Member Info for daveri007

1) The RNS states the gross consideration cost paid for by way of cost carry is 35M USD (Net 7.8M USD) - converted to sterling at exch rate 1.42 is £24.648M (Net £5.493m)

2) Further exploration drilling costs of the 7/8 wells gross 44M USD (Net 9.68M) - converted to sterling at exch rate 1.42 is £30.986M (Net £6.817m)

So gross cashflow using sterling is £55,633,802 with available tax refunds of £43,323,943. The Net cost NOT including corporate costs, EFF financing costs and other seismic data costs etc are £12,309,859.

Of note - the RNS states the EFF will fund 74% of exploration expenditure - It's obvious the EFF is only needed to bridge the cashflow gap of receiving the tax refunds. Of interest it also states the net consideration cost of the buy in represents $0.07.

So with £35,000,000 raising plus existing cash of approx £6,500,000 amounts to £41.5m. Deduct the net exploration and consideration costs of £12.4m leaves 29.1m. Deduct "other costs and general company operating expenses and you could be left with £25m cash in hand at the end of the program. does not include further appraisal drilling costs if we hopefully strike.

So as you say if all wells come up dry and nothing else happens which I very much doubt then cash invested of £45m will be worth £25m - a gamble stake of £20m since incorporation.

I still believe this deal represents a great opportunity in organic growth and most certainly places Longboat in a much stronger position to in parallel execute other "asset producing deals"

Wether or not the Institutional investors agree a £2 placing price and instantly trigger the nil cost founders incentive shares depends on how good they see these 3 transactions.

We will see.

ps. I would rather have my money tied up here than backing England to win the euros :-)

Paul, the company also stated:

"Net mean prospective resources across the licences are estimated by ERC Equipoise ("ERCE") at 104 MMboe with total P10 upside potential of 324 MMboe1, with the mean volume of each prospect in excess of the Longboat estimated minimum economic field size."

so potentially triple the base resource. ATB

So in summary, investors are paying an extra 35m on top of the existing 10m sterling for a crack at 7 wells with an upside of much more ( a potential 1bln)...It's a gamble but with the tax rebates we get much better odds.....Also as stated in the RNS Longboat acquire significant negotiation power with the main counter-party believed to be Equinor which can only help tie up some producing assets on their M&A roadmap.

Paul you are correct - according to the RNS, Longboat's share of the costs on the initial drill exploration for the 7 wells at 44mUSD pre-tax - we then get 78% gov tax rebates...

For tax purposes, the consideration costs for the farm-ins will be treated as a "carry cost" on exploration so as to be allowable for the 78% tax rebate (smart tax planning) but what we don't know yet is what the consideration costs are...and of course these exploration costs have no tangible fixed asset value on the balance sheet unless discovery is successful.

The market cap moving forward will obviously be based on the success or failure in exploration because at the end of the program there will be little cash left. ATB

Paul, Ciaran Nolan has been at Longboat since January....not sure if he is an employee or just a consultant.

Munchbox - check the RNS, the Licence interests to be acquired range from lowest 9% to highest 25%.

I don't see anything wrong with the directors buying in as part of the placing...all good to me whatever the price....more skin in the game is okay with me.

Whatever the re-list price is....I for one have not forgot the nil price options at £2 that the management incentive plan offers.....Maybe a clue....also a very warm welcome to Nick to the LBE BoD's!

Agreed Paul...Primary Bid not the best option......anyway as you yourself highlighted here many times the clues were there for this type of deal...all research/opinions very much welcomed now we are soon to be over the line! ATB

Finally the 87M needed made up of equity 35m and 52m debt is in my opinion a good net gearing ratio...I think this is what will make the deal super attractive to investors. See you on the other side!

On reading the RNS again, to me it's obvious that the 52m lending facility (to fund the drilling program) is partly guaranteed by the 78% Norwegian Govt tax rebate.....the shortfall in the guarantee will need to be disclosed but if no exploration success then it will either be paid back via further placings/mixed with a new acquisition.

They have definitely IMHO been in on the loop.....the lack of a liquid market would not have affected their knowledge.

Longboat have done very well to tie up three bi-lateral farm-in transactions with three major operators "fully funded" and where all but one well the operators are involved.

Producing assets via M&A will arrive when LBE can make the numbers work to maximise shareholder value....I really do not see that LBE business strategy has changed...it's just that this low risk "exploration" opportunity with significant 78% tax rebates came to their doorstep first.....they will still actively be looking to quickly bring onboard producing assets.

Well, even if it is over-subscribed, I personally would like an option via primary bid etc...I know the retail investor holdings are small but it's always nice to see management at least show consideration for their retail investors....and we don't get the option of warrants!
Just saying

like I said if the existing II are onboard I do not see an open offer...like you say we will see and very soon.

But with warrants etc that might not happen - the potential returns in my book have always been 12-18 months (maybe longer) post first deal(s)

If the book build is serviced by the existing institutional investors then we may well see a large premium to the current share price of 80p - with less shares needed to meet the raise obviously less dilution .

I wonder if DNO will be one of the other farm-out partners....Longboat did say they had unique knowledge of some assets.

*DOCUMENT

To be honest, I think they were just a coincidence ....all those 7 licences are where Equinor are NOT the main operator but a partner so I think I jumped to the wrong conclusions....Also we are told that there are 3 farm-ins with 3 separate partners of which Equinor are just one. Lets hope we see the covalent sooner than the 10th June. ATB

I must admit I do like a gamble... a significant, near-term, low-risk exploration high impact drill program that could deliver very attractive high returns. Low risk mainly due to the Norwegian 78% tax rebates and the quality of the farm-out partners .

Assuming the appetite for investment is available (I really so no reason why not) then this is a no brainer for Longboat to get involved whilst they 100% continue to explore acquiring accretive producing assets to bolt on.