TIDMLBE
RNS Number : 5405A
Longboat Energy PLC
26 September 2022
Longboat Energy plc
("Longboat Energy", the "Company" or "Longboat")
Interim Results to 30 June 2022
London, 26 September 2022 - Longboat Energy, the emerging
full-cycle E&P company, is pleased to announce its unaudited
interim results for the period to 30 June 2022.
Helge Hammer, Chief Executive Officer of Longboat Energy,
commented:
"Last week we announced our fourth discovery from eight wells
drilled over the past 15 months. This drill programme has not only
made us one of the most active companies in the Norwegian North Sea
but also one of the most successful in that period with discovery
rates well-ahead of the industry average.
"Of those eight wells, five have been drilled this year
delivering two of our most exciting discoveries to date in Oswig
and Kveikje. Kveikje has excellent quality reservoir in an
attractive location near infrastructure. The initial indications
from Oswig are very encouraging and we should have the results of
further testing in the next 6-8 weeks. Our discoveries to date, as
well as next year's Velocette exploration well, all have the
potential to create substantial value to shareholders."
Operational Highlights
Encouraging results from Longboat's initial eight wells exploration
-- drilling programme with success rates and finding costs better
than industry average
Two discoveries so far this year: Kveikje and Oswig
--
Kveikje discovery (Longboat 10%):
--
E xcellent reservoir qualities and attractive location
-- near infrastructure.
Preliminary estimates of recoverable resources in the excellent
-- quality injectite reservoir were 28 to 48 mmboe gross(1)
Focus on near-term monetization opportunities following
-- multiple enquiries
Oswig discovery (Longboat 20%).
--
Preliminary analysis of extensive wireline logs and core
-- data indicates strong correlation to nearby Tune field
and presence of gas-condensate
Preliminary in-place volumes (GIIP) estimated above pre-drill
-- expectations
Key uncertainty over recoverable resource range due to
-- challenges collecting downhole data from existing wellbore
Joint venture decision to sidetrack well and conduct drill-stem
-- test (DST) to establish reservoir productivity, detailed
fluid properties and recoverable resource range
Continued to pursue gas opportunities given its role in energy
-- security and contribution to the energy transition
Secured further bilateral transaction to acquire interests
-- in two further significant, near-term, low-risk gas exploration
wells on the NCS, Oswig and Velocette
Near-term focus on appraising and monetising existing key
-- discoveries and on building an attractive 3-5 well programme
for 2023.
Continued main focus on North Sea opportunities, but also
-- assessing wider opportunity set to leverage Longboat's
high-quality network, organisation and prior experience
set
Financial Summary
Cash reserves of GBP22.5 million (30 June 2021 GBP38.7 million)
--
Debt of GBP15.7 million to be repaid from the Norwegian Government's
-- tax rebate in November 2023
Loss for the period GBP1.7 million
--
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
Rosie Corbett longboatenergy@fticonsulting.com
Notes :
1 ERC Equipoise estimates, 2C resources of 35 mmboe with 3C
potential of 60 mmboe 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
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
Glossary
Mmboe Millions of barrels of oil equivalent
NCS Norwegian Continental Shelf
scf Standard cubic feet
stb Stock tank barrel
LONGBOAT ENERGY PLC
STRATEGIC REPORT
FOR THE SIX MONTH PERIODED 30 JUNE 2022
CEO Introductory Statement
Well results and assets
In June of last year we announced that we had farmed-in to a
programme of seven exploration wells in Norway in three bilateral
transactions with Equinor, Spirit and Idemitsu. Three of the wells
were drilled in the second half of last year, which resulted in two
discoveries: Egyptian Vulture and Rødhette. In May this year the
Company farmed into two further exploration wells in a bilateral
transaction with OMV. Since the beginning of this year, five
exploration wells have been drilled resulting in a significant oil
discovery on the Kveikje prospect, unsuccessful wells in
Ginny-Hermine, Cambozola and Copernicus and, as recently announced,
a discovery on Oswig which is now being tested.
