Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I'm hoping at the AGM they can confirm that they're still in discussions re. a production deal.
The wording in the last results set was:
"The impact of these [tax] changes allows Longboat to now consider modest exposure to Norwegian development assets in combination with a production acquisition." "The Company's core strategy remains unchanged"
Well, and this is entirely speculative, maybe this is the exploration part and that they were forced to get this one out because of the timings from the partners.
They've obviously been working on it for ages as they had an admission document up their sleeves and these usually take a few months.
Now, if that's the case then we'll be able to work out what production deals they might be looking at by going off the near field infrastructure to this deal.
We should be able to get a confirmation at the AGM I reckon re. further deals.
Yes the more you look the more you realise this deal has been in the pipeline for a long long time.
I think this (below) is key too - what assets are non-core to private equity backed vehicles in Norway at the moment? Or even the U.K. North Sea because that’s still getting a mention:
“Many majors have continued to look to reduce investment in the North Sea and as a result of rapid acquisitions, and there are a number private equity backed vehicles holding assets that are non- core to their businesses. The Directors believe that many of these non-core assets can hold significant value for companies like Longboat Energy, which can focus on unlocking intrinsic and upside value, thereby benefitting both parties in a transaction”.
Agreed - over 80% of the admission document is boilerplate stuff - definitely will be used again when the executive team are happy - and we know finance will be straightforward! Best of Luck
So hopefully an economical exploration strike(maybe more) coupled with a production acquisition before the year end to make the perfect catalyst to get this party well and truly started and set LBE on its journey to become over the next 3-5 years a significant North Sea- focused E&P business.
Well they seem to be gearing up in terms of staffing costs for more than a bit-part role in a few exploration wells.
Yearly salaries/fees are as follows:
Directors/Management:
Helge Hammer: £300,000
Jonathan Cooper: £250,000
Graham Stewart: £103,750
Brent Cheshire: £70,000
Jorun Saetre: £50,000
Katherine Roe: £60,000
Nick Ingrassia: £230,000
That's £1,063,750, plus Julian Riddick whose salary/fees don't seem to appear in the Admission Doc.
Plus 4 current staff:
Synnove Roysland (Drilling & HSEQ Manager)
Morten Rye-Larsen (Exploration Manager)
Per Torfinn Knudsen (Petroleum Technology Manager and BD Support)
Line Veiberg (PA & maternity cover for Hedvig Kleppa).
And a further 10 being recruited:
Senior Geologist
Senior Geoscientist
Senior Reservoir Engineer
Senior Accountant
*Plus 6 others as yet unknown to us.
If those 14 staff are on an average of £50,000 a year (and I suspect it will be more but let's be conservative), that's £65,000 after tax, insurance, benefits & pension contributions etc so a total of £910,000. Plus Julian Riddick.
Then there are the fees for consultants (currently visible on Linkedin are Ludvig Hovring & Ciaran Nolan).
They are going to end up with a wage bill of well over £2m per annum (possibly £2.5m-£3m) which is a lot for a company with a market cap of only £42.5m.
That's before all the other corporate costs so their outgoings are going to be significant.
I know they require a certain amount of technical expertise to meet the Norwegian licensing rules and 'See to Duty', but these salary increases, recruitment drive and eventual staffing costs hopefully indicate that they expect to be growing the company and market cap quite aggressively from here.
"See to Duty" does not come cheap...we are there...we had to be there!
Well given the lack of new licensee/operator approvals in Norway recently (only 11 in the past 4 years), when Longboat get approval they should be in an increasingly rare position to take advantage of opportunities as and when they do arise.
It would be nice to hear from them though. Volume has dried up already within a couple of days of relisting, and whilst that doesn’t really matter to them or us, with another 46.7million shares hitting the market in a couple of weeks it would be good to see some PR. I know I said that before but maybe I’m being naive and this company doesn’t really care as long as the institutions are informed and happy.
I completely agree, Paul.
The PR really needs to be there, because right now they seem to be operating as though any shareholder engagement is a disadvantage to them. Notably, I haven't had a reply to my email (not that I was particularly expecting one) with questions in re. still pursuing production deals).
These fields have expected production dates (from the admission document), starting in 2025, so I think that the intention here must be to prove up resources and then swap them as they did previously at Faroe. It's notable that they nearly all seem to be near to fields where Faroe had production or exploration interests, so my guess is that they would try and swap into production.
In the meantime, I do think that they need to be very clear about the kind of deals they are pursuing now - are they production or exploration and development.
Most of us bought in here pre-RTO on the basis of seeing the firm buy cashflows and I think in-light of how much the firm pushed that narrative, we deserve to know if that is still on the cards.
Right - that is me back into LBE for a modest amount...
Patience required here, so taking a longer-term view of 2-3 years. If board achieve the stated aim of creating a mid-cap oil company then the upside potential is huge from 77p. As world recovers from covid it is inevitable energy demands will increase as the world sees one final oil-boom before transition to greener energy : so the timing could yet be perfect.
Norway is certainly the right environment to be attempting such a venture in current political and economic climate. No doubt the next 18 months will be more exciting that previous period. Exploration more risky than production - however Equinor are a solid partner with good track record - plus there are lots of clues (job adverts etc) that other deals are in the making. Feels to me like LBE remain under the radar for now but excitement will increase towards autumn. An early strike from first or second well would be fantastic to under pin confidence in the strategy and share price.
Good luck all!
