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It’s difficult to argue that this has been anything but frustrating. Even last week, great news on the Monday followed by disappointing news on the Friday! Not many of us bought in for exploration and I think it’s a general consensus that they missed an opportunity not securing a producing asset when commodity prices were lower.

This exploration campaign ‘can’ deliver excellent value for money though. I think they need at least one more commercial discovery and preferably two from the last four wells, but Egyptian Vulture is likely to be an important asset for them which could have already made the whole exploration package worth investing in. Interesting comments here from Equinor in their discovery announcement:

“Our ambition is to transform the shelf from an oil and gas province to a broad energy province that will ensure value creation from the shelf in the decades to come. In this ambition, our exploration activities are central,” says Kristin Westvik who is area director for Exploration and Production North.
She adds that future value creation will largely come from increased recovery from existing fields, and connection of new discoveries close to existing infrastructure. It is therefore uplifting once again to be able to demonstrate resources that can strengthen the service life of producing fields in the Norwegian Sea. Such near-field discoveries are profitable, robust against fluctuations in oil / gas prices, they have a short payback period and low emissions.”

https://www.equinor.com/en/news/20211028-new-oil-discovery-norwegian-sea.html

It’s been said so many times on here but I think if you’re going to continue holding then you’re going to have to be patient - at least another 12 months to see how the rest of the exploration campaign goes and what they can then move onto next. Otherwise it’s probably worth selling to be honest because we are unlikely to see other share price catalysts unless they pull another deal out of the hat.

In the meantime I’m hoping the Egyptian Vulture appraisal is already being planned.

Given the potential size of Egyptian Vulture it might need another 2 or 3 wells to delineate fully, plus a flow test. It would be nice if they got onto that next year - I’m sure the Longboat team will be keen for them to press on ASAP although the timing will ultimately be up to Equinor.

From a technical perspective it’s good that all 3 wells have encountered hydrocarbons and coal was noted as a pre-drill risk for this one.

Obviously disappointing about Rodhette & Mugnetind on the whole but I suppose that’s exploration for you. Thankfully both drills were very quick so no wasted money on overruns.

I think Egyptian Vulture is probably already a company-maker in its own right and if you had to choose one of the first 3 to be successful it would have been that one. It would be nice to get one or two more commercial discoveries by the end of the programme though.

4 more wells to go with 5 prospects to drill, and hopefully an Egyptian Vulture appraisal well to come in addition.

Correction: minimum of 30 days. I think they also have consent for a sidetrack if successful so Ginny/Hermine could be later on in December if Toppand is a discovery.

West Hercules is now on its way to Equinor’s Toppand prospect so Ginny/Hermine will be after that. Toppand is expected to take about 30 days so it’s probably going to be early-mid December for Ginny/Hermine.

Thanks.

“Further appraisal will be required to understand the flow potential of the reservoir and, we believe, could ultimately increase recoverable volumes towards (or even over) 100 mmboe.”

I’m guessing this is Longboat’s take on it. They should be planning the location of the appraisal wells and flow tests by now with a potential discovery of that size.

I would argue that a significant discovery of light oil within close proximity of infrastructure in the current oil price environment is worth more than $4/bbl in the ground too.

Egyptian Vulture has given the company something very significant to work with. Rodhette perhaps a smaller bonus but the true value of both are dependent on further exploration/appraisal. Still 5 well results (including 6 prospects) to come during this campaign - success at a couple of them would be very helpful and would give Longboat a small portfolio to appraise/sell/develop.

For shareholders it might mean waiting for that to play out over the next year or two, by which time hopefully Longboat will have transitioned into the E&P company it wants to become. It will probably take a bit of time though and won’t happen overnight - full value is never achieved from one successful exploration well.

There are still sellers and O&G remains an unloved sector despite commodity prices, but some more success with the drillbit would be very welcome and if that happens the value should eventually be reflected in the share price.

Yes I suspect Helge will be speaking to the institutions over the next few days as well to explain the result and its implications in more detail. From Malcy’s comment it sounds like he’s very pleased it’s liquids, and the word “significant” is not said lightly by these guys.

Yes there is a large range of recoverables at this stage and yes it needs appraising, but this was a very important discovery - just what they needed.

Now over to Mugnetind & Ginny/Hermine (the latter could be a quick drill if it goes to plan with an operator estimate of 27 days). It would be great to get at least one more commercial discovery before year end.

I’ve found the well schematic for Mugnetind if anybody is interested. Page 1 is the initial exploration well and Page 2 shows the sidetrack. The application confirms that it will only be drilled if they find commercial hydrocarbons and it’s a 1600m step out from the initial well:

https://hoering.miljodirektoratet.no/LastNedVedlegg/16540

They quote 71 days for the entire operation if they do both, including 23 days to drill the sidetrack. I suspect we will hear the results of the initial well first regardless.

Malcolm Graham-Wood "I have just spoken to Helge Hammer CEO of Longboat Energy and this is a fantastic discovery. Liquids a big bonus and I’m a very prolific area."

————

Hopefully we might get an interview with Helge after the next two wells to summarise the position at the end of the first stage. It would be useful to know if he’s opened his champagne yet!

icemax, just to come back to you on Mugnetind, yes they could sidetrack if they encounter problems but operators can do that on pretty much any well and it would only be a few metres from what was planned.

The drill permit that AkerBP applied for was for two wells, drilled from the same rig location (so I’m guessing a sidetrack appraisal from the same wellbore). They won’t do it if the initial well is dry, but it’s nice to have the option to crack on immediately if it’s a success.

icemax, with regards to Mugnetind, I think the second well will only happen if the first is a success. Essentially it would be classed as an appraisal well if they make a discovery. If the first well is not successful then it won’t happen. So not quite two shots at it but possibly a swift sidetrack to assess the extent of it if they find anything interesting.

I have to say I’m surprised it’s only opened in the 80s after that result. But as haggis pointed out that result pretty much underpins the share price now so any further discoveries out of the next 5 wells should be a bonus.

It’s also good that they haven’t overrun on either of the first two wells. Both completed before schedule - although it’s only days if they can keep that up there should be some cost savings which can be put into the appraisal budget.

For context they were anticipating 17.6m of sand in a gross interval of 55m.

They got 13m net sand in a gross internal of 37m.

So the total column size was a bit smaller but the net to gross was slightly better, and the porosity was pretty much as they expected.

No oil/water contact at this location and the top Lange sands were encountered slightly shallower than they thought which might be a good thing as the upper Lange has the high net to gross.

Lots of work for the geo teams to be getting on with now - such a significant discovery should hopefully be appraised fairly swiftly.

Egyptian Vulture is a huge structure - they were always going to be conservative in their estimates after just one well, but I’m sure there will be further appraisal wells planned pretty soon.

Still work to do but very promising.

Great news, and West Hercules will soon move onto Ginny/Hermine.

Thanks Mozza. I suspect there may be another well or two planned in the license area in due course.

I may be the only one who missed this but was everyone else aware that AkerBP got a drilling permit for 2 wells at Mugnetind? I’m guessing they might be planning an immediate sidetrack appraisal if the initial well is successful:

https://www.offshore-technology.com/news/aker-bp-permit-wells-norway/

Who knows - only those who are selling! Obviously it’s a bit unnerving when the share price is dropping when well results are expected, especially when there are chunky sells as well. But it could be for any reason as you’ve both said, and we just have to wait for official news. Day 30ish now of Egyptian Vulture.

Yes today’s trading is a little ominous. I guess we will find out soon enough if it’s inside knowledge that drove it.