In the Kveikje well (Longboat 10%), we encountered hydrocarbons
at all four targets levels. Preliminary estimates of recoverable
resources in the excellent quality injectitie reservoir were 28 to
48 mmboe gross. Kveikje is operated by Equinor and is located in an
area to the north of the giant Troll field with significant
infrastructure and multiple tie-back opportunities. Furthermore,
several third-party discoveries have been made close to Kveikje
during the last few years, such as Røver Nord, Toppand and Swicher,
which will allow for significant operational synergies and
economies of scale as the Kveikje development moves forward.
The Company's fourth transaction announced in May was to farm-in
to two further exploration wells on the Norwegian Continental
Shelf, Oswig and Velocette, which had been negotiated bilaterally
with OMV, the Austrian E&P company. The two wells are both
targeting material gas resources in close proximity to Norwegian
gas infrastructure. The first of these wells, Oswig, spud at the
start of August and, as announced last week, a decision has been
taken to drill a sidetrack well and perform a drill stem test.
Extensive coring and logging data have been successfully acquired
and the preliminary analysis of the data indicates excellent
correlation with the nearby Tune field; likely presence of gas and
condensate; and Gas In Place (GIIP) volumes in the Jurassic Tarbert
reservoir higher than pre-drill expectations .
Oswig (Longboat 20%) consists of a high pressure, high
temperature Jurassic rotated fault block nearby the Equinor
operated producing Tune and Oseberg fields. Oswig had a pre-drill
gross unrisked mean resource of 93 mmboe making it one of the
larger gas prospects being tested in Norway this year. Several
additional fault blocks have been identified on-block which could
contain further gross unrisked mean resources of 80 mmboe which
would be significantly derisked by a successful DST.
The Velocette prospect (Longboat 20%) is also operated by OMV
and comprises Cretaceous Nise turbidite sands in the Norwegian Sea.
This gas-condensate prospect is located within tie-back distance to
the Aasta Hansteen gas field and has been estimated by the operator
to contain gross unrisked mean resources of 130 mmboe (26mmboe net
to Longboat). Last week we announced that a rig contract had been
entered into for the Transocean Norge semi-sub with the well
expected to spud in Q3 next year.
In October last year, we announced the Egyptian Vulture
discovery (Longboat 15%) close to infrastructure on the Halten
Terrace in the Norwegian Sea. The discovery is visible on seismic
as a large amplitude anomaly which covers an area of more than 80
km(2) and therefore has significant volume potential. Detailed
technical studies are ongoing with particular focus on the seismic
interpretation and the reservoir quality and distribution as,
whilst expansive, it is a thin reservoir. The objectives are to
reduce the risk and increase the understanding of the discovery as
far as possible before making a final decision on a possible second
well on Egyptian Vulture. As part of this work, ERCE has provided
an independent assessment of the discovery in a Competent Person
Report commissioned by Longboat, which has confirmed the size of
the discovery at gross 4-68 mmboe.
Rødhette was discovered in October last year and is located
within tie-back distance to the Goliath field in the Barents Sea.
The discovery contains oil and gas resources between 9 and 12 mmboe
(gross), which is not commercial as a standalone development, but
could be tied-back for production as part of an area cluster
development. The way forward for the asset therefore depends on the
outcome of several third-party exploration wells, which are
scheduled for drilling in the area before the end of this year. On
the Ginny-Hermine, Cambozola and Copernicus licences work continues
to establish the remaining prospectivity on the licences.
Strategy and markets
Longboat's strategy remains unchanged: to create significant
value to shareholders by building a significant E&P business
through value accretive M&A transactions and with the
drill-bit.
In a situation where access to energy is becoming increasingly
important and particularly gas in North West Europe, Norway plays a
critical role as the country continues to offer attractive
opportunities for E&P companies. Exploration results in Norway
remain good and the country continues to offer high quality acreage
in regular licensing rounds. According to the latest Resource
Report by the Norwegian Petroleum Directorate, only half of total
estimated resources of 100 billion boe have so far been produced
and sold. Longboat, with its highly skilled G&G team and
extensive industry network, is uniquely positioned to benefit from
this continued opportunity as was recently demonstrated by the OMV
farm-in deal.
