Longboat Energy plc (AIM: LBE): Looking at potential next steps
• Longboat has reported its preliminary FY22 results. There were no surprises. The YE22 cash position was ~£12 mm, £3 mm above previous indications. The difference is associated with working capital movement with a payment on the Velocette well due in 1Q23.• Longboat now expects the monetization of the Kveikje discovery by the end of 2Q23. We value this asset at £0.17 per share (US$13 mm), which would boost the company’s balance sheet and address funding concerns.
• In November 2023, Longboat is expected to receive £40.7 mm in tax receivables and repay ~£36.7 mm current debt.
• Longboat is looking for development/production assets in the North Sea and Malaysia that could add 1-3 mboe/d.
• In Malaysia, this includes DRO (Discovered Resource Opportunities). In February, for example, Petronas offered the Chenang DRO cluster off the coast of peninsular Malaysia and the Bambazon DRO cluster off the coast of Sabah. Both are shallow water clusters located close to existing producing hubs that will enable quick monetization. A DRO operates under a modified version of a production sharing agreement with the contractor take level similar to Norway (~22%).
• South East Asia is in our view an interesting area for potential acquisitions. With the region maturing, less appetite for exploration and ESG pressures to reduce exposure to hydrocarbons, the traditional asset holders such as Mubadala, Repsol, Shell, OMV and ConocoPhillips have been divesting properties, sometimes at low prices.
• We re-iterate our target price of £1.10 per share.
Velocette potentially game-changing
The Velocette prospect, targeting 177 mmboe (35 mmboe net to Longboat) continues to be expected to be drilled in 3Q23. Our unrisked NAV for the well is ~£1.50 per share.
Valuation
The shares now trade below our our Core NAV based on the value of Kveikje only (~£0.10 per share). Our ReNAV, including the risked value of Oswig, Velocette and Lotus, is £1.16/sh.
Longboat Energy PLC, formerly Longboat Energy Ltd, is a United Kingdom-based investment company. The Company's investment objectives is to create a full-cycle North Sea exploration and production (E&P) company in order to deliver value to investors.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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