Member Info for pauldrayton

Well the AGM presentation should hopefully be a bit longer and more interesting.

In the meantime it looks like a bit of an exodus again today.

And a £20k late this afternoon.

Let’s see what the meetings next week bring.

Also on page 27 they admit this didn’t meet the objective of acquiring production but state:

“Value-driven, opportunistic transaction, continue targeting production to build balanced portfolio”.

All about these deals rather than what the future holds - not much new info really but some useful bits in there:

https://longboatenergy.com/wp-content/uploads/2021/06/Longboat-Investor-Presentation-June-2021.pdf

What would be the point in subscribing for placing shares at 75p and then dumping them cheaper?

I think the loan facility is simply to cover working capital requirements (if needed on a success case) whilst they wait for the tax rebates from the Norwegian government. In other words the loan is secured against guaranteed rebates but they may need to contribute towards testing/sidetracking/appraising if any of these wells are successful, and this loan will enable them to do so even if they haven’t had the tax refunded at the time the financial commitment is required.

I do agree, however, that the comments in the job adverts and the large recruitment spree suggest that there may well be other deals to come. There is a requirement for technical expertise to become a Norwegian licensee, but these are significant additions to the cash burn which would seem possibly over the top for a company that was only planning on being a small player in a few exploration wells.

Well I was wrong about the placing price being the floor....sigh!

Nice one, many thanks

Mozza are the 'Investor Meet' details on the website yet? I can't seem to find them.

Thanks.

I think/hope you’re right daveri, because with the best will in the world it will take some time to discover, appraise & swap assets and that’s assuming they’re successful.

As Mozza points out the cash flow in that scenario is not “near-term” so you’d think they have other deals being worked on that fit the original strategy.

I think we’d just like to hear confirmation of that from the horse’s mouth.

There is of course the argument that if they’re successful with some of these exploration wells and do manage to swap them for some meaningful production, it would have been an EXTREMELY cheap way to acquire that production. It would also avoid diluting any further at this stage.

A riskier strategy but with potentially much higher rewards.

Mozza I’ve now had a response to my email from Ben Brewerton at FTI Consulting - looks like they have hired a PR firm to fob us off instead now!!

With regards to the first point they were vague and said they’re still looking to become a full E&P company and will either do asset swaps or buy the right deal.

With regards to your second question they said “the intended increase in the directors remuneration was set down in both the original Admission document and the Remuneration Report contained in the Annual Report as approved by shareholders”.

I signalled by disapproval of the latter and told them they could quite easily have deferred the pay increases until such time as they have delivered shareholder value (citing Andrew Austin as a good example of running a company for shareholders and not the directors’ gravy train). It will fall on deaf ears but I feel better pointing it out!

I think if you want anything other than a vague response regarding a production asset in the near-term, the question is going to have to be quite specific or they will skirt around it.

Perhaps “are you currently involved in any processes to acquire production assets and has there been any progress on this since the last update in March?”.

It’s the one thing we all want to know but getting it out of them is the key!

Hope so haggis. To be honest I’d be annoyed at the directors doubling their salaries at this stage if a production deal is not in the pipeline.

There were 2 main objectives when they launched:
1. Acquire a production asset with near-term cash flow.
2. Create shareholder value.
A
So far they have failed to meet either objective so a doubling of salary at this stage seems extremely greedy unless there is something up their sleeve that we don’t know about.

I’m more than happy for them to reap the rewards if they can get the share price to £2/3/4/5 etc but not at 75p.

Welcome back haggis, let’s hope you’ve timed it well!

Mozza I didn’t get a reply to my email either - I might be on the black list now because I was a bit critical(!) but I wonder if they’ve given up on investor relations entirely now!

The AGM is probably our only hope of clarification, but I won’t hold my breath.

Well given the lack of new licensee/operator approvals in Norway recently (only 11 in the past 4 years), when Longboat get approval they should be in an increasingly rare position to take advantage of opportunities as and when they do arise.

