TIDMLBE
RNS Number : 7519N
Longboat Energy PLC
27 September 2023
Longboat Energy plc
("Longboat Energy", the "Company" or "Longboat")
Interim Results to 30 June 2023
London, 27 September 2023 - Longboat Energy, the emerging
full-cycle E&P company, is pleased to announce 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 AS
("Longboat JAPEX").
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
o 4.80% unitised interest in the Statfjord Øst Unit
o 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 GBP2.1
-- million (30 June 2022: GBP22.5 million), which excludes cash
of GBP2.2 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 GBP33.7 million (30 June 2022: GBP15.7 million)
resulting in a net debt position of GBP31.5 million. The majority
of EFF drawings (GBP32.0 million) will be repaid from the Norwegian
Government's tax rebate of GBP35.5 million, due in November
2023
Longboat Energy plc's post-tax loss for the period was GBP6.2
-- million (30 June 2022: GBP1.6 million), total comprehensive
loss for the period of GBP7.9 million (30 June 2022: GBP1.7
million). Includes write off of Egyptian Vulture of GBP10.5
million
This announcement does not contain inside information
Enquiries:
Longboat Energy via FTI
Helge Hammer, Chief Executive Officer
Jon Cooper, Chief Financial Officer
Nick Ingrassia, Corporate Development
Director
Stifel (Nomad and Joint Broker) Tel: +44 20 7710 7600
Callum Stewart
Jason Grossman
Ashton Clanfield
Cavendish Capital Markets Limited Tel: +44 20 7397 8900
(Joint Broker)
Neil McDonald
Pete Lynch
Leif Powis
FTI Consulting (PR adviser) Tel: +44 20 3727 1000
Ben Brewerton
Rosie Corbett
Catrin Trudgill longboatenergy@fticonsulting.com
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 2020.
Review by Qualified Person
The technical information in this release has been reviewed by
Hilde Salthe, Managing Director Longboat JAPEX 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 Masters Degree from Faculty of Applied Earth Sciences
at the Norwegian University of Science and Technology in
Trondheim
Glossary
Mmboe Millions of barrels of oil equivalent
NCS Norwegian Continental Shelf
scf Standard cubic feet
stb Stock tank barrel
LONGBOAT ENERGY PLC
STRATEGIC REPORT
FOR THE SIX MONTH PERIODED 30 JUNE 2023
CEO Introductory Statement
In early May we announced a transaction with Japan Petroleum
Exploration Co, Ltd ("JAPEX") to form a joint venture company in
Norway which involved JAPEX making a significant investment in our
Norwegian subsidiary and providing a financing facility, thereby
significantly strengthening the Company's financial position.
The transaction completed in mid-July, just after the period
end, and the now jointly controlled company was renamed Longboat
JAPEX Norge AS ("Longboat JAPEX"). As part of the arrangements,
JAPEX committed to make an initial cash investment of US$16
million, which was paid on completion, with a further contingent
consideration of US$4 million, payable on the successful completion
of the acquisition of the Statfjord satellites. Following the
results of the Velocette well, the further related contingent
consideration has fallen away.
From the initial US$16 million, US$4.6 million was utilised by
Longboat JAPEX to repay the intercompany loan owed to Longboat
Energy plc.
In addition to these investments, JAPEX has also provided the
joint venture with a five-year US$100 million Acquisition Bridge
Facility to finance acquisitions and associated development costs
in Norway. Longboat JAPEX will pursue a growth-led strategy on the
Norwegian Continental Shelf to create value predominantly through
the acquisition of development projects, growing 2P reserves and
reaching 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.
The Statfjord satellite acquisition was announced in early-July
and is yet to complete. This is a significant acquisition as it
represents not only Longboat's first production acquisition but
also demonstrates the ability of the Longboat JAPEX joint venture
to access and transact opportunities. The 4.80% unitised interest
in the Statfjord Øst Unit and 4.32% unitised interest in the Sygna
Unit represent long-term cash flow with the fields expected to
produce until the late 2030s. Initial production of 300 boepd net
to Longboat JAPEX is 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.
The cash consideration of $12.75 million is anticipated to be paid
back in under two years and will be fully funded by JAPEX's initial
investment in Longboat JAPEX and by drawing on the JAPEX
facility.
Operationally, the first half of 2023 has been a quiet period
without exploration drilling compared to 2021 and 2022 when the
Company participated in one of the most active independent
exploration drilling campaigns. In early-August the drilling of the
OMV operated Velocette well commenced (Longboat JAPEX 20%)
targeting a large gas-condensate prospect on the eastern flank of
the Utgard High in the Norwegian Sea. On 20 September 2023 we
announced a minor gas discovery where the well encountered
hydrocarbons in the primary target in Cretaceous turbidity sands in
the Nise formation. The Velocette volumes are at the lower end of
pre-drill expectations and the discovery is not considered to be
commercial in isolation. However, the licence contains numerous
other prospects which have been de-risked by the presence of gas in
good quality reservoir in the Velocette well. The remaining
prospectivity has significant size potential in multiple structures
and with slightly different trapping geometries. Further assessment
of the
licence prospectivity together with other opportunities in the
area could impact the commercial potential of the licence. High
quality data and gas and fluid samples were collected in the
exploration well and these will be integrated into the updated
prospect evaluations.
Building our position in the prolific Kveikje area where
multiple discoveries have been made this year, we announced early
in the year the award in the APA licensing round of a 30% license
interest in a firm well on the Lotus prospect, which lies 4km
southeast of the Kveikje discovery and is expected to contain
analogous injectite sands to the sand encountered in Kveikje. Based
on company estimates Lotus has gross mean prospective resources of
27 mmboe with an upside of 44 mmboe. The estimated chance of
success is 56%. At the end of May we announced that the Lotus
prospect will be drilled using the semi-submersible Deepsea Yantai
and is expected to be drilled during Q3 2024.
