TIDMLBE
RNS Number : 7071K
Longboat Energy PLC
09 May 2022
9 May 2022
Longboat Energy plc
("Longboat Energy", "Longboat" or the "Company")
Farm-in to two exploration wells
Longboat Energy, the emerging full-cycle North Sea E&P
company, is pleased to announce that it has farmed-in to two
additional near-term, gas weighted exploration prospects on the
Norwegian Continental Shelf ("NCS") targeting combined gross
unrisked mean resources of 223(1) mmboe (45(1) mmboe net to
Longboat) through an agreement with OMV (Norge) AS ("OMV").
Summary
-- Acquiring 20% working interests in Oswig (PL1100, PL1100B) and Velocette (PL1016);
-- Oswig and Velocette are material, gas prospects close to
infrastructure in Norway anticipated to drill in summer 2022 and Q2
2023 respectively;
-- The transaction increases Longboat's net unrisked mean
resources by 68% to 110 mmboe with additional, on-block follow-on
potential of 55 mmboe;
-- Maintains the Company's focus on material gas opportunities
near to infrastructure in line with its ESG strategy; and
-- Post-tax drilling costs net to Longboat of US$6 million (excluding carry).
Overview
Following recent bilateral discussions, Longboat has executed a
two-well farm-in agreement with OMV to enter three licences on the
NCS containing material, gas-weighted prospectivity near existing
infrastructure in return for a partial cost carry, subject to
certain cost caps.
The licences contain two firm wells on the Oswig and Velocette
prospects anticipated to drill in the summer 2022 and Q2 2023
respectively. All the licences are operated by OMV which will
retain a 40% working interest post-transaction. The licences have
significant follow-on prospectivity which would be de-risked by any
exploration success. The consideration for the acquisition of the
interests comprises an aggregate pre-tax carry of approximately
NOK109 million ($12.4 million), NOK 30.7million ($3.4 million)
post-tax. The associated expenditure is anticipated to be met by a
combination of Longboat's existing cash resources and drawings on
its NOK 600 million Exploration Finance Facility. The Company is
fully funded for its current committed expenditure.
The transaction seeks to build on Longboat's recent exploration
success at Kveikje, Egyptian Vulture and Rødhette by adding two
material wells, increasing its net un-risked mean resources by 45
mmboe to 110 mmboe across four firm exploration wells drilling in
the next 12 months, including the currently drilling Cambozola well
(Longboat, 25%). These wells fit with Longboat's ESG strategy being
large gas prospects, close to existing infrastructure and with
plans for electrification from shore for one of the potential tie
backs.
Oswig (PL1100, PL1100B) - Company 20%
The first prospect scheduled to be drilled this summer is Oswig
(PL1100) which consists of a high pressure, high temperature
Jurassic rotated fault block nearby the producing Tune and Oseberg
fields in the Norwegian North Sea, operated by Equinor. The well is
targeting the Tarbert and Ness formations, two separate intervals
which are estimated by the operator to contain combined gross
unrisked mean resources of 93(1) mmboe, 19(1) mmboe net to
Longboat. The Oswig geological chance of success is estimated to be
36%(1) and the key risks are reservoir quality and fault seal.
The Oswig prospect is located close to existing infrastructure
with tie back potential to the Oseberg and Tune fields.
Several additional fault blocks have been identified on PL1100
and PL1100B and are estimated to contain a further gross unrisked
mean resources of 80 mmboe which would be significantly derisked by
an Oswig discovery.
The Oswig well is operated by OMV and will be drilled this
summer with the total post-tax cost net to Longboat estimated to be
$3 million (excluding carry). The other licencees are Wintershall
Dea Norge AS and Source Energy AS.
Velocette (PL1016) - Company 20%
Velocette is a gas-condensate prospect targeting Cretaceous Nise
turbidite sands on the eastern flank of the Utgard High in the
Norwegian Sea which have been identified following recent seismic
reprocessing. Velocette benefits from seismic amplitude anomalies
indicative of gas-filled sands located within tieback distance from
the Equinor operated producing Aasta Hansteen field (45 km).
Velocette is estimated by the operator to contain gross unrisked
mean resources of 130(1) mmboe (26(1) mmboe net to Longboat) with a
geological chance of success of 35%(1) . A number of follow-up
opportunities exist within the licence with aggregate gross
unrisked mean resources of 200(1) mmboe, which would be
significantly de-risked by success in the Velocette well. The key
risks associated with this prospect are reservoir presence and
quality.
The Velocette well will be operated by OMV and is anticipated to
be drilled in the second quarter of 2023 at an estimated total
post-tax cost net to Longboat of $3 million (excluding carry). The
other licensee is INPEX Idemitsu Norge AS.
Helge Hammer, Chief Executive of Longboat, commented:
"We are pleased to be adding two high-quality, gas-weighted
exploration wells into our forward programme following our recent
success at Kveikje and our discoveries at Egyptian Vulture and
Rødhette in 2021.
"Securing these additional wells through a bilateral negotiation
continues to demonstrate Longboat's deep relationships in Norway
and gives investors exposure to a significantly increased
exploration programme targeting net mean un-risked prospective
resources of 110 million, a 68% increase. These important wells
also maintain the Company's focus on material gas opportunities
near to infrastructure at a time when European energy security
remains a top governmental priority.
"With results from the high-impact Cambozola prospect due in the
coming weeks, we now have a sequence of significant, potential
value catalysts between now and the middle of next year. We look
forward to updating the market on Cambozola at the end of drilling
operations."
Ends
Enquiries:
Longboat Energy
Helge Hammer, Chief Executive Officer via FTI
Jon Cooper, Chief Financial Officer
Nick Ingrassia, Corporate Development
Director
Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)
Callum Stewart Tel: +44 20 7710 7600
Jason Grossman
Simon Mensley
Ashton Clanfield
FTI Consulting (PR adviser)
Ben Brewerton
Ntobeko Chidavaenzi Tel: +44 20 3727 1000
Rosie Corbett longboatenergy@fticonsulting.com
1 Source: Operator estimates using, where appropriate, a
gas-to-barrel of oil equivalent conversion factor of 5,600
scf/stb
The information contained within this announcement is considered
to be inside information prior to its release.
Background
Longboat Energy was established at the end of 2019 to create a
full-cycle North Sea E&P company through value accretive
M&A and low-risk, near-field exploration. In June 2021 the
Company entered into three bi-lateral transactions to acquire
interests in a portfolio of seven exploration wells which have
resulted in three discoveries (Egyptian Vulture, Rødhette and
Kveikje) out of five wells drilled to date.
Longboat's remaining exploration wells, excluding appraisal
drilling on the existing discoveries, are both high-impact,
gas-weighted prospects drilling during 2022. Longboat has targeted
exploration prospects located in close proximity to existing
infrastructure, with an overlap between exploration partners and
infrastructure owners, providing 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.
To finance the drilling programme, the Company raised gross
proceeds of GBP35 million in 2021 by means of a share placing and a
NOK 600 million (GBP52 million) Exploration Finance Facility (EFF)
with SpareBank 1 SR-Bank ASA and ING Bank N.V.
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
Hilde Salthe, Managing Director Norge, 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
"mmboe" Million barrels of oil equivalent
"NCS" Norwegian Continental Shelf
"Prospective Resources" those quantities of petroleum which are
estimated, on a given date, to be potentially
recoverable from undiscovered accumulations
"scf" Standard cubic feet
"stb" Stock tank barrels
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END
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