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True Whirlaw but that report also stated that the company “is targeting an initial acquisition that will deliver asset(s) that are able to meet its investment criteria (including near term cashflow)”.
The first bullet point of their investment criteria was: “• producing and/or near producing assets, providing cash flows to fund organic growth with robust economics, sustainable in a low oil price environment”.
Exploration assets via farm-ins and APA applications came second.
Also in their presentation business summary they stated:
“Production remains a focus - also pursuing attractive Norwegian opportunities in the exploration, appraisal and development areas”.
So whilst I think you’re absolutely right that they are looking at exploration, appraisal & development, I would be surprised if the first deal doesn’t include some form of production and cash-flow.
This extract from the recent Annual Results statement make it pretty clear that they haven't seen value in deals so far in 2021: "The activity so far this year has been dominated by buyers who seem willing to bid for assets at a level that would not meet our investment strategy.”
This extract from the same statement suggests first significant news we will get will relate to acquisition or farm-in to exploration, appraisal and development. “In Norway, temporary tax incentives have resulted in continued high level of exploration drilling with many development projects now being planned. Exploration drilling results in Norway have remained very strong, including two excellent discoveries by ConocoPhillips in the second half of 2020 and two significant discoveries by Equinor in the first months of this year. In consequence, we see attractive Norwegian transaction opportunities in the exploration, appraisal and development areas, and some of the processes we are currently pursuing involve potential exploration farm-ins. Accordingly, we have included the acquisition of exploration assets as an integral part our investment strategy.”
With the current tax incentives, it seems to be a sensible solution to me, and I'm happy for them to be getting on with this, whilst they also wait for the right production deal to come along, which could still be months away. (oh and of course there is going to an extension agreed daveri007!).
I think Equinor operate something like 70% of the assets oil and gas assets in Norway, so it makes sense that Longboat wouldn't need this, as they'd only be likely to afford minority interests in any of these fields we think/suspect they are looking at.
Fingers crossed we hear something from them soon! I just hope any deal is done on good terms relative to the IPO price of 100p.
We will all know in a couple of weeks or so - if no extension is agreed we know there are no firm deals in the pipeline - the LBE institutional investors will for sure be updated - unfortunately us retail investors will be the last to know - still v.confident but GLA
You can see that there are two options for this pre-qualification process - one for a licensee and a separate one for an operator. The applications for operator are denoted by “(Op)” after the company name, which Longboat’s does not have.
If this process was to enable them to participate in the licensing round then I’m guessing they would be applying to be operator of any license they’re successful in applying for (at least to begin with anyway). As it’s an application to be a licensee instead, perhaps it’s a sign that they’re expecting to be a smaller partner in a license which already has an operator (which is probably what we were expecting anyway).
I do agree with Whirlaw that they will want to participate in the next licensing round but I think this may be more to do with them getting their ducks in line for a deal.
I’m just musing really! We only have breadcrumbs to go on but they’re better than nothing!
“The authorities will normally expect new players to develop an organisation as described above within 12 months from a swap or award of the first participating interest in a production licence”.
On that basis I’d say it’s another positive sign that Longboat are recruiting now. They could have waited until after the award of a new license before doing so if they are relying on the licensing rounds. Also, the next licensing round in Norway hasn’t started yet, and outcomes won’t be known until next year so maybe this is more to do with a license they are looking to enter via a deal rather than through the application process?
Yeah good spot knokke. My take on this is that it is to do with pursuing exploration, appraisal and development. I thought the new hires were likely to do with preparation for the upcoming licensing round, and your second link appears to confirm this. News of a production deal could come at any moment of course, however this is Longboat doing something (E&A) in parallel to the M&A deals they are looking at, a plan which is spelled out clearly in their most recent presentation, as you rightly point out. Cheers
If you have a look at the second link that explains the rationale and what type of team is needed, then have a look at the end of March presentation again, it makes understanding some of it easier and fits things into place. You guys are so far ahead of me in terms of understanding the sector, it'll be interesting to see your thoughts