TIDMLBE
RNS Number : 1468G
Longboat Energy PLC
17 July 2023
17 July 2023
Longboat Energy plc
("Longboat Energy", the "Company" or "Longboat")
Transaction to create Norwegian Joint Venture with JAPEX
completed
Longboat Energy, the full-cycle E&P company, is pleased to
confirm that its transaction with Japan Petroleum Exploration Co.,
Ltd ("JAPEX") to establish a joint venture in Norway has now been
completed with the initial investment of US$16 million received by
the renamed entity Longboat JAPEX Norge AS ("Longboat JAPEX" or the
"JV"). As part of the transaction, Longboat JAPEX will use part of
the JAPEX investment to repay an intercompany loan of NOK 45.5
million (approximately GBP3.5 million) to Longboat Energy.
The contingent consideration of US$4 million, payable by JAPEX
into the JV, associated with the recently announced production
acquisition, will be paid on completion of that transaction which
is anticipated toward the end of the year.
The third tranche (the "Velocette Tranche") of up to US$30
million is contingent on a successful discovery on the Velocette
well, which is expected to spud in September. The amount payable
under the Velocette Tranche is based on a sliding scale applied to
the gross resources approved for development by the Norwegian
Ministry of Petroleum and Energy.
Having completed the transaction, the US$100 million Acquisition
Financing Facility to finance acquisitions and associated
development costs has been established and is available for drawing
by the JV.
Longboat JAPEX is owned 50.1% by Longboat and 49.9% by
JAPEX.
Helge Hammer, Chief Executive of Longboat, commented:
"We are pleased that the creation of the Longboat JAPEX joint
venture has completed as scheduled and now look forward to pursuing
further acquisitions and opportunities on the Norwegian Continental
Shelf to follow on from the first joint transaction announced at
the beginning of this month.
"In the near term, we are looking forward to the drilling of the
high impact Velocette exploration well (JV 20%) which is expected
to spud in September."
Enquiries:
Longboat Energy via FTI
Helge Hammer, Chief Executive Officer
Jon Cooper, Chief Financial Officer
Stifel (Nomad & Joint Broker) 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
Catrin Trudgill longboatenergy@fticonsulting.com
The information contained within this announcement is not
considered to be inside information prior to its release.
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 an 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 JV with a
US$100 million Acquisition Financing Facility to finance
acquisitions and associated development costs.
In July 2023 the Company announced the acquisition of its first
producing interests in the Statfjord Øst Unit and Sygna Unit
located on the Norwegian Continental Shelf
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 include a corporate 'Net Zero' on a Scope 1 and 2
basis by 2050.
Related Party Transactions
Acquisition Bridge Facility : As announced on 2 May 2023, JAPEX
has provided Longboat JAPEX with a five-year, US$100 million
Acquisition Financing Facility (the "Facility") to finance
acquisitions and associated development costs. The Facility is
available for drawing for the first three years subject to certain
conditions, including mutually agreed acquisitions by the Joint
Venture. The Facility will attract a market-rate of interest on an
increasing scale over its tenor with an initial rate of 6% in the
first year, rising to 13% in year five, resulting in an all-in cost
over the term of less than 10%. Whilst no amounts have been drawn
on the Facility to-date, by the nature of JAPEX being a related
party to the Company following completion of the JAPEX transaction,
future drawings and payments under the Facility will constitute
related party transactions under AIM Rule 13. The Company's
directors consider, having consulted with Stifel, the Company's
Nominated Adviser, that the terms of Facility are fair and
reasonable insofar as shareholders are concerned.
Secondment Agreement : Under the terms of the Investment
Agreement between the Company and JAPEX dated 28 April 2023, at
completion Longboat JAPEX shall enter into a Secondment Agreement
with JAPEX which entitles JAPEX to second employees to Longboat
JAPEX (the "Secondment Agreement"). Under the terms of the
Secondment Agreement, Longboat JAPEX will pay JAPEX a secondment
fee and meet the living and other expenses of the seconded
employees in Norway together with any associated payroll taxes
which is expected to be circa GBP0.3 million for the remainder of
2023 and approximately GBP0.8 million in future full year periods.
This may increase by circa 20% in 2024, up to GBP1.0 million, as a
result of JAPEX increasing the number of seconded employees to the
maximum allowed under the Secondment Agreement. The payments to
JAPEX from Longboat JAPEX Norge AS under the Secondment Agreement
are expected to classify as related party transactions under AIM
Rule 13. The Company's directors consider, having consulted with
Stifel, the Company's Nominated Adviser, that the terms of the
Secondment Agreement are fair and reasonable insofar as
shareholders are concerned.
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END
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