In February, we announced that Longboat had entered into
Malaysia through the award of a production sharing agreement for
Block 2A, a large exploration block covering an area of more than
12,000 km(2) offshore Sarawak with material exploration
opportunities including the giant 'Kertang' prospect. Longboat is
operator (36.75%) of the block which already has significant 2D and
3D seismic coverage and the partnership includes PETRONAS and
Petroleum Sarawak Exploration & Production. This potentially
significant opportunity has been acquired without a material
initial cost obligation and with three years until a drilling
commitment decision has to be made. We are very excited about the
opportunity set in Malaysia which in many ways resembles the North
Sea a decade ago. Establishing a presence in Malaysia and building
an excellent relationship with PETRONAS provides Longboat with a
significantly expanded opportunity set and improved growth
potential.
In September we announced a transaction to expand our business
in SE Asia through the acquisition of privately-held Topaz Number
One Limited, increasing our working interest to 52.5% in Block 2A.
This transaction will simplify the process towards making a
positive well decision on the prospect and the potential
introduction of an additional funding partner prior to drilling.
Consideration for this acquisition will be in three tranches: an
initial $100,000 through an issue of new ordinary shares in the
Company; a further US$125,000 in cash or shares payable upon an
exploration well being committed on Block 2A or a farm-out; and up
to US$3,000,000 in cash or shares payable upon a discovery being
made on Block 2A, depending on the resource size and the growth in
the price of the Company's shares over a two year period.
Furthermore, the Topaz team, which comprise James Menzies and
Pierre Eliet, will join Longboat Energy bringing extensive regional
expertise and an established SE Asia network, thereby strengthening
Longboat's team and our ability to grow a full cycle E&P
business in SE Asia.
Strategy and Outlook
Longboat is committed to building a full-cycle E&P business
both in Norway and in SE Asia. The creation of the Longboat JAPEX
joint venture in Norway has the potential to deliver significant
value creation and growth and brings together two companies with
strong complimentary qualities. The Longboat team has significant
technical experience and expertise in the Norwegian E&P sector
and strong local industry relationships, while JAPEX is a
long-established E&P company with a strong balance sheet and
significant worldwide technical competence including E&P in the
North Sea. The two companies also share the ambition to have strong
ESG credentials and play roles in the energy transition, where
JAPEX already has experience with a Carbon Capture Utilisation and
Storage (CCUS) pilot project. By joining forces, we will have
greater access to opportunities and financing. We believe that this
agreement has laid the foundations for exciting growth in Norway in
the coming years.
In a situation where access to energy is becoming increasingly
important and particularly gas in North West Europe, Norway plays a
critical role as the country continues to offer attractive
opportunities for E&P companies. Exploration results in Norway
remain good and the country continues to offer high quality acreage
in regular licensing rounds. According to the latest Resource
Report by the Norwegian Petroleum Directorate, only half of the
total estimated resources of 100 billion boe have so far been
produced and sold. Longboat, with its highly skilled geological and
geophysical team and extensive industry network, is uniquely
positioned to find business opportunities and exploration
prospects.
Norway also continues to offer an attractive regulatory
framework. A new Norwegian Petroleum Tax System was introduced
during 2022, which was generally positive for Longboat. The main
elements of the updated tax system are an unchanged marginal rate
at 78%, a move to immediate expensing of investments, 71.8%
repayment of all losses in the following year (compared to
previously 72% of exploration losses only) with corporate tax at
6.2% carried forward against future profits. In early 2023,
Longboat JAPEX increased its exploration finance facility ("EFF")
to NOK 800 million from NOK 600 million and extended the
availability period for drawing by one year through to 31 December
2024. Longboat JAPEX will use these EFF credit facilities to assist
with the working capital requirement for future exploration
expenditure.
The North Sea M&A market for production and development
remains highly competitive. We believe the establishment of the
Longboat JAPEX joint venture will bring more access to financeable
opportunities. To make use of our highly skilled team and to
accelerate growth Longboat expanded its activities to include
Southeast Asia. Longboat identified the Malaysian market as having
many of the characteristics required to fast track the development
of a full cycle E&P Company, including a large and active
E&P industry, significant existing infrastructure, stable
regulatory framework, supportive authorities and an active M&A
market. Accordingly, in February 2023, Longboat announced its first
licence award in Malaysia which has many similarities to what the
Norwegian North Sea had 15-20 years ago, and Longboat is in a
strong position to exploit this opportunity due to our subsurface
and M&A expertise and industry relationships. In order to
accelerate this ambition, James Menzies and Pierre Eliet will join
Longboat Energy to help grow a full cycle E&P business in SE
Asia.
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 GBP2.1
million (30 June 2022: GBP22.5 million), which excludes cash of
GBP2.2 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 GBP33.7 million (30 June 2022: GBP15.7million)
resulting in a net debt position of GBP31.5 million. The EFF
drawings disclosed in Note 21 are shown net of prepaid loan fees of
GBP0.5 million, which are being amortised over the life of the
facility. The majority of EFF drawings (GBP32.0 million) will be
repaid from the Norwegian Government's tax rebate of GBP35.5
million, due in November 2023. Longboat Energy plc's post-tax loss
for the period was GBP6.2 million (30 June 2022: GBP1.6 million),
total comprehensive loss for the period of GBP7.9 million (30 June
2022: GBP1.7 million). During the period our Norwegian subsidiary
had a much less active drilling campaign compared to the prior
period with GBP0.4 million (30 June 2022: GBP14.6 million) of
exploration drilling costs and GBP0.3 million (30 June 2022:
GBP14.2 million) of exploration carry costs. In the period,
Egyptian Vulture was relinquished and the intangible asset of
GBP10.5 million pre-tax and GBP2.3 million post tax was written
off. The post-tax write off is included in the loss from
discontinued operations of GBP4.1 million.