Norway also continues to offer an attractive regulatory
framework. A new Norwegian Petroleum Tax System has been
introduced, which Longboat views as generally positive for the
Company. The main elements of the new tax system are an unchanged
marginal rate at 78%, a move to immediate expensing of investments,
71.8% repayment of all losses in the following year (compared to
previously 72% of exploration losses only) with corporate tax at
6.2% carried forward against future profits. Longboat has worked
with its lending banks and has successfully amended the
'Exploration Finance Facility' (EFF) to fit the new tax regime and
will use its restructured EFF credit facilities to meet the working
capital requirement for future exploration expenditure. The size
and tenure of the facility remains the same as the original
facility, NOK600 million and is available for drawing until 31
December 2023.
As part of Longboat's sustainability strategy, the Company has
undertaken to be corporate 'Net Zero' on a Scope 1 and 2 basis by
2050. In this context, delivering exploration success with
significant gas prospects near existing infrastructure will be
crucial to reducing carbon intensity in order maximise the use of
existing facilities and pipelines. We aim to make an important
contribution to the energy transition and acknowledge the place
that hydrocarbon exploration and production will continue to have
in the global markets for the foreseeable future.
During 2022, Longboat has also continued to pursue production
acquisition opportunities in the North Sea, which has not yet led
to any production transactions. In the M&A market there have
been multiple deals made involving production assets in the North
Sea this year, however the recent spike in commodity prices
following the Russian invasion of Ukraine has widened the gap
between buyer and seller expectations. Almost all of the production
transactions during the period have occurred in Norway, with the UK
continuing to suffer from negative investor sentiment associated
most recently with the 25% windfall levy imposed on UK producers in
response to high domestic energy prices. The majority of deals in
Norway continue to be struck by privately held companies. Longboat
continues to be active in this market but is not willing to
compromise on its requirement for transactions to be of high
quality and value accretive.
Bearing in mind that the North Sea M&A market for production
and development assets remains very competitive with a rather small
number of opportunities to review, to make full use of our highly
skilled team, the Company has recently also started to review
opportunities in a few carefully selected countries outside of the
North Sea. These are countries which offer attractive opportunities
in supportive regulatory regimes as we continue to pursue in
Norway.
Financial Results
The Company's gross cash position at 30 June 2022 was GBP22.5
million (30 June 2021: GBP38.7 million) with debt of GBP15.7million
(30 June 2021: nil) drawn under the EFF, resulting in a net cash
position of GBP6.8 million. EFF drawings in the period will be
repaid from the Norwegian Government's tax rebate, due in November
2023. The post-tax loss for the period was GBP1.7 million (30 June
2021: $0.9 million). During the period the Company had an active
drilling campaign which included spudding Ginny & Hermine,
Kveikje and Cambozola, spending GBP17.7 million on exploration
drilling costs and GBP13.5 million on exploration carry costs.
Operational performance has been good and the wells were drilled in
line with the budget. In the period to 30 June 2022 there were no
write offs of E&A costs despite drilling dry wells while
evaluation work to establish remaining prospectivity on the
licences is still ongoing. The carrying value of licences and
evaluation work will again be reviewed at the year end.
Administrative expenses in the period were GBP2.4 million (30
June 2021: 1.5 million). Wages and salaries in the period were
GBP1.2 million (30 June 2021: 0.4 million) reflecting increased
staffing costs post the farm-in deals.
Going concern
The Directors have completed the going concern assessment, including
a review of cash flow forecasts to December 2023, to assess whether
the Group is a going concern. Following the announcement of a
discovery at Oswig, the Oswig partnership has agreed to expand
the scope of appraisal work which will now include a side track
and drill stem test. This expanded work programme will require
additional funding under the base case towards the end of the
forecast period. Whilst the directors are confident that such
funding will be available if required there can be no guarantee
that this will be the case. These circumstances represent 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 going
concern basis of preparation being inappropriate.
