Shares in Longboat Energy (LON: LBE) enjoyed a fillip after the company said it would exit Norway.
The AIM-listed explorer and producer confirmed a deal to sell its majority 50.1% stake in its Norwegian operations to its joint venture partner Japan Petroleum Exploration Co (JAPEX) for $2.5 million, plus its share of drawn debt.
The move comes after the Norway and Malaysia-focused energy firm warned last month it faced having to walk away from its Longboat JAPEX Norge (LJN) JV due to “disappointing” production.
The London and Stavanger-based firm said the stake in LJN was worth £12.5m as at 31 December 2023, but that this estimate of carrying value had been made on “certain assumptions” on performance and which would be “significantly impaired at the next reporting date to reflect the sales price”.
Instead of Norway, where it has been operating since its launch in 2019, it will make a “strategic pivot” to focus on Southeast Asia, the firm said.
Board changes
Graham Stewart, a founder of Longboat and its current chairman and previous founder/CEO of Faroe Petroleum, will continue to play a role as a non-executive.
The reduction in the company’s board will be subject to confirmation at its upcoming AGM in June.
It said it has found a “proliferation of opportunities” across Southeast Asia since it moved into Malaysia last year.
The firm added it also has found a “positive and supportive attitude of the host governments towards small-and-medium sized companies which are now viewed as crucial to maximizing value from their maturing basin”.
Longboat CEO Nick Ingrassia said: “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.”
Disappointment
Longboat’s decision to sell up in Norway follows “continuing scarcity” of suitable acquisition opportunities.
It also reiterated the “disappointing” performance of the Statfjord Satellites and “slow progress” on monetising the Kveikje discovery.
These have contributed to a “near-term projected working capital shortfall” which would have likely result in Longboat forfeiting some-or-all of its shares in LJN.
As part of the deal, JAPEX will assume all financial obligations including all staff and running costs.
Shares were up 48.28% in lunchtime trading.
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