On 20 September we 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 GBP1.6 million
with anticipated net pre-tax drilling and carry cost estimates of
GBP19.9 million (net post tax costs of GBP5.6), 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 GBP2.0 million (30 June 2022: GBP1.3
million). Wages and salaries for continuing operations in the
period were GBP0.7 million (30 June 2022: GBP0.8 million).
Going concern
The Directors have completed the going concern assessment, including
considering cash flow forecasts up to the end of 2024, sensitivities,
and stress tests to assess whether the Group is a going concern.
Base case scenarios include completion of the Statfjord Satellites
acquisition. Having undertaken careful enquiry, the Directors
are of the view the Group will need to access additional funds
during 2024 in order to fund on-going operations and pursue growth
opportunities. This is in line with the Company's current activities
of exploring, maturing its discoveries and seeking acquisitions.
In the absence of such funding, the Group is forecasted to have
limited or no liquidity by early 2025 and, in some reasonably
possible downside scenarios during 2024. It is anticipated that
these funds will be sourced through asset disposals / farm downs,
issuing new equity or a combination of these actions. To the
extent that growth opportunities will support debt, this will
be considered where appropriate for example to support production
acquisitions. The financial statements for the period to 30 June
2023 have been prepared assuming the Group will continue as a
going concern. In support of this, the Directors believe the
liquid nature of asset market combined with historical shareholder
support, adequate funds can be accessed if and when required.
However, the ability to continue as a going concern is not guaranteed
at the date of signing these financial statements. As a consequence,
this funding requirement represents a material uncertainty that
may cast significant doubt on the Group's ability to continue
as a going concern. The financial statements do not include any
adjustments that would result from the basis of preparation being
inappropriate.
On behalf of the board
..................................................
Helge Ansgar Hammer
Director
26 September 2023
LONGBOAT ENERGY PLC
DIRECTORS' RESPONSIBILITES STATEMENT
FOR THE SIX MONTH PERIODED 30 JUNE 2023
The directors are responsible for preparing the interim report
in accordance with applicable law and regulations.
The directors have elected to prepare the financial statements
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the United Kingdom. The directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and of the profit or loss of the Group for that period. The
directors are also required to prepare the financial statements in
accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the United Kingdom, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company. They are also responsible for
safeguarding the assets of the company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
Website publication
The directors are responsible for ensuring the annual and
interim reports and financial statements are made available on a
website. Financial statements are published on the company's
website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the company's website is the
responsibility of the directors. The directors' responsibility also
extends to the ongoing integrity of the financial statements
contained therein.
LONGBOAT ENERGY PLC
INDEPENT REVIEW REPORT
FOR THE SIX MONTH PERIODED 30 JUNE 2023
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with the London Stock Exchange AIM Rules for Companies.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises consolidated
statement of comprehensive income, consolidated statement of
financial position, consolidated statement of changes in equity,
consolidated statement of cash flows and notes to the consolidated
interim financial information.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
a form consistent with that which will be adopted in the Company's
annual accounts having regard to the accounting standards
applicable to such annual accounts.
Material uncertainty related to going concern
We draw attention to note 1.2 to the condensed set of financial
statements which indicates that the Group requires additional
funding which is not secured. These events or conditions, along
with other matters as set out in note 1.2, indicate that a material
uncertainty exists which may cast significant doubt over the
Group's ability to continue as a going concern. Our conclusion is
not modified in respect of this matter.
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Directors' responsibility for the interim financial
statements
The directors are responsible for preparing the half-yearly
financial report in accordance with the London Stock Exchange AIM
Rules for Companies which require that the half-yearly report be
presented and prepared in a form consistent with that which will be
adopted in the Company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange AIM Rules for Companies for no
other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by
virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
26 September 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 30 JUNE 2023
Restated Restated
6 months 6 months Year
ended 30 ended to to 31
June 30 June December
2023 2022 2022
unaudited unaudited audited
Notes GBP GBP GBP
Administrative
expenses (1,966,497) (1,294,745) (2,660,910)
------------------ -----------
Operating loss 6 (1,966,497) (1,294,745) (2,660,910)
Investment income 5 51,492 - 42,374
Net foreign
exchange
gain/(loss) (134,845) 8,858 26,063
Loss before
taxation from
continuing
operations (2,049,850) (1,285,887) (2,592,473)
Income tax credit 8
Loss for the period
from continuing
operations (2,049,850) (1,285,887) (2,592,473)
------------------ ----------- ------------
Loss for the period
from discontinued
operations 9 (4,132,511) (358,477) (12,880,134)
------------------ -----------
Loss for the period (6,182,361) (1,644,364) (15,472,607)
------------------ ----------- ------------
Items that may be
reclassified to profit
or loss
Currency translation
differences from
discontinued operations (1,716,511) (23,989) (19,754)
Total items that may be
reclassified
to profit or loss (1,716,511) (23,989) (19,754)
------------------ ----------- ------------
Total comprehensive loss (7,898,872) (1,668,353) (15,492,360)
------------------ ----------- ------------
Loss per share 10
Basic and
diluted -
continuing
operations (3.62) (2.27) (4.57)
Basic and
diluted -
discontinued
operations (7.29) (0.63) (22.73)
Loss per share is expressed in pence per share.