Outlook
Our plan remains to build Longboat into a full-cycle E&P
company. The very high commodity prices are making the M&A
market challenging for both buyers and sellers, although more so
for buyers. That aside, Longboat remains well-placed to transact.
We have an experienced team with excellent relationships across the
industry and we believe there are now many excellent opportunities
for Longboat to pursue. However, patience will still be required
given the commodity price levels and the competitive landscape.
On behalf of the board
Helge Ansgar Hammer
Director
23 September 2022
LONGBOAT ENERGY PLC
DIRECTORS' RESPONSIBILITES STATEMENT
FOR THE SIX MONTH PERIODED 30 JUNE 2022
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.
LONGBOAT ENERGY PLC
INDEPENT REVIEW REPORT
FOR THE SIX MONTH PERIODED 30 JUNE 2022
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 2022 is not prepared, in all material respects, in accordance
with the London Stock Exchange AIM Rules for Companies.
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 2022 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.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). 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.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been 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.
Material uncertainty related to going concern
We draw attention to note 1.2 to the condensed set of financial
statements which indicates that additional funding will be required
to meet the Group's commitments and obligations as they fall due.
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 Company and Group's ability to
continue as a going concern. Our conclusion is not modified in
respect of this matter.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with
the London Stock Exchange AIM Rules for Companies 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.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including the Material Uncertainty Related to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange AIM Rules for Companies for no
other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by
virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
BDO LLP
Chartered Accountants
London
23 September 2022
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 30 JUNE 2022
6 months 6 months
ended 30 ended to Year
June 30 June to 31 December
2022 2021 2021
unaudited unaudited audited
Notes GBP GBP GBP
Administrative expenses (2,399,804) (1,513,958) (4,720,133)
Exploration and evaluation
refund/(expense) 309,337 - (6,399,134)
Operating loss 6 (2,090,467) (1,513,958) (11,119,267)
Investment revenues 5 - 3,963 11,412
Finance costs (405,878) - (484,527)
Loss before taxation (2,496,345) (1,509,995) (11,592,382)
Income tax credit 8 851,981 645,117 6,911,762
Loss for the period (1,644,364) (864,878) (4,680,620)
Items that may be reclassified to profit
or loss
Currency translation differences (23,989) (11,731) 580,447
Total items that may be reclassified
to profit or loss (23,989) (11,731) 580,447
Total comprehensive loss (1,668,353) (876,609) (4,100,173)
Loss per share 10
Basic and diluted (2.90) (7.70) (12.97)
Loss per share is expressed in pence per share.
The income statement has been prepared on the basis that all operations
are continuing operations.
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE SIX MONTH PERIODED 30 JUNE 2022
30 June 30 June 31 December
2022 2021 2021
unaudited unaudited audited
Notes GBP GBP GBP
Non-current assets
Exploration and evaluation
assets 11 55,191,851 - 23,988,754
Property, plant and
equipment 11 74,817 25,685 29,600
Right of use assets 11 498,806 - 560,709
Non-current tax receivable 14 20,960,554 - -
76,726,028 25,685 24,579,063
Current assets
Inventories 9 104,502 - 92,798
Trade and other receivables 12 991,174 1,368,540 1,136,081
Current tax recoverable 14 - 1,089,367 8,149,906
Cash and cash equivalents 22,492,722 38,729,643 26,282,067
23,588,398 41,187,550 35,660,852
Total assets 100,314,426 41,213,235 60,239,915
Current liabilities
Trade and other payables 16 8,668,246 1,707,404 4,772,167
Lease liabilities 13 119,219 - 96,172
8,787,465 1,707,404 4,868,339
Net current assets 14,800,933 39,480,146 30,792,513
Non-current liabilities
Lease liabilities 13 422,822 - 486,630
Deferred tax liabilities 17 41,146,691 372,709 18,766,424
Bank loans and borrowings 15,328,609 - -
372,709
56,898,122 372,709 19,253,054
Total liabilities 65,685,587 2,080,113 24,121,393
Net assets 34,628,839 39,133,122 36,118,522
Equity GBP GBP GBP
Called up share capital 15 5,666,665 5,666,665 5,666,665
Share premium account 35,570,411 35,570,411 35,570,411
Own shares 450,000 450,000 450,000
Currency translation
reserve 557,007 (11,183) 580,996
