP GBP
Expense relating to short-term leases 47,048 47,744 96,519
18 Related party transactions
Remuneration of key management personnel
Members of the Board of Directors are deemed to be key management
personnel. Key management personnel compensation for the financial
period is the same as the Director remuneration set out in note
5 to the accounts.
Other information
Directors' and PDMR interests in the shares of the Company in
the period, including family interests, were as follows:
Ordinary shares
Helge Hammer 680,000
Jonathan Cooper 275,000
Graham Stewart 300,000
Jorunn Saetre 45,000
Nick Ingrassia 120,000
Julian Riddick (PDMR) 220,000
In addition, the following conditional awards have been made
to the Executive Directors and Company Secretary under the FIP
which are expressed as a percentage of the total maximum potential
award, being 10% of the Company's issued share capital:
Founder Percentage Maximum percentage
entitlement entitlement of Maximum percentage
of Initial growth in value of issued share
Award pool from IPO capital
% % %
Helge Hammer 23.50% 3.53% 2.35%
Graham Stewart 19.75% 2.96% 1.98%
Jonathan Cooper 19.13% 2.87% 1.91%
Julian Riddick 18.50% 2.78% 1.85%
The Group does not have one controlling party.
19 Cash used by operations
30 June 30 June 31 Dec
2021 2020 2020
GBP GBP GBP
Loss for the Six Month Period after
tax (864,878) (1,108,131) (1,626,179)
Adjustments for:
Net taxation credited (645,117) - (753,858)
Investment income (3,963) (10,719) (18,736)
Depreciation and impairment of property,
plant and equipment 3,483 954 2,807
Equity settled share based payment
expense 46,824 52,185 97,763
Movements in working capital:
(Increase)/decrease in trade and other
receivables (815,712) 8,721 7,192
Increase in trade and other payables 1,360,034 (24,271) 126,363
Cash absorbed by operations (919,329) 1,081,261 (2,164,648)
20 Events after the reporting date
Longboat Energy was established as a closed-ended investment
company on 28 May 2019 with the objective of creating a new mid-cap
independent oil and gas company. From its admission to trading
on AIM on 28 November 2019, the Company was an "investing company"
for the purposes of the AIM Rules for Companies.
On 31 August 2021, the Company's wholly-owned subsidiary, Longboat
Energy Norge AS, completed the acquisition of interests in seven
exploration wells derived from three Farm-in Agreements with
Equinor Energy AS, Spirit Energy (Norge) AS and Idemitsu Petroleum
Norge AS.
The Farm-ins constituted a reverse takeover under the AIM Rules
and following completion of the farm-ins on 31 August 2021 the
Company ceased to be an investing company, for the purposes of
the AIM Rules, and become an operating company.
21 Other information
A copy of this interim report and financial statements is available
on the Company's website www.longboatenergy.com.
, 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 or visit 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.
END
IR FFFFLAAILFIL
(END) Dow Jones Newswires
September 22, 2021 02:00 ET (06:00 GMT)
Longboat Energy (LSE:LBE)
Historical Stock Chart
From May 2024 to Jun 2024
Longboat Energy (LSE:LBE)
Historical Stock Chart
From Jun 2023 to Jun 2024
