Member Info for pauldrayton

I think Kveikje must be worth at least 25p so cash and EV/Oswig are currently not in the share price. You’d like to think this is therefore at (or close to) the bottom. Who knows with the market though, a keen seller can always push it down.

I think an email to Helge is a good idea - I’m sure he already knows how frustrated shareholders are but no harm in telling him again.

I really hope they can do a deal with Kveikje that gets them some production, even if they have to add some borrowing alongside.

I actually still think Oswig has a lot of potential even with poor quality reservoir.

There is perhaps some hope left, but that’s all it is, and it relies on the management taking the company in a different direction now.

Unfortunately we will have to go through the rigmarole of setting up a new panel, followed by various submissions from both parties plus costs etc. I really don’t understand why an application for annulment should take so long unless there was a clear breach of the rules (which I’m sure there isn’t), but that’s the way it is with ICSID. Italy want to put others off going down the same route, and ICSID taking so long only help them. Let’s hope they pull their fingers out this time but I won’t hold my breath.

Arghhhh!

Surely for a tribunal to decide that the previous panel manifestly exceeded its powers, it would have to be on the basis that ICSID has no jurisdiction. That’s been ruled on numerous times already, not just in this case but in others as well.

Moody has been fairly consistent in fairness to him.

He’s always said Italy are likely to kick & scream, and he said to me a year or two ago that the lawyers’ thoughts were that the higher the award, the more they would try to prevent having to pay it.

So this is no surprise to Moody, Harbour or King & Spalding. I’m guessing they will have prepared for this and now we just have to wait for the process.

Frustrating as it is, it’s highly unlikely that Italy will succeed and interest will ramp up from December.

The placing was done earlier in the year to see them through the next couple of years and by that stage there should be a definitive outcome anyway.

Let’s hope ICSID are keen to deal with this rather more swiftly than they dealt with the original case.

I emailed Investor Relations earlier and got this response. To be honest it’s annoyed me even more - do they not know that Mugnetind was a failure?! Are they really counting a sun commercial Rodhette as a discovery? Do they really think they’re performing above industry averages? They’re kidding themselves. Let’s hope they wake up now:

———

Whilst we had hoped for a more positive outcome from the Oswig side-track, we can see there is still plenty of upside potential. As you will appreciate, exploration always carries risk but of the eight wells drilled, there have been five hydrocarbon discoveries (Egyptian Vulture, Mugnetind, Rødhette, Kveikje and Oswig), representing a 63% success rate which is well above industry averages. Despite the share price reaction, the discoveries we have made do present us with significant potential to deliver value.

We have the Velocette well to drill next year which is a medium risk high reward gas opportunity and are working hard to expand the programme. We are fully funded for all of our current commitments
The management and founders of the Company are all major shareholders having invested approximately £2m to date, and we share and completely understand the frustration and disappointment felt by shareholders over the current share price. Rest assured we continue to work to deliver value both from the current portfolio and through other options

We also recommend your involvement in one of the upcoming Investor Meet Company presentations, where you can put your questions to the Longboat Energy management directly.

I agree I can’t see them raising money for more exploration alone.

Perhaps they could get creative with Kveikje and offer it up as part of a deal, plus cash raised by RBL to secure production.

They’ve always touted themselves as great dealmakers - now is the time to prove it.

There is no doubt that the extent of the share price fall this morning has been substantial, of course one the one side the well has failed to deliver pre-drill estimates in terms of size but it should be borne in mind that this is not a dry hole.

As I understand it the argument falls between two theses, one the one hand in place volumes are quite high but against that at this stage, recovery rates are low. Speaking to the CEO this morning I feel that a number of actions could be taken to make this a better looking result starting with analysis of the substantial amount of data that the operator has gathered in the well.

Also there may be potentially large volumes in the south, obviously not in these numbers but just might double the discovered amount of hydrocarbons and more importantly substantially increase the recovery factor.

The Longboat management, and they are amongst the best in the business, are now going to be working flat out over the next few months to firstly sort out this Oswig process and also to maybe come up with some portfolio activity to either raise money or get some production into the mix. If that happens then today’s 27p should be a thing of the past, the company hasnt become a bad one overnight…

I think it’s oversold but there is a general lack of trust in the board’s strategy, and the DST results did not match what they had hoped for. Also there are no near term share price catalysts other than Kveikje monetisation and/or another deal of sorts. They really need to pull their fingers out and do something worthwhile. I actually think a period now of no drilling might be a good thing - let them focus on something else and actually creating shareholder value.

Thanks for that. Oswig is another one for the bottom drawer - I think it will get developed but needs a bit more work and time first so no immediate value placed on it by the market. Interesting to see they think it might extend further south and that acreage will be awarded to the partnership in Feb next year. I wonder if this was partly what Ocean Mermaid was looking at a few weeks ago.

I’d certainly take £1.20 right now!!

Have you got a copy of their analysis Mozza?

I completely agree. I can understand 3 more wells with their current portfolio (EV, Oswig, Velocette) but no more exploration.

Swap Kveikje for cash or preferably production, and then do the same with the others once drilled.

Time to refocus and make the most of what they can from the exploration results to date.

Yes the cash position doesn’t look too bad with all the tax rebates.

However I think they need a change of strategy. Exploration simply hasn’t delivered shareholder value. I think they will want to appraise both Egyptian Vulture and Oswig if the operators decide to, and there is Velocette to come at some stage next year. I don’t think more exploration wells are the way forward though - they have to use Kveikje as a bargaining chip for something else. Unfortunately they only own 10% of it but with oil prices where they are now would be a good time to sell it or swap it - they said they’ve had a lot of interest so let’s see.

The in-place volumes being lower when the initial RNS said higher isn’t great. To be honest these things almost always need appraisal to prove up a decent volume so perhaps it was unwise to mention it, and the formation was perhaps a bit tighter than they expected too, or the pressures were lower (possible compartmentalisation?).

Overall I think Oswig will be appraised and developed and today’s drop is recent traders exiting having bought in hoping for a better result. Plus there is no more drilling scheduled for some time.

Disappointing day in terms of the share price but another discovery which should ultimately add value.

I hope they’ve progressed discussions to monetise Kveikje in the meantime.

Not much sign of anything in the market today though - all very quiet.

They really are shooting themselves in the foot with these windfall taxes. We need to incentivise investment to increase supply:

https://www.reuters.com/article/netherlands-energy-tax/dutch-government-to-levy-windfall-tax-on-fossil-fuel-companies-idUKS8N2Z500C

For those who kindly did some research into the ICSID cases where an application for annulment was made, did anybody happen to look at the average duration from application to judgement?

Just wondering if the lawyers’ 18-24 month assessment is standard or not.

Pretty sure that was Mozza dripping a bit more in ;-).

That’s a fair point that I hadn’t considered - whilst the Ness formation won’t be drilled or tested as part of the DST, they could decide to drill on once the DST is finished to see if they can get more clarity on it. We shall see.

I wouldn’t have thought they are still drilling at this stage. I hope not anyway!! And I think they are only testing the Tarbert formation with the DST (not the lower Ness formation).

My rough guess on timings is 3 weeks to plug back & drill the sidetrack, followed by 3 weeks of testing, followed by 1 week to plug & abandon. So about 7 weeks total, give or take a bit. On that schedule the testing would finish at the end of this week, so maybe news next week.

It is a pure guess though.