Share based payment reserve 532,220 144,587 353,550
Retained earnings (8,147,464) (2,687,358) (6,503,100)
Total equity 34,628,839 39,133,122 36,118,522
Total equity and liabilities 100,314,426 41,213,235 60,239,915
The financial statements were approved by the board of directors
and authorised for issue on 23 September 2022 and are signed on its
behalf by:
Helge Ansgar Hammer
Director
Company Registration No. 12020297
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 30 JUNE 2022
Share Share Currency Share
capital premium translation based payment Own Retained
capital account reserve reserve shares earnings Total
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 for the
period - - - - - (864,878) (864,878)
Other
comprehensive
loss for the
period - - (11,731) - - - (11,731)
Total
comprehensive
loss for the
period - - (11,731) - - (864,878) (876,609)
Issue of share
capital 4,666,665 30,333,334 - - - - 34,999,999
Share issue
costs - (2,571,584) (2,571,584)
Credit to
equity for
equity
settled
share-based
payments - - - 46,824 - - 46,824
Balance at 30
June 2021 5,666,665 35,570,411 (11,182) 144,587 450,000 (2,687,358) 39,133,122
----------- ----------- ------------ -------------- -------- ----------- -----------
Period ended
31 December
2021
Loss for the
period - - - - - (3,815,742) (3,815,742)
Other
comprehensive
income for
the period - - 592,178 - - - 592,178
Total
comprehensive
income for
the period - - 592,178 - - (3,815,742) (3,223,564)
Credit to
equity for
equity
settled
share-based
payments - - - 208,963 - - 208,963
----------- ----------- ------------ -------------- -------- ----------- -----------
Balance at 31
December 2021 5,666,665 35,570,411 580,996 353,550 450,000 (6,503,100) 36,118,522
=========== =========== ============ ============== ======== =========== ===========
Balance at 1 January 2022 5,666,665 35,570,411 580,996 353,550 450,000 (6,503,100) 36,118,522
Period ended 30 June 2022
Loss for the period - - - - - (1,644,364) (1,644,364)
Other comprehensive losses - (23,989) - - - (23,989)
Credit to equity for equity
settled
share-based payments - - - 178,670 - - 178,670
----------- ---------- -------- ------- ------- ----------- -----------
5,666,665 35,570,411 557,007 532,220 450,000 (8,147,464) 34,628,839
=========== ========== ======== ======= ======= =========== ===========
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE SIX MONTH PERIODED 30 JUNE 2022
30 30 31 December
June June 2021
2022 2021
unaudited unaudited audited
Notes GBP GBP GBP
Cash flows from operating
activities
Cash absorbed by operations 19 (3,412,843) (919,329) (4,197,318)
Tax refunded - 705,850 1,429,635
Net cash (outflow) from operating
activities (3,412,843) (213,479) (2,767,683)
------------- ----------- -------------
Investing activities
Purchase of property, plant
and equipment (55,547) (17,331) (25,769)
Tax refund relating to investing
activity 10,552,543 - 17,173,053
Purchase of exploration and
evaluation assets (26,330,050) (477,015) (26,513,457)
Interest received 5 - 3,963 11,412
Net cash used in investing
activities (15,833,054) (490,383) (9,354,761)
------------- ----------- -------------
Financing activities
Issue of ordinary shares - 32,428,415 32,428,416
Loan 15,716,675 - -
Interest paid (180,898) - (484,527)
Loan facility fees (224,980) - (604,085)
Net cash generated from financing
activities 15,310,797 32,428,415 31,339,804
------------- ----------- -------------
Net (decrease)/increase in cash
and cash equivalents (3,935,100) 31,724,553 19,217,360
------------- ----------- -------------
Cash and cash equivalents
at beginning of period 26,282,067 7,016,199 7,016,199
Effect of foreign exchange
rates 145,755 (11,733) 48,508
Cash and cash equivalents at end
of period 22,492,722 38,729,019 26,282,067
------------- ----------- -------------
Relating to:
Bank balances and short term
deposits 22,492,722 38,729,643 26,282,067
Bank overdrafts and credit - (624) -
cards
LONGBOAT ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2022
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 2022
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 2021
included in this report was derived from the statutory accounts
for that year, which were prepared in accordance with International
Financial Reporting Standards ('IFRSs') as adopted for use in
the United Kingdom, a copy of which has been delivered to the
Registrar of Companies. The report of the auditors on those accounts
was unqualified and did not contain a statement under 498(2)
498(3) of the Companies Act 2006. The ISRE 2410 review conclusion
on the consolidated interim financial statements as of and for
the six-month period ended 30 June 2021 included a material uncertainty
in respect of going concern paragraph.
