Member Info for MozzaBezza

My guess is that this refers to hedging production.

Let us say they spend 200m usd and get 30k bopd from BP (entirely hypothetical).

At 20bopd net back hedged at 40usd/bbl, they would make $219m a year hedged, so the need for equity raising drops quite a lot when you can hedge production.

My feeling is they will still raise both as there will be an appetite for equity on a good deal, but it's not clear cut that it would be required per say.

Great to see this moving again!

I guess that there either a buyer in the background that we can't see or fresh rumours are circulating among the primary traders/market makers.

These broader mergers/deals will be really good for us as the larger companies look to divest from their smaller assets to focus on their big ones.

It would be lovely to hear more form the BOD, but obviously I understand why they have to keep their mouths shut.

It's all glorified guess work at the moment: I've always assumed in my own work that they will follow the path that RRE did: (listed at 50p, RTO + raise at 150p, next RTO + raise 300p).

So for LBE that would look like: listed at 100p, RTO at 300p - 600p depending on the asset size, features, market etc. Also, on top of that we have to contend with the valuation, which they will attempt to tactically price so that it relists post RTO and has room to run to the upside. Equally, they don't want to price it too low, or else the current funds will be hacked off that their equity valuation was too low.

It's a balancing act, but I like that the BOD ultimately make more money as we do in any deal - that's what really matters.

Fingers crossed you're on the mark, as I'd love to see that too, but we'll see I suppose. Time will tell.

My gut feeling is that we were looking at 3-5k bopd, but that now we are maybe looking at double that (6-10k bopd). But that being said, I will be absolutely delighted to be proved wrong.

The thing is, I suspect that ultimately these larger 10k bopd or more assets will be swallowed up by larger, established companies.

That would be grand. From what I cna find Scott is doing just under 40k bopd, with CNOOC having about 80% of thst, or ~31k bopd.

The thing is, I can only see them winning it if they bid for it and take the decommissioning on. Now it may be they cna do a Rockrose and push that out, but I think thst it might be a bit big for them perhaps? Particularly if4 the likes of Enquest are circling too.

Further speculation: but if you look on Var Energi's website below, on their licence map, you can see their non-operated partner share fields.

I reckon this must be the kind of thing we are after and I really wouldn't be surprised if we're even directly looking at some of these owned by Var Energi as they'll have acquired some minority interests here that they'll want to divest from, as per other links.

https://varenergi.no/en/our-business/license-map/

Now this is entirely speculative, but what would make sense would be for LBE to think about buying stakes in some of the Equinor operated assets off of Norway:

https://www.equinor.com/en/what-we-do/fields-and-platforms.html#fields-we-operate-in-norway

Exxon sold more than 20 minority stakes in these Equinor operated fields to Var Energi about this time last year, so it may well be that these are back for sale:

https://www.worldoil.com/news/2020/7/21/eni-seeks-to-sell-assets-in-norway-congo

From the above article, dates late June this year: "Var Energi is Norway’s largest non-state oil and gas producer, having bought Exxon Mobil Corp.’s assets in the country in 2019. At the time, Var said it planned to dispose of some of the assets acquired through the $4.5 billion deal."

I'm trawling through the results again, presumably Daveri this hub strategy could be the synergy your contact suggested:

"· assets with identifiable upsides via organic growth through further field investment (infill drilling etc.), potential near-field exploration and with follow-on opportunities to deliver a hub strategy;"

The implication being that there must be two separate assets reasonably close together that they feel look attractive.

I wonder actually if they are looking more towards Norway, because "UK" only appears once outside of the accounting jargon, while "Norway" appears four times and has a random bit included that adds nothing unless it's a serious consideration:

"In Norway the "see to duty", a central part of industry regulations, allows and requires a non-operating partner to have significant input into the asset partnership."

Chanceman, you have been filtered for being intergalactically irritating.

That's how I read it.

A few weeks ago, I emailed them and had this back, which I'm sure they wouldn't mind me posting here but basically says the same thing:

"Thank you for your note and empathy and it has indeed been a frustrating time for us. I probably don’t need to tell you that the pandemic and oil price collapse has taken a heavy toll on deal making this year, with transactions being put on hold as companies focused on operations and cost reductions. Regrettably this has pushed back our expected timing.

However we remain active, leveraging relationships and creating business development ideas and expect to see increased activity in the second half of the year. We remain confident in the strategy and we will disclose to the market as soon as we have something material to announce.



Kind regards

Julian Riddick
Commercial Director & Company Secretary
Longboat Energy plc"

I completely agree with that Munch.

Fingers crossed they can get something good across the line soonish!

"Events year-to-date have been unprecedented causing deals under negotiation to be put on hold on several occasions, due to matters beyond Longboat's control."

The words "postpone" and "hold" are used a reasonable number of times, so I wonder if they are simply delayed, but that they are using the time to keep doing due diligence on other deals.

I wonder Daveri if the, same deals are still on, but have just been delayed by covid (?).

Is your source able to comment on it? I. E if their funding is still available, etc? It would be interesting to know.

I've never really liked taking about price targets, particularly with RTOs, because so much of it depends on the funding price for an initial acquisition.

For me, I have a 500p target price with the information I currently have:

1. Pre-covid we were looking at 3000-5000 bopd.
2. 50-200m USD price.

Now, obviously there are a lot of moving parts: operating cost, abandonment cost, etc, but if we look at the transactions that have taken place:

1. Ithica buying Chevron's North Sea business in November, 80k bopd for $1.6bn, or $20k per barrel.

2. Viaro paid $250m for RRE's 20800 boepd in April 2020 (note that RRE had a lot of cash when that occurred so this example needs to be taken with a large pinch of salt), or $12,019 per barrel.

Now, let us assume that LBE pay $15,000 per barrel.

In that case they come out at doing 13.3k bopd, which on a high $20 breakeven would put them at a yearly revenue at $40/bbl of 191,995,200 USD.

If we do that transaction on a low Price to revenue of say 4, then the equity value would be 479p.

My target here is about 500p, but obviously I would adjust that based on viewing the deal we do.

Come on then, what details:

Surely you can hint, or provide some information that can be corroborated elsewhere, or even just something concrete.

Forgive me if I am a little sceptical, as after all your first post here was: "What's the catalyst for the price increase, is it speculative of a merger?", which doesn't exactly imply you're best buds with Mr Hammer.

Fingers crossed that the company can at least hint at what they're looking at tomorrow!

Although, I suspect their NOMAD will make them say a load of waffle that doesn't really mean anything.

Very many thanks, Daveri. Much appreciated.

Have a good weekend!

Daveri, if you're lurking on here, have you heard anything from your sources?

Surely we must be getting closer to something!