Longboat Energy, established by the former management team of Faroe Petroleum to build a significant North Sea-focused E&P business, has announced its half-year results for the six months ended 30 June 2020.
- Cash reserves of ~£8.1 million at 30 June 2020 with no debt (31 Dec 2019: £9.2 million)which allows the Company ample headroom to continue to pursue its business development activities.
- Low fixed running costs of ~£125k per month, together with low variable due diligence costs triggered by the impact of COVID-19 on the A&D market, allows the Company significant capacity to pursue attractive opportunities as activity picks up.
- During Q1 2020, the Company was engaged in a number of processes to acquire portfolios with positive cash flow, 2P reserves and growth, with negotiations curtailed due to Covid-related market conditions.
- As business and market activity returns, Longboat is actively leveraging relationships, testing creative and new business development ideas and is making good progress on several fronts.
- Recently introduced Norwegian tax changes have lowered breakeven oil prices and increased Internal Rate of Return (IRR) for non-sanctioned projects which will accelerate new project developments and drilling plans. The impact of these changes allows Longboat to now consider modest exposure to Norwegian development assets in combination with a production acquisition.
- The Company’s core strategy remains unchanged and the market dislocation presents an exciting opportunity as the backlog of transactions begins to unwind.
- Many of the Majors and large E&P players in the North Sea have announced significant changes in strategic direction whichwill involvea substantial divestment of assets.
- Longboat is well positioned to pursue the expected forthcoming transactional opportunities, guided by a management team with a strong track record of delivering value through M&A.
Helge Hammer, Chief Executive Officer of Longboat Energy commented:
'We floated the business in November 2019 having identified an opportunity to build a new, North Sea-focused E&P business through value-accretive M&A transactions. At the beginning of the year, we were engaged in a number of opportunities but our business development activities were curtailed by the onset of the coronavirus pandemic as the sector entered a period of huge uncertainty and market volatility.
'Despite the challenging times, we see encouraging signs of recovery and have remained active throughout the period as we leverage the experience and creativity of our team and our industry relationships to generate business opportunities. As a result of policy changes and strategic shifts by existing players, we believe there will be increased opportunities to secure quality assets on attractive terms in the period ahead, and we remain focused on delivering the best possible deal for our shareholders.'