Welcome back haggis, let’s hope you’ve timed it well!
Mozza I didn’t get a reply to my email either - I might be on the black list now because I was a bit critical(!) but I wonder if they’ve given up on investor relations entirely now!
The AGM is probably our only hope of clarification, but I won’t hold my breath.
You would expect a little PR before the new shares come to market? Also : the recruitment campaign surely means there are plans in progress to add on production (i.e revenue) ?
A little good news should see tick up nicely given limited free float not in institutional hands.
Hope so haggis. To be honest I’d be annoyed at the directors doubling their salaries at this stage if a production deal is not in the pipeline.
There were 2 main objectives when they launched:
1. Acquire a production asset with near-term cash flow.
2. Create shareholder value.
A
So far they have failed to meet either objective so a doubling of salary at this stage seems extremely greedy unless there is something up their sleeve that we don’t know about.
I’m more than happy for them to reap the rewards if they can get the share price to £2/3/4/5 etc but not at 75p.
To appoint a qualified account with post qualification 10 years experience is not cheap and definitely an over-kill at this stage when a book-keeper would be more than adequate to do the job....Another "See to Duty" requirement or may be the Executive team know what's coming near-term and have an eye on a future potential CFO.
Regarding PR at this stage, I think they are holding back for their Norwegian Licence to be approved which is pivotal for the farm-in transactions to complete.
You're probably right there, Daveri.
It will be nice to quiz the BOD a bit using the Investor Meet system for the AGM. Two immediate questions for me:
1. Are they still looking to do a production deal in the shorter term?
2. How does the BOD justify the substantial increase in salaries in-light of the fact that they haven't acquired cashflow producing assets?
Question 1 I think will be answered, question 2 on the other hand I suspect will be ignored.
Mozza I’ve now had a response to my email from Ben Brewerton at FTI Consulting - looks like they have hired a PR firm to fob us off instead now!!
With regards to the first point they were vague and said they’re still looking to become a full E&P company and will either do asset swaps or buy the right deal.
With regards to your second question they said “the intended increase in the directors remuneration was set down in both the original Admission document and the Remuneration Report contained in the Annual Report as approved by shareholders”.
I signalled by disapproval of the latter and told them they could quite easily have deferred the pay increases until such time as they have delivered shareholder value (citing Andrew Austin as a good example of running a company for shareholders and not the directors’ gravy train). It will fall on deaf ears but I feel better pointing it out!
I think if you want anything other than a vague response regarding a production asset in the near-term, the question is going to have to be quite specific or they will skirt around it.
Perhaps “are you currently involved in any processes to acquire production assets and has there been any progress on this since the last update in March?”.
It’s the one thing we all want to know but getting it out of them is the key!
Very helpful! Thanks for passing that on.
TBH, I'll be surprised if I get a reply - I don't think I came across as a particularly happy bunny!
I'll be very specific.
Don't get me wrong this is a very good exploration deal. However, it's not a production deal and that has been the calling card of this firm since the IPO and I feel they need to address this properly rather than skirt around the edges.
There is of course the argument that if they’re successful with some of these exploration wells and do manage to swap them for some meaningful production, it would have been an EXTREMELY cheap way to acquire that production. It would also avoid diluting any further at this stage.
A riskier strategy but with potentially much higher rewards.
Very true and I think if you read between the lines that's ultimately the direction they seem to be heading in, but the problem is on a time frame scale, because the possibility of cashflows in two years isn't worth as much as cash flows today, even if today those cashflows might be expensive to buy.
It's all about the timing as we have all discussed.....
Both exploration and production are both as important as each other for LBE to significantly grow and maximise shareholder value....so it's my view we are half way there.
Expecting to see more exploration deals and a number of accretive production deals.....I do not believe there has been a shift in strategy.
I think/hope you’re right daveri, because with the best will in the world it will take some time to discover, appraise & swap assets and that’s assuming they’re successful.
As Mozza points out the cash flow in that scenario is not “near-term” so you’d think they have other deals being worked on that fit the original strategy.
I think we’d just like to hear confirmation of that from the horse’s mouth.
"Seed investors" including some of us private investors considered an inaugural deal would have occurred within months of original listing due to the ex-Faroe management team's proven track-record and contacts and a premium on RTO was a probable outcome.
Forward 18 months and entry point is less than original placing..."NO reward" for seed investors, in fact a significant loss.
Of course we all know the main reasons for this, namely the unprecedented pandemic and global lockdowns resulting in the collapse of oil and gas prices due to lack of demand resulting in energy companies battening down their doors instantly killing M&A activity.
As the world emerges from lockdowns with the success of the vaccination programs we are now clearly seeing a significant increase in M&A activity and hopefully Longboat can deliver what it set out to do - become a significantNorth Sea-focused E&P business.
With a highly tax efficient near-term 3 x bi-lateral farm-in exploration programs agreed (subject to approval of a Norwegian licence) lets hope LBE next acquire cashflow generative production deal(s).
It is what it is....
^ it has taken longer than expected but the reasons to invest remain.
management are well incentivised to get the share price to £2 (see RNS below) within a 3 year period.
https://www.lse.co.uk/rns/LBE/founders-incentive-plan-awards-eti542raki865i2.html
Mozza are the 'Investor Meet' details on the website yet? I can't seem to find them.
Thanks.
Hi Paul,
You might need to login to access it, but here is a link anyway:
https://www.investormeetcompany.com/investor/company/longboat-energy-plc