The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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Many BoD's are desperate to get deals over the line to appease their impatient shareholders...this executive team will do what's right regardless of external pressures and I trust we are now starting to reap the benefits of their experienced decision making. GLA
It's worth remembering the CEOs letter that accompanied the annual report back in April (see below excerpt). Makes it clear why they haven't executed a production deal as of yet, but that they are certainly looking. It's not either/or.
"This year has seen oil and gas prices stabilising at a much higher level and vaccination programmes are being
rolled out. The transaction market is already looking more positive and in the UK, several large production deals
have already been announced. 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. However there are several processes that have
been launched recently, and we expect more assets to come to market as vendors seek to take advantage of the
uptick in commodity prices.
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."
Think we are on the same page there daveri.
There has to be more "asset producing" deals on the horizon....
These 3 farm-in agreements (with Equinor being the vendor of six out of the seven licences) had to be announced now due to the very tight timings involved with the first well due to spud in September and "pivotal" for the farm-in deals to complete, LBE needing to apply and receive approval for the Norwegian oil and gas licence.
We, know ideally they wanted to announce to the market a deal with both production and exploration but timings simply did not allow that to happen....I'm sure the main investors in the fund raise would have been reassured on this subject. ATB
It might be wishful thinking on my part but given the comments in the Admission Doc & job advert plus the increase in salaries and headcount, I suspect we may well see a production deal land before the first exploration well results are even known. Hopefully with a large debt/equity ratio so the raise won’t be at a discount to current holders - this deal has let the institutions in at a discount and I think we will see in the market at the end of the month what their intentions are with their new shares. It would be a very good sign if they hold and don’t flip.
Yes the clues were there for this deal, and there appear to be clues that other deals will follow but we will have to wait and see.
daveri, yes I also noticed in the Admission Document that they stated: “The Group has four employees and is in the process of recruiting up to ten further employees”.
That’s quite a big addition both in terms of expertise and cost. I think we’ve seen 3 or 4 of those 10 positions advertised now so it will be interesting to see what else comes along.
The language they use is intriguing: “As Longboat completes more deals” - no ifs or maybes here, this was not the only deal they want to do - they are looking at ‘more’. Maybe I’m reading too much into the word ‘completes’ as well but this could signify that they’ve already identified deals and are going through the due diligence process before completion.
Also “becomes an operator” - this is quite important because this would mean development/production is more likely. I don’t think they’d be looking to be an operator for pure exploration on its own - they’ve used the bilateral deals for that to take smaller stakes in larger projects with existing operators who have got the prospects to exploration stage already and are sharing a large portion of the costs.
A lot of reading between the lines I know, and hopefully we will hear more at the AGM if not before.
Very interesting find, Paul. Well done.
Thst reads to me like there are more ongoing deals in the making, but as ever, we'll have to wait and see!
They are certainly loading up a high cost base looking to imminently add another 10 employees...it also didn't go unnoticed the 100% pay increase for the CEO (£150K to £300K) - though at least he's put his money where his mouth is in the fund raise.
https://www.finn.no/job/fulltime/ad.html?finnkode=220895652
An interesting comment:
"As Longboat completes more deals and becomes an operator it is envisaged that Longboat will consider bringing its accounting in house and will look to use Sun systems or Visma. The candidate will be involved in the decision to choose the future alternative accounting system.
At this stage, with the new exploration portfolio, it is envisaged the Accountant/Controller will have the following responsibilities supervised by the Finance Manager".
As Longboat completes more deals and becomes an operator...watch this space maybe?