It would be nice to hear from them though. Volume has dried up already within a couple of days of relisting, and whilst that doesn’t really matter to them or us, with another 46.7million shares hitting the market in a couple of weeks it would be good to see some PR. I know I said that before but maybe I’m being naive and this company doesn’t really care as long as the institutions are informed and happy.

Well they seem to be gearing up in terms of staffing costs for more than a bit-part role in a few exploration wells.

Yearly salaries/fees are as follows:

Directors/Management:
Helge Hammer: £300,000
Jonathan Cooper: £250,000
Graham Stewart: £103,750
Brent Cheshire: £70,000
Jorun Saetre: £50,000
Katherine Roe: £60,000
Nick Ingrassia: £230,000

That's £1,063,750, plus Julian Riddick whose salary/fees don't seem to appear in the Admission Doc.

Plus 4 current staff:
Synnove Roysland (Drilling & HSEQ Manager)
Morten Rye-Larsen (Exploration Manager)
Per Torfinn Knudsen (Petroleum Technology Manager and BD Support)
Line Veiberg (PA & maternity cover for Hedvig Kleppa).

And a further 10 being recruited:
Senior Geologist
Senior Geoscientist
Senior Reservoir Engineer
Senior Accountant
*Plus 6 others as yet unknown to us.

If those 14 staff are on an average of £50,000 a year (and I suspect it will be more but let's be conservative), that's £65,000 after tax, insurance, benefits & pension contributions etc so a total of £910,000. Plus Julian Riddick.

Then there are the fees for consultants (currently visible on Linkedin are Ludvig Hovring & Ciaran Nolan).

They are going to end up with a wage bill of well over £2m per annum (possibly £2.5m-£3m) which is a lot for a company with a market cap of only £42.5m.

That's before all the other corporate costs so their outgoings are going to be significant.

I know they require a certain amount of technical expertise to meet the Norwegian licensing rules and 'See to Duty', but these salary increases, recruitment drive and eventual staffing costs hopefully indicate that they expect to be growing the company and market cap quite aggressively from here.

Yes the more you look the more you realise this deal has been in the pipeline for a long long time.

I think this (below) is key too - what assets are non-core to private equity backed vehicles in Norway at the moment? Or even the U.K. North Sea because that’s still getting a mention:

“Many majors have continued to look to reduce investment in the North Sea and as a result of rapid acquisitions, and there are a number private equity backed vehicles holding assets that are non- core to their businesses. The Directors believe that many of these non-core assets can hold significant value for companies like Longboat Energy, which can focus on unlocking intrinsic and upside value, thereby benefitting both parties in a transaction”.

Think we are on the same page there daveri.

It might be wishful thinking on my part but given the comments in the Admission Doc & job advert plus the increase in salaries and headcount, I suspect we may well see a production deal land before the first exploration well results are even known. Hopefully with a large debt/equity ratio so the raise won’t be at a discount to current holders - this deal has let the institutions in at a discount and I think we will see in the market at the end of the month what their intentions are with their new shares. It would be a very good sign if they hold and don’t flip.

Yes the clues were there for this deal, and there appear to be clues that other deals will follow but we will have to wait and see.

daveri, yes I also noticed in the Admission Document that they stated: “The Group has four employees and is in the process of recruiting up to ten further employees”.

That’s quite a big addition both in terms of expertise and cost. I think we’ve seen 3 or 4 of those 10 positions advertised now so it will be interesting to see what else comes along.

The language they use is intriguing: “As Longboat completes more deals” - no ifs or maybes here, this was not the only deal they want to do - they are looking at ‘more’. Maybe I’m reading too much into the word ‘completes’ as well but this could signify that they’ve already identified deals and are going through the due diligence process before completion.

Also “becomes an operator” - this is quite important because this would mean development/production is more likely. I don’t think they’d be looking to be an operator for pure exploration on its own - they’ve used the bilateral deals for that to take smaller stakes in larger projects with existing operators who have got the prospects to exploration stage already and are sharing a large portion of the costs.

A lot of reading between the lines I know, and hopefully we will hear more at the AGM if not before.