17th Jun 2024 14:09
(Alliance News) - Longboat Energy PLC on Monday announced the strategic pivot of the business to focus on southeast Asia following the sale of its majority holding in Longboat Japex Norge AS.
Shares in the oil and gas exploration company soared 59% to 11.50 pence each in London on Monday in response. The stock remains down 44% over the past 12 months, however.
Longboat said it is selling its 50.1% stake in Longboat Japex Norge AS in Norway to joint-venture partner Japan Petroleum Exploration Co Ltd for USD2.5 million in cash. In addition, Japex will assume financial obligations associated with USD8.5 million of debt net to Longboat in the LJN subsidiary, plus its share of drawn debt under a bridge facility.
Longboat said it had made the decision to exit Norway and to focus on building a full-cycle E&P business in Southeast Asia after a detailed review.
Chief Executive Nick Ingrassia said: "It was a tough decision for the board and management to exit Norway, but western Europe is proving to be an increasingly difficult region to thrive for independent E&P companies."
Longboat sees significantly more potential for a small company in southeast Asia than in Norway and believes its existing positioning and access to opportunities provide "excellent value-creation potential".
Longboat said recent structural changes to the Norwegian upstream industry have favoured an increasingly small group of very large companies with long-term investment horizons and access to low-cost capital.
This has left the company at a significant competitive disadvantage.
Longboat said the strategic pivot also gives it the opportunity to streamline and reduce its cost base, including a smaller board. The Longboat board will be reduced to four.
The cost-reduction measures taken will result in annual savings in excess of USD1.25 million from the start of 2025.
Longboat said its focus in the near-term will remain on its Malaysian activities, offshore Sarawak.
By Jeremy Cutler, Alliance News reporter
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