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE SIX MONTH PERIODED 30 JUNE 2023
30 June 30 June 31 Dec
December
2023 2022 2022
unaudited unaudited audited
Notes GBP GBP GBP
Non-current assets
Exploration and evaluation
assets 11 - 55,191,851 34,661,436
Property, plant and equipment 11 12,718 74,817 66,107
Right of use assets 11 - 498,806 447,396
Trade and other receivables 13 - - 98,368
Non-current tax receivable 14 - 20,960,554 -
12,718 76,726,028 35,273,307
Current assets
Cash and cash equivalents 2,100,622 22,492,722 12,059,561
Inventories 12 - 104,502 123,432
Trade and other receivables 13 224,961 991,174 934,918
Current tax recoverable 14 - - 40,755,157
2,325,583 23,588,398 53,873,068
Assets in disposal group
held for sale 21 61,645,759 - -
Total assets 63,984,060 100,314,426 89,146,375
Current liabilities
Trade and other payables 15 282,562 8,668,246 5,225,497
Lease liabilities 16 - 119,219 122,612
Exploration Finance Facility - - 36,761,340
282,562 8,787,465 42,109,449
Liabilities in disposal
group held for sale 21 50,515,795 - -
Net current assets 2,043,021 14,800,933 11,763,619
Non-current liabilities
Lease liabilities 16 - 422,822 366,968
Deferred tax liabilities 17 - 41,146,691 25,736,898
Bank loans and borrowings - 15,328,609 -
56,898,122
- 372,709 26,103,866
Total liabilities 50,798,357 65,685,587 68,213,315
Net assets 13,185,703 34,628,839 20,933,060
Equity
Called up share capital 18 5,666,665 5,666,665 5,666,665
Share premium account 35,570,411 35,570,411 35,570,411
Own shares 450,000 450,000 450,000
Currency translation
reserve (1,155,269) 557,007 561,242
Share based payment reserve 811,964 532,220 660,449
Retained earnings (28,158,068) (8,147,464) (21,975,707)
Total equity 13,185,703 34,628,839 20,933,060
Total equity and liabilities 64,500,911 100,314,426 89,146,375
The financial statements were approved by the board of directors
and authorised for issue on 26 September 2023 and are signed on its
behalf by:
..............................
Helge Ansgar Hammer
Director
Company Registration No. 12020297
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 30 JUNE 2023
Share Currency Share
Share premium translation based payment Own Retained
capital account reserve reserve shares earnings Total
GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January 2022 5,666,665 35,570,411 580,996 353,550 450,000 (6,503,100) 36,118,522
----------- ---------- ------------ ------------- -------- ------------ ------------
Period ended
30 June 2022
Loss for the
period - - - - - (1,644,364) (1,644,364)
Other
comprehensive
loss for
the period - - (23,989) - - - (23,989)
Credit to
equity for
equity
settled
share-based
payments - - - 178,670 - - 178,670
Balance at 30
June 2022 5,666,665 35,570,411 557,007 532,220 450,000 (8,147,464) 34,628,839
----------- ---------- ------------ ------------- -------- ------------ ------------
Period ended
31 December
2022
Loss for the
period - - - - - (13,828,243) (13,828,243)
Other
comprehensive
income for
the period - - 4,235 - - - 4,235
Credit to
equity for
equity
settled
share-based
payments - - - 128,229 - - 128,229
----------- ---------- ------------ ------------- -------- ------------ ------------
Balance at 31
December 2022 5,666,665 35,570,411 561,242 660,449 450,000 (21,975,707) 20,933,060
=========== ========== ============ ============= ======== ============ ============
Period ended 30 June
2023
Loss for the period - - - - - (6,182,361) (6,182,361)
Other comprehensive
income for
the period - - (1,716,511) - - - (1,716,511)
Credit to equity for
equity
settled share-based
payments - - - 151,515 - - 151,515
----------- ---------- ----------- ------- ------- ------------ -----------
Balance at 30 June 2023 5,666,665 35,570,411 (1,155,269) 811,964 450,000 (28,158,068) 13,185,703
=========== ========== =========== ======= ======= ============ ===========
LONGBOAT ENERGY PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
Restated Restated
30 30 31 December
June June 2022
2023 2022
unaudited unaudited audited
Notes GBP GBP GBP
Cash flows from operating
activities
Cash absorbed by continuing
operations 20 (1,990,241) (1,430,178) (2,616,492)
Cash absorbed by operating
activities from discontinued
operations (1,300,256) (1,559,951) (4,957,680)
Net cash (outflow) from operating
activities (3,290,497) (2,990,129) (7,574,172)
------------ ------------- -------------
Investing activities
Purchase of property, plant
and equipment (3,500) (2,800) (4,998)
Interest received 51,492 - 42,486
Investing activities from
discontinued operations 22 (4,577,757) (15,794,167) (43,116,021)
Net cash used in investing
activities (4,529,765) (15,796,967) (43,078,533)
------------ ------------- -------------
Financing activities
Interest paid - - (112)
Financing activities from
discontinued operations 22 166,313 14,922,731 35,179,319
Net cash generated from financing
activities 166,313 14,922,731 35,179,207
------------ ------------- -------------
Net (decrease)/increase in cash
and cash equivalents (7,653,949) (3,864,365) (15,473,498)
------------ ------------- -------------
Cash and cash equivalents
at beginning of period 12,059,561 26,282,067 26,282,067
Effect of foreign exchange
rates (88,051) 75,020 1,250,992
------------ ------------- -------------
Cash and cash equivalents
at end of period 4,317,561 22,492,722 12,059,561
------------ ------------- -------------
Cash held in continuing operations 2,100,622 22,492,722 12,059,561
Cash classified as held for 2,216,939 - -
sale
Relating to:
Bank balances and short term
deposits 2,100,622 22,492,722 12,059,561
LONGBOAT ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
1 Accounting policies
Company information
Longboat Energy plc is a public company limited by shares incorporated
in England and Wales. The registered office is 5th Floor One
New Change, London, EC4M 9AF. The Company's principal activities
and nature of its operations are disclosed in the directors'
report.
1.1 Accounting convention
The financial statements have been prepared in accordance with
UK adopted international accounting standards and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS, except as otherwise stated.
