TIDMLBE
RNS Number : 0598P
Longboat Energy PLC
16 June 2022
16 June 2022
Longboat Energy plc
("Longboat Energy", "Longboat" or the "Company")
Operational Update
Longboat Energy, the emerging full-cycle North Sea E&P
company , is pleased to provide the following operational
update.
Highlights
-- Two high-impact exploration wells scheduled for Q3 targeting
net, unrisked mean resources of 44 mmboe:
o Oswig (Company 20%) expected to commence drilling in July
o Copernicus (Company 10%) expected to commence drilling by the
end of September
-- A further firm, high-impact exploration well (Velocette, 20%)
expected to be drilled in Q2 2023
-- Longboat remains fully funded for its committed drilling programme
-- Actively reviewing monetisation and commercialisation options of three existing discoveries
-- Screening opportunities to participate in recently announced Norwegian APA licensing round
-- Advantageous new Norwegian tax regime approved by the Norwegian parliament
Firm Drilling Programme 2022
Oswig (PL1100, PL1100B) - Company 20%
The Oswig prospect is expected to spud at the beginning of July
using the Maersk Intrepid jack-up rig. Oswig consists of a high
pressure, high temperature Jurassic rotated fault block nearby the
producing Tune and Oseberg fields in the Norwegian North Sea. The
well is targeting two separate intervals which are estimated by the
operator to contain combined gross unrisked mean resources of 93
mmboe(1) (19 mmboe(1) 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.
Copernicus (PL 1017) - Company 10%
Copernicus will be drilled using the Deepsea Yantai rig and is
expected to spud by the end of September. The prospect lies in the
Vøring Basin region of the Norwegian Sea. Copernicus is estimated
to contain gross mean prospective resources of 254 mmboe (2) (25
mmboe net to Longboat) with further potential upside to bring the
total to 471 mmboe (2) . The chance of success associated with this
prospect is 26% (2) with the key risks being reservoir
presence/quality and trap.
Monetisation and Commercialisation of discoveries
Since commencement of drilling in Q3 2021, Longboat has made
three hydrocarbon discoveries out of six wells at Egyptian Vulture
(Company 15%), R ø dhette (Company 20%) and Kveikje (Company 10%)
representing an estimated 12 mmboe of resources net to the Company.
Longboat is actively reviewing multiple options to monetise or
commercialise those discoveries in the near term. This work
includes both examining development scenarios for each of the
assets and/or the potential for asset swaps or outright sales given
the current high demand for assets in Norway.
While this process is at an early stage, Longboat remains
committed to maximizing shareholder value at the earliest stage
possible from its exploration success to date.
APA Licensing Round
The Norwegian Ministry of Petroleum and Energy recently
announced the APA Licensing Round for 2022 encompassing blocks
across the NCS. Leveraging its in-house technical expertise, the
Company has a number of potential applications under review both as
follow-on acreage around its existing licences and in new
areas.
New Norwegian Tax Regime Approved
The new Norwegian Petroleum Tax System has now been approved by
the Norwegian parliament (Storting) with no material changes to the
original proposal and is effective from 1 January 2022. Longboat
views the new system as positive for the Company, allowing for the
expansion of existing financial structures to fund both exploration
and development projects with improved economics and reduced
working capital. The main elements of the new tax system are:
- Unchanged marginal rate (78%)
- Move to immediate expensing of investments
- 71.8% repayment of all losses in following year
- Corporate Tax (6.2%) carried forward until profitable
Longboat has reviewed the new tax system and is already in
discussion with the banks about a smooth transition from the
'Exploration Finance Facility' regime to a new fit-for-purpose
financing facility.
Longboat anticipates a significant benefit for these
restructured credit facilities to meet the working capital
requirement for future development expenditure.
Helge Hammer, Chief Executive of Longboat, commented:
"Longboat has a sequence of significant value catalysts between
now and the middle of next year with two material gas-weighted
exploration wells in the coming months following our recent success
at Kveikje and our earlier discoveries at Egyptian Vulture and
Rødhette. The well programme continues into 2023 with Velocette and
with further potential licences to be added in the APA round.
"The new tax system gives us an additional option for realising
the value of exploration success by carrying discoveries through to
development as we look at all available options to progress to a
full-cycle E&P company."
The information contained within this announcement is not
considered to be inside information prior to its release.
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
Notes :
1 Operator estimates using, where appropriate, a gas-to-barrel
of oil equivalent conversion factor of 5,600 scf/stb
2 Resource figures and chance of success estimates are from the
ERC Equipoise Competent Person Report and using a gas-to-barrel of
oil equivalent conversion factor of 5,600 scf/stb
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 six wells drilled to date.
Longboat's future exploration wells, after having farmed in to
two additional gas wells, are high-impact, gas-weighted prospects
drilling during 2022 and 2023. 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.
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
Masters Degree from Faculty of Applied Earth Sciences at the
Norwegian University of Science and Technology in Trondheim.
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.
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
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END
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