In 2019 London South East interviewed the former COO of Faroe Energy to hear what his plans were to build a full cycle North Sea energy company. You may remember that the highly regarded Faroe team sold their previous business for $900M. The CEO Helge Hammer explained that the new business was called Longboat Energy (LSE:LBE), the plan was to replicate the Faroe model - and that most of the institutions which had backed Faroe were backing #LBE.
Well, for good reason Longboat have not been able to purchase producing wells supplemented with exciting exploration opportunities as intended. "The oil price crashed, Covid intervened and two production assets were pulled by the sellers. Then auction opportunities became expensive when the oil price rose again" explained CEO Helge Hammer.
So those initial plans have been adapted to the new circumstances and are no less intriguing. "Nobody was looking at exploration and yet in Norway exploration results were phenomenally good, we had 50% success rates. We saw there was a unique opportunity to build a multi-well programme. We had all the skills needed as we are ex-Faroe".
In today's interview, Helge explained how £35M had been raised in a share placing, and a further £52 million in exploration finance. This was to purchase 7 near-term predominantly gas-focused exploration wells in the Norwegian sector of the North Sea. The tax breaks for exploration in Norway are very generous, meaning the gross price for the assets is $35M but shrinks to less than $8M dollars when the up-front tax rebate is included, or 7 cents per prospective barrel. "We think this is a very attractive price" said Hege.
Longboat Energy (LBE)