TIDMLBE
RNS Number : 6555E
Longboat Energy PLC
03 July 2023
3 July 2023
Longboat Energy plc
("Longboat Energy", the "Company" or "Longboat")
Acquisition of initial production assets in Norway
Longboat Energy, an emerging full-cycle E&P company with
activities in Norway and Malaysia, is pleased to announce the
acquisition of a 4.80% unitised interest in the Statfjord Øst Unit
and a 4.32% unitised interest in the Sygna Unit (together, the
"Statfjord Satellites") located on the Norwegian Continental Shelf
("NCS"), through its subsidiary Longboat Energy Norge AS ("Longboat
Norge"), from INPEX Idemitsu Norge AS ("INPEX Idemitsu") . Longboat
Norge will shortly become a joint venture between Longboat Energy
and Japan Petroleum Exploration Co., Ltd ("JAPEX") on completion of
the investment into Longboat Norge by JAPEX announced on 2 May
2023.
The acquisition represents Longboat's first producing
assets.
Transaction highlights:
-- Acquisition of long-term cash flow, fields expected to produce until late 2030s
-- Production of 300 boepd net to Longboat Norge (based on NPD figures to 30 April 2023)
-- Production anticipated to approximately double in 2024
following a five well in-fill drilling programme, which is
currently underway, and gas-lift installation which is complete
-- Acquisition price equivalent of US$8.2/2P boe, in-line with recent NCS transactions
-- A udited 2P reserves of 1.55 mmboe net to Longboat Norge, of
which approximately 77% is oil and NGLs
-- Cash consideration of $12.75 million
-- Anticipated payback on the transaction in under two years
-- Consideration to be fully funded by JAPEX's investment in Longboat Norge
The Company will make a short presentation on this acquisition
via the Investor Meet Company platform. The online presentation
will take place at 11:00 am on Wednesday, 5 July 2023 and is open
to all existing and potential shareholders. Those who wish to
attend the online presentation should register in advance via this
link:
https://www.investormeetcompany.com/longboat-energy-plc/register-investor
A copy of the presentation is available on the Company's website
(www.longboatenergy.com).
Helge Hammer, Chief Executive of Longboat, commented:
"We are pleased to announce our first production acquisition in
Norway, the next step in realising our growth ambitions on the
Norwegian Continental Shelf. The Statfjord Satellites are two
high-quality, long-life assets undergoing an exciting and
transformative redevelopment led by Equinor.
Longboat's ability to secure this acquisition through a
bilateral negotiation continues to demonstrate the Company's deep
relationships in Norway and is an important next step in creating a
full cycle E&P company.
We would also like to thank our new joint venture partner,
JAPEX, with whom we have worked in close cooperation to execute
this important transaction. The Statfjord Satellites help position
the enlarged business for future success and proves the benefits of
joint venture concept."
Transaction detail
Longboat Norge has signed a sale and purchase agreement ("SPA")
with INPEX Idemitsu to acquire a 9.60% interest in PL 089, equating
to a 4.80% unitised interest in the Statfjord Øst Unit and a 4.32%
unitised interest in the Sygna Unit, for cash consideration of
US$12.75 million (the "Transaction"). In addition, Longboat Norge
has entered into a decommissioning security agreement with INPEX
Idemitsu and will pay a further deferred, post-tax consideration of
US$1.75 million in equal stages over the next 18 months, which will
be returned to Longboat Norge after the successful decommissioning
of the Statfjord Satellites, currently anticipated in the late
2030s. The Transaction effective date is 1 January 2023.
In addition to the customary regulatory, lender and partner
approvals, the Transaction is subject to the successful carve-out
of Statfjord Øst and Sygna from PL 089 and the completion of the
investment by JAPEX in Longboat Norge, announced on 2 May 2023.
Completion of the acquisition of the Statfjord Satellites is
anticipated prior to the end of 2023.
Assets overview
Statfjord Øst is located seven kilometres to the northeast of
the Statfjord field in a maximum water depth of 190 metres.
Statfjord Øst produces oil and gas from good quality, Middle
Jurassic sandstone in the Brent Group.
Statfjord Øst began production in 1994 from two subsea
production templates and one water injection template tied-back to
the Statfjord C platform. The Ministry of Petroleum and Energy
approved a redevelopment plan in 2021 to drill five new production
wells into potentially undrained areas of the field while also
adding gas-lift to increase production levels. This in-fill
drilling programme is currently underway and anticipated to last
until the end of 2023 and result in a material uplift to production
in 2024. The field is currently anticipated to produce until the
late 2030s.
In the period to 30 April 2023, Statfjord Øst had gross
production of 5,200 boepd from one well, equivalent to 250 boepd
net to the acquired INPEX Idemitsu working interest.
The Statfjord Øst Unit partners are Equinor Energy AS (43.25%,
op), Petoro AS (30.00%), Vår Energi ASA (20.55%), INPEX Idemitsu
Norge AS (4.80%) and Wintershall Dea Norge AS (1.40%).
The Sygna field is located just northeast of the Statfjord Nord
field in 300 metres water depth. Sygna produces oil and gas from
good quality, Middle Jurassic sandstone in the Brent Group.
