Longboat Energy has reached agreement on a bilateral basis with three separate counterparties to acquire a significant, near-term, low-risk exploration drilling programme on the Norwegian Continental Shelf (“NCS”) structured as three farm-in transactions.

Longboat further announces its intention to carry out a proposed equity financing to raise gross proceeds of £35 million, to be conducted by means of a placing and subscription for new ordinary shares in the Company. The net proceeds from the Proposed Fundraising will be used principally to finance the consideration for the Farm-Ins and costs associated with the high-impact drilling programme, as well as the acquisition of certain seismic data and general corporate costs.

The Transactions are classified as a reverse takeover pursuant to the AIM Rules for Companies.

Highlights of the Proposed Farm-Ins

• High activity level: seven wells expected to be drilled in the next 18 months, with the first well expected to spud in Q3 2021 and a further three wells expected to drill before year-end;
• Significant resource potential: initial drilling programme targeting net mean prospective resource potential of 104 MMboe1 with an additional 220 MMboe1 of upside and follow-on prospectivity;
• Low cost, low risk portfolio: acquisition costs and drilling programme fully eligible for 78% Norwegian tax refund and Chances of Success in the range of 25-55%1 for all-but-one high-impact prospect;
• Norway delivering outstanding exploration results: Norwegian success rates of almost double global rates in 2020, year-to-date in 2021 at 70%2;
• Matches Longboat’s ESG objectives: a gas-weighted portfolio with all prospects within tie-back distance to existing infrastructure with the potential to reduce emissions per barrel produced and contribute positively to decarbonisation projects; and
• Value creation: Net Asset Value (“NAV”) creation potential of over $1 billion1 based on precedent transactions on the NCS for development assets.

The three separate Farm-Ins have each been negotiated on a bilateral basis to create a tailored exploration drilling portfolio with a balanced risk/reward profile. The Farm-Ins are corner-stoned with a single, multi-licence deal with a major oil & gas company which is one of the most active and successful explorers on the NCS. The Farm-Ins represent an opportunity to take advantage of cyclical budget cuts in the sector to accelerate Longboat’s first steps towards building a full-cycle E&P company. The high-quality nature of the portfolio is evidenced by the vendors retaining interests in six of the seven targets included in the Farm-Ins.

The consideration for the Farm-Ins will be settled via a cost carry by Longboat on behalf of the vendors and is fully eligible for the Norwegian tax refund system. The post-tax cost to Longboat of the carry element of the transaction is approximately $7.8 million ($35 million pre-tax), representing $0.07 per prospective boe on a post-tax basis.

Helge Hammer, Chief Executive of Longboat, commented:
“After Faroe was sold for c.$900 million in 2019, the management team formed Longboat to replicate that success. I am very pleased that Longboat is taking over where Faroe left off with a unique opportunity for shareholders to invest in a high-impact, low-risk, multi-well exploration drilling programme. Thanks to our excellent industry relationships, developed over many years of operating in the North Sea, we have negotiated three bilateral agreements to deliver a bespoke drilling programme. We look forward to a busy period of almost continuous drilling and frequent catalysts during the next 18 months.

“This represents a unique opportunity which accelerates Longboat’s ambition to build a full-cycle E&P company.”

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