Member Info for MozzaBezza

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

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.

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.

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.

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.

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.

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!

I completely agree. They need to get pushing the story here now and really articulate the path forwards.

It'll be interesting to see how much demand there is today. Some of that will be down to if the placing is/was oversubscribed or not.

True. Good point, Paul. I also think that having read this morning's news and how fast we're coming back from suspension that all of these ducks have been lined up for ages now and I guess they were just waiting on confirmation from one of the third parties.

Certainly, in my eight years investing I've never seen a firm come back from an RTO this fast. It's usually a couple of months at the minimum.

My general view is that this is a really good exploration deal, the annoying thing is, I invested here on the basis of an RTO of a production asset.

I'm happy to see where we go. These deals are always structured so that there's quickly some level of upside for those who fund.

Really though, we still need to know more about the deal, because right now it's all a bit vague on the details.

Ah, my apologies. I'd delete that if I could! Sorry all!

Where I do struggle with this, is that we'll have 56.6m shares in issue, which at 75p values the firm at £42.50m.

Now you can argue this both ways:

1. We'll have cash of £35m + current cash of £7m, then access to £52m in debt funding, or a total cash available figure of £94m, which per share comes to £1.66 then factor in any value for the actual deal and it opens a path to £2.00.

2. However, you could make a pretty coherent argument that when looking at companies with £42.5m market capitalisations, one could actually just go out and buy abother stock that actually makes cash.

For avoidance of doubt, I do actually this this is a good exploration deal, but this would have been a lot easier if they had just bought production like they said they would.

I haven't run over the numbers myself yet, but the upsides of those figures you state, is that when we do come back to market the likelihood is that we'll go up as buyers come in to bring us up to a more sensible valuation.

I wonder if this deal has been in the making for a long time, but that they felt they would be able to get a production deal done prior to this one - i.e. we were meant to have production by now that this would be the 'bolt-on' for. It would make sense, because they've been talking about 'bilateral' discussions for a long time.

The problem is that valuing this kind of deal is very hard - they need to find a big chunk of oil really for us to be able to say we should be trading at XYZ. That was always the advantage with a production deal, in that it was very easy to put a valuation on relatively speaking.

I have emailed the BOD (not that it will make any differences) with my views and questions. I've also encouraged them to do another interview, so concerns can be voiced openly.

Yeah, I think if we read between the lines it'll be rocky for a week or two as old money leaves and new money enters, but ultimately there is an outlook now beyond 'maybe, maybe not', as irritating as the journey has been to get here.

Best of luck elsewhere!

I know what you mean. After an 18 month wait on the basis of acquired cash flows and then they don't get that... Added to which what we do buy they can't raise at a premium for.

Certainly right now this morning, it's hard to make much of an argument that the last 18 months hasn't been a waste of time, but the market demand post deal will be key.

This is the thing: while it's annoying it's not at a premium, tbh, as long as there's market demand it won't matter loads because this stock won't be in the free float so to speak - but crucially that demand does have to be there!

Well, at least they didn't raise at a discount. Let's just hope that it's massively oversubscribed (although I suspect if it was it would have gone at a premium) so we get a good move post deal completion.

That's the biggest question for me: are they still looking at production deals in the short term?

One of the reasons this deal is interesting is because its the other way around from what we expected. HH had said that they planned to "bolt on" exploration, so I wonder if this might be about trying to replicate the asset swaps they had previously done on any significant find so that they don't have to raise big sums of money for buying cashflows.

Personally, i'd like to see the path to cash flows, because ultimately that's what this is all about., although on the little info we have this looks like a good deal on the face of it.