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 2022.
1 Accounting policies
1.2 Going concern
The Directors have completed the going concern assessment, including
a review of cash flow forecasts to December 2023, to assess whether
the Group is a going concern. Following the announcement of a
discovery at Oswig, the Oswig partnership has agreed to expand
the scope of appraisal work which will now include a side track
and drill stem test. This expanded work programme will require
additional funding under the base case towards the end of the
forecast period. Whilst the directors are confident that such
funding will be available if required there can be no guarantee
that this will be the case. These circumstances represent 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 going
concern 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 2021, except for the adoption of
new standards effective as of 1 January 2022. 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 2022, 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.
Exploration and evaluation assets
Judgement is required to determine whether impairment indicators
exist in respect of the Group's exploration assets recognised
in the statement of financial position. The Group has to take
into consideration whether the assets have suffered any impairment,
taking into consideration the results of the drilling to date,
and the likelihood of reserves being found. The Group relies
upon information from third parties to take these decisions,
and can be subject to change if future information becomes available.
Share 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 2021.
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.
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.
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
2022 2021 2021
Number Number Number
Executive Directors 5 2 3
Non-Executive Directors 4 4 4
Staff 10 2 4
Total 19 8 11
Their aggregate remuneration comprised:
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Wages and salaries 1,181,256 391,440 1,703,062
Share based payment 178,678 46,824 255,737
Social security costs 233,973 51,753 245,771
Pension costs 137,454 25,510 133,047
Foreign currency gains - - (33,844)
1,731,361 515,527 2,303,773
5 Investment Income
Six month Six month
period ended period ended Year ended
30 June 30 June to 31 Dec
2022 2021 2021
GBP GBP GBP
Interest income
Bank deposits - 3,963 11,412
Total interest income for financial assets that are not held at
fair value through profit or loss is GBPNil (2021: GBP3,963).
6 Operating Loss
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Operating loss for the period is stated
after charging/(crediting):
Exchange losses (355,013) 47,249 151,369
Fees payable to the company's auditor
for the audit of the company's financial
statements - - 36,190
Depreciation of property, plant and
equipment 67,400 3,483 30,057
Share-based payments 178,670 46,824 255,787
7 Auditor's remuneration
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2022 2021 2021
Fees payable to the company's auditor GBP GBP GBP
and associates:
For audit services
Audit of the financial statements
of the company - - 32,000
Audit of the financial statements
of the company's subsidiaries - - 4,190
- - 36,190
For non-audit services
Interim review 23,000 16,000 16,000
Other services - 110,000 110,000
Total non-audit fees 23,000 126,000 126,000
During the period the auditor provided non-audit services of GBP23,000
for their role in review of the interim accounts. There were GBP126,000
non-audit services provided in the six months to 30 June 2021 and
in the year to 31 December 2021, they provided additional services
for the audit of the interim financial statements and performed
work in relation to the readmission to AIM.
