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  • Writer's pictureMark Watson-Mitchell

Longboat Energy – everyone is jumping aboard the Longboat after its latest mega-deal

The shares of Longboat Energy (LON:LBE) have leapt nearly 140% this morning after the £13.4m capitalised company announced that it has tied up a mega-deal with Japan Petroleum Exploration concerning its Norwegian subsidiary.

Impressively it is a significant capital injection for the group with no dilution of the equity, enabling Longboat Energy to retain exposure to its catalyst-rich asset base.

The group, which was only established three years ago, is a ‘full-cycle’ exploration and production company which has subsequently expanded through various acquisitions, has centred upon building up a portfolio of nine gas-weighted exploration wells drilling on the Norwegian section of the Continental Shelf.

Of those wells, which are situated close to existing infrastructure, eight have been drilled to date showing five hydrocarbon discoveries, achieving an impressive 63% technical success rate.

And that is what JAPEX are buying into by making a significant $50m investment by taking a 49.9% stake in Longboat Energy Norge AS, which is to be renamed Longboat JAPEX Norge AS.

The joint-venture will pursue a growth-led strategy through the acquisition of development projects, 2P reserves growth and establishing a significant production level within three to five years. The Joint Venture will continue to target the drilling of one to three exploration and appraisal wells per year.

This is a transformational deal for Longboat, with an upfront $16m cash boost to Norge, which is the equivalent of the total group’s capitalisation.

Analyst James Mccormack at Cenkos Securities rated the group’s shares as a Buy, having increased his Target Price from 57p to 66p in the process.

Longboat last year reported a £49.4m pre-tax loss and ended the year with closing cash of £12.1m.

For the current year Cenkos goes for just a £10.5m loss, but with cash ending at £25.7m.

For the end December 2024 year they estimate only a £5.0m loss, with cash falling to £22.6m.

Over at Auctus Advisers their analyst Stephane Foucaud also rates the shares as a Buy, but with a 90p Target Price.

The group’s shares, which closed on Friday night at just 9.5p, have been up to 23p this morning before easing back slightly to the current 21.5p.

The shares reacted very well to the news, perhaps too well, as others take their profits there could well be some cheaper buying possibilities.


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