The same accounting policies, presentation and methods of computation
are followed in the interim consolidated financial information
as were applied in the Gr'up's latest annual audited financial
statements except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2023 and will be adopted in the 2023
annual financial statements.
This interim financial information does not constitute statutory
accounts within the meaning of section 434 and of the Companies
Act 2006. The information for the year ended 31 December 2022
included in this report was derived from the statutory accounts
for that year, which were prepared in accordance with UK adopted
international accounting standards and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS,
a copy of which has been delivered to the Registrar of Companies.
The report of the auditors on those accounts was unqualified
and did not contain statements under s498(2) or (3) Companies
Act 2006, but it did contain a material uncertainty in relation
to going concern. The ISRE 2410 review conclusion on the consolidated
interim financial statements as of and for the six-month period
ended 30 June 2022 included a material uncertainty in respect
of the going concern paragraph.
The financial statements are prepared in sterling, which is the
functional currency of the company. Monetary amounts in these
financial statements are rounded to the nearest GBP.
The financial statements have been prepared under the historical
cost convention.
The Group interim financial statements consolidate the financial
statements of the parent company and the held for sale subsidiary
undertaking drawn up to 30 June 2023.
1.2 Going concern
The Directors have completed the going concern assessment, including
considering cash flow forecasts up to the end of 2024, sensitivities,
and stress tests to assess whether the Group is a going concern.
Base case scenarios include completion of the Statfjord Satellites
acquisition. Having undertaken careful enquiry, the Directors
are of the view the Group will need to access additional funds
during 2024 in order to fund on-going operations and pursue growth
opportunities. This is in line with the Company's current activities
of exploring, maturing its discoveries and seeking acquisitions.
In the absence of such funding, the Group is forecast to have
limited or no liquidity by early 2025 and, in some reasonably
possible downside scenarios during 2024. It is anticipated that
these funds will be sourced through asset disposals / farm downs,
issuing new equity or a combination of these actions. To the
extent that growth opportunities will support debt, this will
be considered where appropriate for example to support production
acquisitions. The financial statements for the period to 30 June
2023 have been prepared assuming the Group will continue as a
going concern. In support of this, the Directors believe the
liquid nature of asset market combined with historical shareholder
support, adequate funds can be accessed if and when required.
However, the ability to continue as a going concern is not guaranteed
at the date of signing these financial statements. As a consequence,
this funding requirement represents a material uncertainty that
may cast significant doubt on the Group's ability to continue
as a going concern. The financial statements do not include any
adjustments that would result from the basis of preparation being
inappropriate.
1.3 Discontinued operations and assets held for sale
In accordance with IFRS 5 "Non-current assets held for sale and
discontinued operations" the net results relating to the assets
held for sale are presented within discontinued operations in
the income statement, for which the comparatives have been restated.
The assets and liabilities of these operations are presented
separately on the balance sheet. Please refer to note 21 for
further details.
2 Adoption of new and revised standards and changes in accounting
policies
The accounting policies adopted in the preparation of the consolidated
financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements
for the year ended 31 December 2022, except for the adoption of
new standards effective as of 1 January 2023. The Group has not
early adopted any standard, interpretation or amendment that has
been issued but is not yet effective.
Several amendments and interpretations apply for the first time
in 2023, but do not have an impact on the interim financial statements
of the Group.
3 Critical accounting estimates and judgements
In the application of the Group's accounting policies, the directors
are required to make judgements, estimates and assumptions about
the carrying amount of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised, if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Exploration and evaluation assets
Judgement is required to determine whether impairment indicators
exist in respect of the Group's exploration assets recognised
in the statement of financial position. The Group has to take
into consideration whether the assets have suffered any impairment,
taking into consideration the results of the drilling to date,
and the likelihood of reserves being found. The Group relies upon
information from third parties to take these decisions and can
be subject to change if future information becomes available.
At 30 June 2023 all exploration and evaluation assets were classified
as held for sale. See notes 11 and 21 for more detail.
Share based payments
Estimation was required in determining inputs to the share-based
payment calculations including share price volatility as detailed
in the annual accounts for the year to 31 December 2022.
Under the Founder Incentive Plan, judgment was required in determining
the point at which the Company and recipients had a shared mutual
understanding of the terms of the awards. Whilst the awards were
legally granted in July 2020, the Board consider that the IPO
Admission Document provided such a shared mutual understanding
given the detailed disclosure of the terms of the scheme.
Under the Long-Term Incentive Plan, judgement was required in
determining the fair value of the shares awarded. The Board has
taken advice from external parties and has determined the fair
value per share.
4 Employees
The average monthly number of persons (including directors)
employed by the Group during the period was:
Restated Restated
Six month Six month Year
period ended period ended ended
30 June 30 June 31 Dec
2023 2022 2022
Number Number Number
Executive Directors 3 3 3
Non-Executive Directors 4 4 4
Staff 2 2 2
Total 7 8 8
Their aggregate remuneration comprised:
Restated Restated
Six month Six month Year
period ended period ended ended
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Wages and salaries (including
directors'
remuneration) 526,820 526,815 1,036,481
Social security costs 66,250 83,134 160,616
Pension costs 28,750 27,500 55,000
Share based payment charge 85,582 119,671 157,756
707,402 757,120 1,409,853
5 Investment Income
Restated Restated
Six month Six month Year
period ended period ended ended
30 June 30 June to 31 Dec
2023 2022 2022
GBP GBP GBP
Interest income
Bank deposits 51,492 - 42,374
Total interest income for financial assets that are not held at
fair value through profit or loss is GBPNIL (2022: GBPNIL).