8 Income tax credit
Six month Six month
period ended period ended Year ended
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Current tax
UK corporation tax on profits for
the current period - - -
Foreign taxes and reliefs (23,788,541) (1,017,401) (25,971,588)
------------- ------------- ------------
(23,788,541) (1,017,401) (25,971,588)
============= ============= ============
Deferred tax
Origination and reversal of temporary
differences 22,936,560 372,284 19,059,826
========== ========= ===========
Total tax (credit) (851,981) (645,117) (6,911,762)
========== ========= ===========
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 GBP2,028,262 (June 2021: GBP2,003,236). A deferred tax liability
has been recognised relating to Norway, further details of which
can be found in Note 17.
Longboat Energy Norge AS received a tax refund under the temporary
tax measures introduced in Norway for the tax year 2020 & 2021.
9 Inventories
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Materials and supplies 104,502 - 92,798
---------- ---------- ------
Closing inventories are equal to their net realisable
value
10 Loss per share 30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Weighted average number of ordinary
shares for basic loss per share 56,666,666 11,229,050 36,082,191
Losses
Continuing operations
Loss for the period from continued
operations (1,644,364) (864,878) (4,680,620)
------------- ----------- -------------
Loss for basic and diluted loss
per share being net losses attributable
to equity shareholders of the company
for continued operations (1,644,364) (864,878) (4,680,620)
============= =========== =============
Basic and diluted loss per share
(pence per share) (2.90) (7.70) (12.97)
============= =========== =============
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of shares
outstanding during the period.
Diluted earnings per share is calculated using the weighted average
number of shares adjusted to assume to conversion of all dilutive
potential ordinary shares. 2,281,661 (2021: 2,281,661) of share options
are not included because they are anti-dilutive, due to the loss.
11 Non-current assets
Exploration Computers
and Right Fixtures
evaluation of Use and
assets Asset Fittings
GBP GBP GBP GBP
Cost
At 1 January 2021 - - - 14,605
Additions - - - 17,331
------------ -------- ----------- ---------
At 30 June 2021 - - - 31,936
Additions 29,716,850 580,044 3,340 20,538
Disposals - - - (15,322)
Foreign currency adjustments - - - (119)
At 31 December 2021 29,716,850 580,044 3,340 37,033
Additions 30,893,760 - 41,979 13,234
Foreign currency adjustments - (4,499) -
------------ -------- ----------- ---------
At 30 June 2022 60,610,610 575,545 45,319 50,267
Accumulated depreciation and
impairment
At 1 January 2021 - - - 2,807
Charge for the Six Month Period - - - 3,483
Foreign currency adjustments - - - (39)
------------ -------- ----------- ---------
At 30 June 2021 - - 6,251
Charge for the Six Month Period - 20,015 167 6,392
Foreign currency adjustments (671,038) (680) - 13
Exploration write off 6,399,134 - - (2,050)
At 31 December 2021 5,728,096 19,335 167 10,606
Exploration write off reversal (309,337) - - -
Charge for the Six Month Period 57,404 2,705 7,291
At 30 June 2022 5,418,759 76,739 2,872 17,897
Carrying amount
At 30 June 2022 55,191,851 498,806 42,447 32,370
============ ======== =========== =========
At 30 June 2021 - - - 25,685
============ ======== =========== =========
At 31 December 2021 23,988,754 560,709 3,173 26,427
============ ======== =========== =========
The exploration write off in the first half of 2021 relates to
the Mugnetind licence. The exploration refund in the Consolidated
statement of comprehensive income in 2022 relates to the
reimbursements of previously billed costs from the Operator,
effectively reducing the overall write off on Mugnetind.
12 Trade and other receivables
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Trade receivables 177,245 - 22,662
VAT recoverable 184,855 144,305 81,737
Prepayments and other receivables 629,074 1,224,235 1,031,682
991,174 1,368,540 1,136,081
======= ========= =========
13 Lease liabilities
The Group has lease contracts for buildings used in its operations.
The Group's obligations under its leases are secured by the lessor's
title to the leased assets.
