Longboat Energy, the emerging full-cycle E&P company, has announced its unaudited interim results for the period to 30 June 2023.

Helge Hammer, Chief Executive Officer of Longboat Energy, commented:
"Earlier this year, Longboat announced a transaction with Japan Petroleum Exploration Co, Ltd ("JAPEX") to form a joint venture company in Norway which involved JAPEX making a substantial investment in our Norwegian subsidiary and providing a financing facility, thereby significantly strengthening the Company's financial position. The transaction completed in mid-July and the now jointly controlled company was renamed Longboat JAPEX Norge.

Longboat JAPEX will pursue a growth-led strategy on the Norwegian Continental Shelf to create value predominantly through the acquisition of production and development projects and growing 2P reserves to reach a significant production level within three to five years. Furthermore, the joint venture will continue to pursue exploration and appraisal opportunities with the target of drilling one to three wells per year.

In early August the drilling of the OMV operated Velocette well commenced targeting a large gas-condensate prospect on the eastern flank of the Utgard High in the Norwegian Sea. In mid-September we announced a minor gas discovery where the well encountered hydrocarbons in the primary target in Cretaceous turbidite sands in the Nise formation. While the discovery is not considered to be a commercial prospect, the licence contains numerous other prospects which have been de-risked by the presence of gas in good quality reservoir in the Velocette well.

Earlier this month we announced an expansion of our operations in SE Asia through the acquisition of privately held Topaz Number One Limited, thereby increasing our interest in Malaysian 2A PSC to 52.5% which includes the giant Kertang target, with James Menzies and Pierre Eliet also joining the Company to lead our growth in the region."

Operational Highlights

• Formed a joint venture company in Norway with Japan Petroleum Exploration Co, Ltd ('JAPEX'). JAPEX made a significant investment with an initial $16 million subscription, with a further $4 million contingent payment, and providing a $100 million financing facility
• Entered into an agreement through the new Norwegian joint venture to acquire its first producing assets in Norway
  • 4.80% unitised interest in the Statfjord Øst Unit
  • 4.32% unitised interest in the Sygna Unit
• This acquisition, when completed, represents long-term cash flow with the fields expected to produce until late 2030s
• Expanded our business in SE Asia with the entrance into Malaysia through the award of a production sharing agreement for Block 2A. Later announced the acquisition of a further interest in Block 2A and the employment of two senior executives, James Menzies and Pierre Eliet
• Announced a small non-commercial discovery in the Velocette well which, through the presence of reservoir and hydrocarbons, has de-risked the other prospects on the licence
• Announced the award in the APA licensing round of a 30% licence interest in a firm well on the Kjøttkake Lotus prospect, building our position in the prolific Kveikje area

Financial Summary

• Longboat Energy plc had gross cash at 30 June 2023 of £2.1 million (30 June 2022: £22.5 million), which excludes cash of £2.2 million in Longboat Energy Norge AS (shown on the balance sheet as "held for sale" pending completion of JAPEX JV (completed post period end, 14 July 2023)
• Longboat Energy Norge AS had exploration financing facility ("EFF") drawings of £33.7 million (30 June 2022: £15.7 million) resulting in a net debt position of £31.5 million. The majority of EFF drawings (£32.0 million) will be repaid from the Norwegian Government's tax rebate of £35.5 million, due in November 2023 
• Longboat Energy plc's post-tax loss for the period was £6.2 million (30 June 2022: £1.6 million), total comprehensive loss for the period of £7.9 million (30 June 2022: £1.7 million). Includes write off of Egyptian Vulture of £10.5 million

Financial Results

On 14 July 2023, our Norwegian subsidiary became a joint venture with JAPEX. At 30 June 2023, the completion of this transaction was considered highly probable and as this would result in Longboat Energy plc sharing control of its subsidiary, it would be deemed a sale in the parent company accounts. Therefore, the results of our Norwegian subsidiary are classified as discontinued operations in the Income Statement, with comparatives restated to be consistent with this approach. The assets and liabilities of our Norwegian subsidiary are disclosed as held for sale in the Balance sheet. These calculations and disclosures are in line with IFRS 5 "Non-current assets held for sale and discontinued operations". 

Longboat Energy plc had gross cash at 30 June 2023 of £2.1 million (30 June 2022: £22.5 million), which excludes cash of £2.2 million in Longboat Energy Norge AS, that was shown on the balance sheet as held for sale. Longboat Energy Norge AS had EFF drawings of £33.7 million (30 June 2022: £15.7million) resulting in a net debt position of £31.5 million. The EFF drawings disclosed in Note 21 are shown net of prepaid loan fees of £0.5 million, which are being amortised over the life of the facility. The majority of EFF drawings (£32.0 million) will be repaid from the Norwegian Government's tax rebate of £35.5 million, due in November 2023.  Longboat Energy plc's post-tax loss for the period was £6.2 million (30 June 2022: £1.6 million), total comprehensive loss for the period of £7.9 million (30 June 2022: £1.7 million). During the period our Norwegian subsidiary had a much less active drilling campaign compared to the prior period with £0.4 million (30 June 2022: £14.6 million) of exploration drilling costs and £0.3 million (30 June 2022: £14.2 million) of exploration carry costs. In the period, Egyptian Vulture was relinquished and the intangible asset of £10.5 million pre-tax and £2.3 million post tax was written off. The post-tax write off is included in the loss from discontinued operations of £4.1 million. 

On 20 September Longboat Energy announced Velocette (PL1016) as a small non-commercial gas discovery. The failure of the Velocette well to find commercial hydrocarbons means that the Velocette Tranche under the JAPEX investment agreement will not be payable. The results and follow up potential are being evaluated. As at the 30 June 2023 the intangible asset in relation to licence PL1016 was £1.6 million with anticipated net pre-tax drilling and carry cost estimates of £19.9 million (net post tax costs of £5.6), based on operator pre-drill estimates. The intangible carrying value will be updated as the operator's invoices are issued and the ability to carry these amounts will be assessed again at the year end.  

Longboat Energy plc's continuing operations administrative expenses in the period were £2.0 million (30 June 2022: £1.3 million). Wages and salaries for continuing operations in the period were £0.7 million (30 June 2022: £0.8 million).

 KeyFacts Energy: Longboat Norway country profile