Longboat Energy Provides Operational Update

Source: www.gulfoilandgas.com 6/16/2022, Location: Europe

Longboat Energy, the emerging full-cycle North Sea E&P company , is pleased to provide the following operational update.

Highlights
• Two high-impact exploration wells scheduled for Q3 targeting net, unrisked mean resources of 44 mmboe:
o Oswig (Company 20%) expected to commence drilling in July
o Copernicus (Company 10%) expected to commence drilling by the end of September

• A further firm, high-impact exploration well (Velocette, 20%) expected to be drilled in Q2 2023
• Longboat remains fully funded for its committed drilling programme
• Actively reviewing monetisation and commercialisation options of three existing discoveries
• Screening opportunities to participate in recently announced Norwegian APA licensing round
• Advantageous new Norwegian tax regime approved by the Norwegian parliament

Firm Drilling Programme 2022

Oswig (PL1100, PL1100B) - Company 20%
The Oswig prospect is expected to spud at the beginning of July using the Maersk Intrepid jack-up rig. Oswig consists of a high pressure, high temperature Jurassic rotated fault block nearby the producing Tune and Oseberg fields in the Norwegian North Sea. The well is targeting two separate intervals which are estimated by the operator to contain combined gross unrisked mean resources of 93 mmboe1 (19 mmboe1 net to Longboat). The Oswig geological chance of success is estimated to be 36%1 and the key risks are reservoir quality and fault seal.

The Oswig prospect is located close to existing infrastructure with tie back potential to the Oseberg and Tune fields. Several additional fault blocks have been identified on PL1100 and PL1100B and are estimated to contain a further gross unrisked mean resources of 80 mmboe which would be significantly derisked by an Oswig discovery.

Copernicus (PL 1017) - Company 10%
Copernicus will be drilled using the Deepsea Yantai rig and is expected to spud by the end of September. The prospect lies in the Vøring Basin region of the Norwegian Sea. Copernicus is estimated to contain gross mean prospective resources of 254 mmboe 2 (25 mmboe net to Longboat) with further potential upside to bring the total to 471 mmboe 2 . The chance of success associated with this prospect is 26% 2 with the key risks being reservoir presence/quality and trap.

Monetisation and Commercialisation of discoveries
Since commencement of drilling in Q3 2021, Longboat has made three hydrocarbon discoveries out of six wells at Egyptian Vulture (Company 15%), R ø dhette (Company 20%) and Kveikje (Company 10%) representing an estimated 12 mmboe of resources net to the Company. Longboat is actively reviewing multiple options to monetise or commercialise those discoveries in the near term. This work includes both examining development scenarios for each of the assets and/or the potential for asset swaps or outright sales given the current high demand for assets in Norway.

While this process is at an early stage, Longboat remains committed to maximizing shareholder value at the earliest stage possible from its exploration success to date.

APA Licensing Round
The Norwegian Ministry of Petroleum and Energy recently announced the APA Licensing Round for 2022 encompassing blocks across the NCS. Leveraging its in-house technical expertise, the Company has a number of potential applications under review both as follow-on acreage around its existing licences and in new areas.

New Norwegian Tax Regime Approved
The new Norwegian Petroleum Tax System has now been approved by the Norwegian parliament (Storting) with no material changes to the original proposal and is effective from 1 January 2022. Longboat views the new system as positive for the Company, allowing for the expansion of existing financial structures to fund both exploration and development projects with improved economics and reduced working capital. The main elements of the new tax system are:
- Unchanged marginal rate (78%)
- Move to immediate expensing of investments
- 71.8% repayment of all losses in following year
- Corporate Tax (6.2%) carried forward until profitable

Longboat has reviewed the new tax system and is already in discussion with the banks about a smooth transition from the 'Exploration Finance Facility' regime to a new fit-for-purpose financing facility.

Longboat anticipates a significant benefit for these restructured credit facilities to meet the working capital requirement for future development expenditure.

Helge Hammer, Chief Executive of Longboat, commented:
"Longboat has a sequence of significant value catalysts between now and the middle of next year with two material gas-weighted exploration wells in the coming months following our recent success at Kveikje and our earlier discoveries at Egyptian Vulture and Rødhette. The well programme continues into 2023 with Velocette and with further potential licences to be added in the APA round.

"The new tax system gives us an additional option for realising the value of exploration success by carrying discoveries through to development as we look at all available options to progress to a full-cycle E&P company."


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