Originally discovered in 1996, the field began production in 2000
from three production wells tied-back via a subsea template to the
Statfjord C facility. A long-reach water injection well was also
drilled from the Statfjord Nord template. The field is currently
anticipated to produce until the early 2030s.
In the period to 30 April 2023, Sygna had gross production of
1,300 boepd from one well, equivalent to 60 boepd net to the
acquired INPEX Idemitsu working interest.
The Sygna Unit partners are Equinor Energy AS (43.425%, op),
Petoro AS (30.00%), Vår Energi ASA (20.995%), INPEX Idemitsu Norge
AS (4.32%) and Wintershall Dea Norge AS (1.26%).
Reserves and production
In conjunction with the Transaction, Longboat commissioned ERCE
("ERCE") to produce an independent, competent persons report
("CPR") in relation to the Statfjord Satellites, a summary is
provided below:
The ERCE CPR values Longboat Norge's net entitlement 2P reserves
in the Statfjord Satellites at NPV10 of US$15.3 million, based on a
long-term Brent oil price assumption of US$75.7/bbl (real 2023) and
an NBP gas price of 108.4 p/therm. A full copy of the CPR can be
found on Longboat's website ( www.longboatenergy.com ).
Longboat anticipates the full year 2023 production to be in-line
with the levels during the first four months of the year.
Production is anticipated to approximately double in 2024 following
the completion of the in-fill drilling programme, subject to
ultimate well deliverability and success of the gas-lift project.
It is Longboat's intention to provide a more detailed update on
2024 production outlook towards the end of 2023 once the drilling
programme is substantially complete.
Profits
For the year ended 31 December 2022, Longboat has estimated the
profits to the Company associated with the Transaction to be GBP5.6
million. Going forward, the Transaction is expected to unlock
material tax synergies within Longboat Norge associated with
historic corporation tax losses which ceased to be refunded by the
Norwegian government following tax changes implemented in 2022.
Based on Longboat Norge's internal estimates, at current commodity
price levels the Transaction is anticipated to reach payback in
under two years.
Financing
The Transaction and subsequent capital expenditures on the
Statfjord Satellites will be funded by a combination of existing
cash on hand in Longboat Norge and the pending investment by JAPEX,
made up of the initial US$16 million base investment (less
repayment of the intercompany loan to Longboat of approximately
US$4.75 million) and the additional US$4 million contingent payment
previously agreed with JAPEX which will be triggered by the
Transaction. A portion of the US$100 million Acquisition Bridge
Facility, provided by JAPEX in relation to its investment into
Longboat Norge, is also available should it be needed.
The information contained within this announcement is considered
to be inside information prior to its release.
Enquiries:
Longboat Energy via FTI
Helge Hammer, Chief Executive Officer
Jon Cooper, Chief Financial Officer
Nick Ingrassia, Corporate Development
Director
Stifel (Nomad) Tel: +44 20 7710 7600
Callum Stewart
Jason Grossman
Ashton Clanfield
Cenkos Securities plc (Joint Broker) Tel: +44 20 7397 8900
Neil McDonald
Pete Lynch
Leif Powis
FTI Consulting (PR adviser) Tel: +44 20 3727 1000
Ben Brewerton
Rosie Corbett longboatenergy@fticonsulting.com
Background
Longboat Energy was established at the end of 2019 to create a
full-cycle E&P company through value accretive M&A and
near-field exploration. Since June 2021, Longboat has entered a
series of four transactions to acquire interests in a portfolio of
nine, gas-weighted exploration wells drilling on the Norwegian
Continental Shelf close to existing infrastructure. To date, eight
of these wells have been drilled resulting in five hydrocarbon
discoveries, representing a technical 63% success rate.
In February 2023, Longboat entered Malaysia through the award of
a Production Sharing Contract for Block 2A, offshore Sarawak. Block
2A covers approx. 12,000km(2) and is located in water depths of
between 100-1,400 metres where a number of large prospects across
multiple plays have been identified, with significant volume
potential representing multiple trillions of cubic feet of gas.
In May 2023, the Company announced that agreement had been
reached with Japan Petroleum Exploration Co., Ltd ("JAPEX") to make
a significant investment into its Norwegian subsidiary, Longboat
Energy Norge AS ("Longboat Norge"), to form a joint venture. Under
this agreement, JAPEX will make a cash investment of up to US$50
million for 49.9% of Longboat Norge and provide the Joint Venture
with a US$100 million Acquisition Financing Facility to finance
acquisitions and associated development costs.
Longboat's activities remain focused on creating 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.
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 2022.
Review by Qualified Person
The technical information in this release has been reviewed by
Hilde Salthe (Managing Director Longboat Energy Norge AS), 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
"1P" Proved reserves
"2P" Proved plus probable reserves
"3P" Proved plus probable plus possible reserves
"boe" Barrels of oil equivalent
"boepd" Barrels of oil equivalent per day
"Bscf" Billion standard cubic feet
"mmboe" Million barrels of oil equivalent
"NBP" National Balancing Point
"NCS" Norwegian Continental Shelf
"NPV10" Net present value at a 10% discount rate
"scf" Standard cubic feet
"stb" Stock tank barrels
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END
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