STRATEGIC PIVOT TO FOCUS ON SOUTHEAST ASIA
LONDON: Longboat Energy, an emerging full-cycle E&P company, has reached agreement to sell its 50.1% holding in Longboat Japex Norge AS (LJN) to its joint venture partner Japan Petroleum Exploration Co. Ltd (JAPEX).
In light of the near-term financial challenges facing the business, the board and management of Longboat Energy have made the decision to exit Norway to ensure capital is being directed towards the areas with the greatest value-creation potential for an E&P company with a limited capital base.
This decision follows the continuing scarcity of acquisition opportunities suitable for Longboat, the disappointing performance of the Statfjord Satellites (comprised of a 4.80% unitised interest in the Statfjord Øst Unit and a 4.32% unitised interest in the Sygna Unit) and slow progress on monetising the Kveikje discovery (LJN, 10%), all of which have contributed to a near-term projected working capital shortfall in LJN which could result in Longboat forfeiting some-or-all of its shares in LJN.
Following a process to explore all options available to the Company under the Shareholder Agreement to realise value for shareholders, Longboat has entered into a sale and purchase agreement to sell its 50.1% interest in LJN to its joint venture partner, JAPEX, for a cash consideration of $2.5 million payable on completion plus the assumption of the entire debt drawn by LJN under the Acquisition Bridge Facility provided to the joint venture by JAPEX. Net drawings to Longboat under the Acquisition Facility are currently $8.5 million ($17 million gross).
As part of the Transaction, JAPEX will also assume all financial obligations associated with LJN including all staff and running costs going forward and has amended the Acquisition Facility pre-completion to allow further drawings to manage the immediate working capital needs at LJN. The Management Services Agreement providing for transitional services between LJN and the Company will remain in-place until 30 September 2024 resulting in an estimated net outflow of up to ~£20k per month until that point. Completion of the Transaction is anticipated during Q3 2024.
Longboat Energy intends to use the proceeds from the Transaction to fund its working capital requirements and ongoing operations in Malaysia as part of the Company’s plan to pivot its efforts to building a business in Southeast Asia. The Transaction consideration, along with ongoing efforts to cut Longboat’s cost base, are forecast to provide capital to run the Company through the end of Q1-25.
Nick Ingrassia, CEO of Longboat commented: “I am proud of what Longboat and its team has achieved in the three years since it became active in Norway. In this short period, the business safely drilled nine exploration wells resulting in six hydrocarbon discoveries, was awarded two APA licenses in the highly prolific Norwegian North Sea, executed a total of seven transactions and welcomed JAPEX as an active participant into the Norwegian Continental Shelf through the creation of an innovative joint venture.
While we leave Norway with mixed emotions, I am pleased that the transaction delivers JAPEX a full-cycle business with an exceptional team, providing an excellent platform for a large company with access to significant capital to build long-term success.”
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