6 Operating Loss
Restated Restated
Six month Six month Year
Period ended period ended ended
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
(crediting):
Operating loss for the
period
is stated after
charging/(crediting):
Exchange losses/(gains) 134,845 (8,858) (26,063)
Fees payable to the
company's
auditor for the audit
of the company's
financial statements 47,750 - 65,000
Depreciation of
property, plant
and equipment 5,047 5,050 10,300
Share-based payments 85,582 119,671 157,756
7 Auditor's remuneration
Restated Restated
Six month Six month Year
period ended period ended ended
30 June 30 June 31 Dec
2023 2022 2022
Fees payable to the GBP GBP GBP
company's auditor
and associates:
For audit services
Audit of the financial
statements
of the company and
consolidated
financial statements 47,750 - 65,000
Audit of the financial
statements
of the company's
subsidiaries* 15,237 - 18,304
62,987 - 83,304
*This fee is in relation to the audit of Longboat Energy Norge
AS, which was held for sale as at 30 June 2023.
For non-audit services
Interim review 26,250 23,000 23,000
Other services - - -
Total non-audit fees 26,250 23,000 23,000
During the period the auditor provided non-audit services of GBP26,250
(2022: GBP23,000) for their role in review of the interim accounts.
8 Income tax credit
Restated Restated
Six month Six month Year
period ended period ended ended
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Current tax
UK corporation tax on profits for
the current period - - -
Deferred tax
UK deferred taxation - - -
Total tax - - -
No deferred tax asset has been recognised in the UK because there
is uncertainty of the timing of suitable future profits against
which they can be recovered. The Company has losses carried forward
of GBP6,457,841 (Dec 22: GBP4,783,533). A deferred tax liability
has been recognised relating to Norway, further details of which
can be found in Note 17 and Note 21.
9 Loss for period from discontinued operations
On 28 April 2023 an Investment Agreement was entered into whereby
Japan Petroleum Exploration Co.Ltd agreed to made a significant
investment in Longboat Energy Norge AS to form a joint venture.
As this investment will result in sharing control of the subsidiary,
Longboat Energy Norge AS is considered as held for sale and the
results of the entity are disclosed under discontinued operations.
See Note 21 for more details.
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Expenses excluding exploration
write
offs (3,061,498) (901,120) (3,918,853)
Exploration write off (10,496,796) (309,338) (42,877,022)
Loss before tax (13,558,294) (1,210,458) (46,795,875)
Current tax on discontinued
operations 1,775,778 23,788,540 41,029,956
Deferred tax on discontinued
operations 7,650,005 (22,936,559) (7,114,215)
Loss after tax on discontinued
operations (4,132,511) (358,477) (12,880,134)
Loss per share impact from
discontinued:
operations
Basic and diluted impact (7.29) (0.63) (22.73)
10 Loss per share Restated Restated
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Weighted average number of ordinary
shares for basic loss per share 56,666,666 56,666,666 56,666,665
Losses:
Continued operations
Loss for the period from continued
operations (2,049,850) (1,285,887) (2,592,473)
Discontinued operations
Loss for the period from discontinued
operations (4,132,511) (358,477) (12,880,134)
Basic and diluted loss per share (pence
per share)
From continuing operations (3.62) (2.27) (4.57)
From discontinued operations (7.29) (0.63) (22.73)
----------- ----------- ------------
(10.91) (2.90) (27.30)
11 Non-current assets
Exploration
and Right Fixtures
evaluation of Use and
assets Asset Fittings Computers Total
GBP GBP GBP GBP GBP
Cost
At 1 January 2022 23,988,754 580,044 3,340 37,033 24,609,171
Additions 53,588,635 - 42,570 17,333 53,648,538
Foreign currency adjustments (38,932) 3,516 21 55 (35,340)
Exploration write off (42,877,021) - - - (42,877,021)
------------ --------- ---------- ------------
At 31 December 2022 34,661,436 583,560 45,931 54,421 35,345,348
Additions* - - - 3,500 3,500
Additions** 715,329 - - - 715,329
Foreign currency adjustments
** (3,679,984) (45,839) (5,728) (2,941) (3,734,492)
Exploration write off
** (10,496,796) - - (10,496,796)
Assets held for sale (21,199,985) (537,721) (38,796) (19,923) (21,796,425)
------------ --------- ---------- ------------
At 30 June 2023 - - 1,407 35,057 36,464
------------ --------- ---------- --------- ------------
Accumulated depreciation
and impairment
At 1 January 2022 - 19,335 167 10,606 30,108
Charge for the year - 117,099 7,772 16,787 141,658
Foreign currency adjustments - (270) (343) (744) (1,357)
------------ --------- ---------- --------- ------------
At 31 December 2022 - 136,164 7,596 26,649 170,409
Charge for the six month
period * - - 235 4,813 5,048
Charge for the six month
period ** 35,253 1,669 3,407 40,329
Foreign currency adjustments** - (19,589) (189) (2,468) (22,246)
Assets held for sale - (151,828) (8,607) (9,359) (169,794)
--------- ------------
At 30 June 2023 - - 704 23,042 23,746
Carrying amount
At 30 June 2023 * - - 703 12,015 12,718
------------ --------- ---------- --------- ------------
At 30 June 2023 ** 21,199,985 385,893 30,189 10,564 21,626,631
============ ========= ========== ========= ============
At 30 June 2022 55,191,851 498,806 42,447 32,370 55,765,474
============ ========= ========== ========= ============
At 31 December 2022 34,661,436 447,396 38,335 27,772 35,174,939
============ ========= ========== ========= ============
*Relates to continuing operations
**Relates to discontinued operations and assets held for sale
12 Inventories
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Materials and supplies - 104,502 123,432
Closing inventories are equal to their net realisable
value.
13 Trade and other receivables
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Non-current
Prepayments - - 98,368
Current
Trade receivables - 177,245 14,073
VAT recoverable 115,182 184,855 182,160
Prepayments and other receivables 109,779 629,074 738,685
---------- --------------- -----------------
224,961 991,174 934,918
224,961 991,174 1,033,286
========== =============== =================
14 Current and non-current tax receivable
Tax receivables relate to Longboat Energy Norge AS, which is classified as held for sale as
at 30 June 2023.