Set out below are the carrying amounts of right of use assets recognised
and the movements during the period:
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Opening balance 582,802 - -
Additions - - 585,706
Repayments (43,694) -
Interest 8,131 - 2,758
Foreign exchange (5,198) - (5,662)
Closing balance 542,041 - 582,802
-
Within 1 year 119,219 - 96,172
In two to five years 422,822 - 486,630
-------- ------- --------
542,041 - 582,802
======== ======= ========
Maturity analysis -
Within one year 115,109 - 111,799
In two to five years 383,697 - 514,273
-
Total undiscounted liabilities 498,806 - 626,072
Future finance charges and other adjustments 43,235 - (43,270)
-------- ------- --------
Lease liabilities in the financial
statements 542,041 - 582,802
======== ======= ========
14 Current and non-current tax receivable
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Current tax receivable - 1,089,367 8,149,906
Non-current tax receivable 20,960,554 - -
---------- --------- ---------
20,960,554 1,089,367 8,149,906
========== ========= =========
15 Share Capital
GBP
Balance at 1 January 2021 1,000,000
Additions 4,666,665
-----------
Balance at 30 June and 31 December 2021 5,666,665
-----------
Balance at 30 June 2022 5,666,665
===========
16 Trade and other payables
30 June 30 June 31 Dec
2022 2021 2021
GBP GBP GBP
Trade payables 3,568,526 823,780 580,084
Accruals 4,757,033 830,971 2,753,202
Social security and other taxation 336,911 48,946 239,922
Other payables 5,776 3,707 1,198,959
---------- ---------- -------------
8,668,246 1,707,404 4,772,167
========== ========== =============
17 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.
ACAs Total
GBP GBP
Deferred tax balance at 1 January 2021 431 431
Deferred tax movements in prior year
Differences in tax basis for depreciation in
Norway 372,278 372,278
---------- ----------
Deferred tax liability at 30 June 2021 372,709 372,709
========== ==========
Deferred tax movements
Foreign exchange (293,832) (293,832)
Differences in tax basis for depreciation in
Norway 18,687,547 18,687,547
Deferred tax liability at 31 December 2021 18,766,424 18,766,424
========== ==========
Deferred tax movements
Differences in tax basis for depreciation in
Norway 22,380,267 22,380,267
Deferred tax liability at 30 June 2022 41,146,691 41,146,691
========== ==========
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 refundable when incurred.
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 which is disclosed
in the Annual Report and 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 837,023
Jonathan Cooper 333,432
Graham Stewart 350,000
Jorunn Saetre 51,667
Nick Ingrassia 179,023
Julian Riddick (PDMR) 272,648
Hilde Sathe 11,805
In addition, the following conditional awards have been made
to the Executive Directors and Company Secretary under the prior
period 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
2022 2021 2021
GBP GBP GBP
Loss for the six month period
after tax (1,644,363) (864,878) (4,680,620)
Adjustments for:
Net taxation (credited) (851,980) (645,117) (6,911,763)
Exploration write offs (309,338) - 6,399,134
Release of prepaid bank fees - - 103,517
Investment income - (3,963) -
Interest payable 180,898 - 484,527
Interest receivable - - (11,412)
Non-utilisation fees 224,980 - -
Time writing adjustments - - (448,071)
Depreciation of property, plant
& equipment 68,523 3,483 27,982
Equity settled share-based payment
expense 178,678 46,824 255,736
Movements in working capital:
Increase in inventories (11,704) - (92,798)
(Increase)/decrease in trade
and other receivables (221,922) (815,712) 104,906
(Decrease)/increase in trade
and other payables (1,026,618) 1,360,034 571,544
Cash (absorbed by) operations (3,412,846) (919,329) (4,197,318)
20 Events after the reporting date
On 15 September 2022, the Company announced that the Copernicus
well was dry.
On 23 September 2022, the Company announced that a side track
and drill stem test would be performed on the Oswig well.
21 Other information
A copy of this interim report and financial statements is available
on the Company's website www.longboatenergy.com.
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END
IR FFFEIAIIEFIF
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