Longboat Energy inks farm-down deals with Concedo

8th Dec 2023 14:00

(Sharecast News) - Norway and Malaysia-focused exploration and production company Longboat Energy announced a significant development through its subsidiary Longboat Japex on the Norwegian Continental Shelf (NCS) on Friday.

The AIM-traded firm said it had entered into a farm-down agreement with Concedo for two exploration licences, PL1182S and PL1049.

On PL1182S, Longboat Japex reduced its ownership stake from 30% to 15% as part of the farm-down agreement.

In return, Concedo would fully fund the Lotus exploration well, extending coverage to an agreed cap above the dry well budget.

The Lotus exploration well, located in the northern North Sea about four kilometres southeast of Longboat Japex's Kveikje discovery, was expected to start drilling in the third quarter of 2024.

Longboat said the Lotus prospect, characterised by Palaeocene injectite sandstones with favourable reservoir properties and seismic amplitudes, was estimated to hold gross mean prospective resources of 27 million barrels of oil equivalent, with an additional upside potential of 44 million equivalent barrels.

The success probability for Lotus was estimated at 54%, with the primary risk being hydrocarbon retention.

If successful, Lotus-Kjøttkake was expected to contribute to an area cluster development in conjunction with nearby discoveries and the Troll field infrastructure.

At PL1049, Longboat Japex reduced its ownership stake from 40% to 25%, and in exchange, Concedo would carry 15% of Longboat Japex's exploration spend in 2024.

PL1049 encompasses the Jasmine and Sjøkreps prospects, targeting Tertiary plays.

Both prospects benefitted from new high-quality seismic data and advanced processing techniques, which had the potential to de-risk exploration prospects.

Sjøkreps is a fault-bounded three-way dip closure at the Palaeocene level, with estimated recoverable volumes ranging from 20 million to 300 million barrels of oil equivalent, with reservoir presence and quality as the primary risk.

The Jasmine prospect, an injectite target at the Eocene level, carried recoverable volume estimates between 10 million and 30 million equivalent barrels, with reservoir presence and quality as the main risk.

Longboat said the work programme for PL1049 included seismic studies, potential seismic reprocessing, and integration of results from ongoing and near-term wells targeting the same interval.

The activities aimed to improve the chances of success, and a drilling decision for PL1049 was expected by February 2025.

"We are pleased to announce the successful farm down of the two Norwegian exploration licences and the full carry of the Lotus exploration well cost, which is in line with our strategy to retain exposure to high quality exploration wells but at minimum use of the company's equity capital, and we remain fully focussed on delivering on our plans to grow production and reserves in high quality assets in Norway and in south east Asia," said chief executive officer Helge Hammer.

At 1059 GMT, shares in Longboat Energy were flat at 17.5p.

Reporting by Josh White for Sharecast.com.