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Current tax receivable - - 40,755,157
Non-current tax receivable - 20,960,554 -
---------- --------------- ---------------
- 20,960,554 40,755,157
========== =============== ===============
15 Trade and other payables
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Trade payables 4,822 3,568,526 2,840,806
Accruals 165,848 4,757,033 1,373,031
Social security and other taxation 95,750 336,911 302,900
Other payables 16,142 5,776 708,760
--------- ----------- ------------
Trade and other payables 282,562 8,668,246 5,225,497
Exploration Financing Facility - - 36,761,340
--------- ----------- ------------
16 Lease liabilities
The Group has lease contracts for buildings used in its operations,
which are held by Longboat Energy Norge AS, which is now classified
as held for sale. The Group's obligations under its leases are
secured by the lessor's title to the leased assets.
Set out below are the carrying amounts of right of use assets
recognised and the movements during the period:
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Opening balance 489,580 - 582,802
Additions 25,163 - -
Repayments (66,939) (43,694) (103,812)
Interest (13,898) 8,131 14,510
Foreign exchange (58,112) (5,198) (3,920)
Liabilities held for sale 403,591 - -
Closing balance - 542,041 489,580
Lease liabilities:
Within 1 year - 119,219 122,612
In two to five years - 422,822 366,968
-------- -------- ---------
- 542,041 489,580
======== ======== =========
Maturity analysis
Within one year - 115,109 134,971
In two to five years - 383,697 382,419
Total undiscounted liabilities - 498,806 517,390
Future finance charges and other adjustments - 43,235 (27,810)
-------- -------- ---------
Lease liabilities in the financial
statements - 542,041 489,580
-------- -------- ---------
Lease liabilities held for sale 403,591 - -
======== ======== =========
Deferred taxation
The following are the major deferred tax liabilities and assets
recognised by the company and movements thereon during the current
and prior reporting period.
All the deferred tax balance relates to Longboat Energy Norge
AS, which was held for sale as at 30 June 2023.
ACAs Total
GBP GBP
Deferred tax balance at 1 January 2022 18,766,424 18,766,424
Deferred tax movements
Differences in tax basis for depreciation in
Norway 22,380,267 22,380,267
------------ ------------
Deferred tax liability at 30 June 2022 41,146,691 41,146,691
============ ============
Deferred tax movements
Differences in tax basis for depreciation in
Norway (15,266,051) (15,266,051)
Foreign exchange (143,742) (143,742)
------------ ------------
Deferred tax liability at 31 December 2022 25,736,898 25,736,898
============ ============
Deferred tax movements
Foreign exchange (2,859,585) (2,859,585)
Differences in tax basis for depreciation in
Norway (7,663,789) (7,663,789)
Change in other temporary differences (13,784) (13,784)
Deferred tax liability moved to held for sale (15,199,740) (15,199,740)
------------ ------------
Deferred tax liability at 30 June 2023 - -
============ ============
Deferred tax assets and liabilities are offset in the financial
statements only where the company has a legally enforceable right
to do so. In Norway, deferred tax assets and liabilities occur
mainly because of prepayment of Exploration spend. Exploration
spend is fully tax refundable when incurred.
18 Share Capital
GBP
Balance at 1 January 2022 5,666,665
Balance at 30 June and 31 December 2022 5,666,665
---------
Balance at 30 June 2023 5,666,665
=========
19 Related party transactions
Remuneration of key management personnel
Members of the Board of Directors are deemed to be key management
personnel. Key management personnel compensation for the financial
period is the same as the Director remuneration which is disclosed
in the Annual Report and accounts.
Other information
Directors' and PDMR interests in the shares of the Company as
at 30 June 2023, including family interests, were as follows:
Ordinary shares
Helge Hammer 837,023
Jonathan Cooper 333,432
Graham Stewart 350,000
Jorunn Saetre 51,667
Nick Ingrassia 179,023
Julian Riddick (PDMR) 272,648
Hilde Sathe (PDMR) 11,805
In addition, at 30 June 2023 the following conditional awards
have been made to the Executive Directors and Company Secretary
under the prior period FIP which are expressed as a percentage
of the total maximum potential award, being 10% of the Company's
issued share capital:
Founder Percentage Maximum percentage
entitlement entitlement of Maximum percentage
of Initial growth in value of issued share
Award pool from IPO capital
% % %
Helge Hammer 23.50% 3.53% 1.48%
Graham Stewart 19.75% 2.96% 0.62%
Jonathan Cooper 19.13% 2.87% 0.59%
Julian Riddick 18.50% 2.78% 0.48%
The Group does not have one controlling party.
20 Cash used by continuing operations
Restated Restated
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Loss for the six month period after tax - continuing
operations (2,049,850) (1,285,887) (2,592,473)
Add back:
Depreciation 5,047 5,050 10,300
Interest payable - - 112
Interest receivable (51,492) (42,486)
Share based payments expense 85,582 119,671 157,757
Movements in working capital:
Trade payables 15,391 (80,205) (40,032)
VAT recoverable (5,709) (11,161) (74,121)
Prepayments and other receivables 21,267 (22,728) (70,805)
Accruals (17,843) (151,209) (5,823)
Social security and other taxation 735 (5,603) 35,452
Other payables 6,631 1,893 5,627
Cash flow from continuing operating activities (1,990,241) (1,430,178) (2,616,492)
21 Assets and liabilities classified as held for sale
30 June
2023
GBP
Intangible assets 21,199,985
Tangible assets 426,647
Tax recoverable 37,264,850
Other current assets held for
sale 2,754,277
Total assets classified as
held for sale 61,645,759
Exploration finance facility - short term 32,032,314
Other current liabilities held
for sale 1,835,332
Exploration finance facility
- long term* 1,157,131
Deferred tax 15,199,740
Other long term liabilities
held for sale 291,278
Total liabilities classified
as held for sale 50,515,795
*Disclosed net of GBP0.5 million prepaid loan fees, being
amortised over the life of the facility.
At the date of authorisation of the financial statements the deal
resulting in the sharing of control of Longboat Energy Norge AS
had completed. See Note 22 for more details. The short term EFF
liability will be settled by the tax receivable included in the
current assets held for sale of GBP37.2 million, due to be received
in November 2023.
22 Cash flow for discontinued operations
Restated Restated
30 June 30 June 31 Dec
2023 2022 2022
GBP GBP GBP
Investing activities
from discontinued
operations:
Tax receipts - 10,538,406 7,120,899
E&E additions (4,631,603) (26,279,513) (50,289,195)
PP&E additions (311) (53,060) (56,108)
Interest received 54,157 - 108,382
Cash flow from investing
activities (4,577,757) (15,794,167) (43,116,021)
Finance activities
from discontinued
operations:
Receipt of loan 1,417,944 15,328,609 36,462,022
Interest paid (1,088,344) (180,898) (938,121)
EFF commitment fee (163,287) (224,980) (344,583)
Cash flows from financing
activities 166,313 14,922,731 35,179,319
23 Events after the reporting date
On 14 July 2023 Longboat Energy Norge AS issued 3,386,430 new
shares, representing 49.9% of its total share capital to Japan
Petroleum Exploration Co. In the newly formed partnership both the
Company and Japan Petroleum Exploration Co hold equal voting rights
and joint control over Longboat Energy Norge AS under the terms of
the associated shareholder agreement. Therefore, despite the 50.1%
shareholding, this new arrangement constitutes shared control of
Longboat Energy Norge AS and establishes a new Joint Venture
partnership with Longboat Energy Norge AS renamed Longboat JAPEX
Norge AS.
As a result of the transaction, Longboat JAPEX Norge AS will be
accounted for as an equity accounted joint venture prospectively
and the Company with record an investment in equity accounted joint
venture in the statement of financial position and its share of
profit or loss and other comprehensive income and expense. In
accordance with accounting requirements the retained interest will
be revalued with reference to the fair value of consideration paid
for the 49.9%. Consideration is in three tranches: the initial
tranche consisted of a cash investment of US$16 million; the second
tranche two of US$4 million is payable contingent on the successful
completion of the Statfjord satellites; and the final tranche of up
to US$30 million, payable contingent upon a successful discovery on
the Velocette exploration well, has since fallen away. From the
initial US$16 million, US$4.6 million was utilised by Longboat
JAPEX to repay the intercompany loan owed to Longboat Energy
plc.
The Company is currently finalising the accounting for the
transaction but it is anticipated that the transaction will give
rise to a gain of approximately GBP8.7 million based on net assets
disposed at 14 July of GBP6.7 million, fair value of retained
ownership based on the cash consideration of GBP12.6 million and
the estimated contingent consideration of GBP2.7 million. The
contingent consideration relates to the Statfjord satellites
acquisition and is dependent on the estimated probability of
completion. The failure of the Velocette well to find commercial
hydrocarbons means that the Velocette Tranche under the JAPEX
investment agreement will not be payable.
On 20 September 2023 the Company announced a minor gas discovery
in the Velocette exploration well (Longboat JAPEX Norge AS 20%).
The well encountered hydrocarbons in the primary target in
Cretaceous turbidity sands in the Nise formation. The Velocette
volumes are at the lower end of pre-drill expectations and the
discovery is not considered to be commercial in isolation. However,
the licence contains numerous other prospects which have been
de-risked by the presence of gas in good quality reservoir in the
Velocette well. The remaining prospectivity has significant size
potential in multiple structures and with slightly different
trapping geometries. Further assessment of the licence
prospectivity together with other opportunities in the area could
impact the commercial potential of the licence. As at the 30 June
2023 the intangible asset in relation to licence PL1016 was GBP1.8
million with anticipated net pre-tax drilling and carry cost
estimates of GBP19.9 million (net post tax costs GBP5.6 million),
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.
Post the period end Longboat announced the purchase of an
interest in the Statfjord satellites, which is yet to complete. The
Statfjord satellite acquisition is significant as it represents not
only Longboat's first production acquisition but also evidences the
ability of the Longboat JAPEX joint venture to assess and transact
opportunities. The 4.80% unitised interest in the Statfjord Øst
Unit and 4.32% unitised interest in the Sygna Unit represent
long-term cash flow with the fields expected to produce until late
2030s. Initial production of 300 boepd net to Longboat JAPEX is
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. The cash consideration of
$12.75 million, contingent on completion, is anticipated to be paid
back in under two years and will be fully funded by JAPEX's initial
investment, and drawdown under the JAPEX acquisition bridge
facility agreement.
Post the period end, Longboat Energy plc announced the
acquisition of privately held Topaz Number One Limited ("Topaz"),
increasing its working interest in the Production Sharing Contract
over Block 2A offshore Sarawak, Malaysia ("Block 2A") to 52.5%.
Topaz's sole asset is a 15.75% working interest in Block 2A
Consideration for this purchase will be in three tranches: an
initial $100,000 through an issue of new ordinary shares in the
Company; a further US$125,000 in cash or shares payable upon an
exploration well being committed on Block 2A or a farm-out; and up
to US$3,000,000 in cash or shares payable upon a discovery being
made on Block 2A, depending on the resource size and the growth in
the price of the Company's shares over a two year period
Other information
24
A copy of this interim report and financial statements is available
on the Company's website www.longboatenergy.com.
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END
IR LFMMTMTTTTAJ
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September 27, 2023 02:00 ET (06:00 GMT)
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