Wednesday 3 May 2023

Longboat Energy, the emerging full-cycle E&P company, has announced that it has reached agreement with Japan Petroleum Exploration Co., Ltd ("JAPEX") to make a significant investment into its Norwegian subsidiary, Longboat Energy Norge AS ("Longboat Norge"), to form a joint venture.

The joint venture will be renamed Longboat JAPEX Norge AS ("Longboat JAPEX" or the "Joint Venture"), with a goal of building a leading Norwegian-focussed independent.

Transaction highlights

Cash investment of up to US$50 million for 49.9% of Longboat JAPEX comprised of:

· cash investment on completion of US$16 million;

· a contingent consideration of US$4 million, payable on successful completion of a production acquisition currently under review; and

· a further tranche of up to US$30 million, payable on a sliding scale following a successful discovery on the Velocette exploration well due to spud in Q3 2023.

JAPEX to provide the Joint Venture with a US$100 million Acquisition Financing Facility:

· five-year facility to finance acquisitions and associated development costs in pursuit of the Joint Venture's strategy; and

· interest rate based on a sliding scale with an all-in cost over the term of <10%.

JAPEX, founded in 1955, is a public company listed on the Tokyo Stock Exchange (m/cap ~US$1.8 billion) with proved reserves of 159 mmboe (2022/3) and production of 58,500 boepd (FY22). JAPEX's largest shareholder is the Japanese government (35%) via the Minister of Economy, Trade and Industry of Japan.

Longboat JAPEX will pursue a growth-led strategy to create value predominantly through the acquisition of development projects, growing 2P reserves and reaching 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.

Helge Hammer, Chief Executive of Longboat, commented:

"Longboat is delighted to have found a strong and complementary strategic partner in JAPEX. JAPEX has been looking for the best way to enter Norway and identified Longboat as an excellent match to reach its strategic objective.

"The Longboat team has significant experience and expertise in the Norwegian E&P sector and has strong local industry relationships. JAPEX is a long-established E&P company with a strong balance sheet and significant worldwide technical competence including in the North Sea. By joining forces, we will have greater opportunities and strong financial backing to pursue them. We believe that this agreement has laid the foundations for exciting growth in the coming years.

"We are also pleased to be in a strong position to continue to pursue our interests in the Kveikje area as this development project is being matured and additional value created.

"The team looks forward to delivering production and reserves growth to create value for shareholders both in Norway with JAPEX, but also in Malaysia following our recent entry into the region."

Masahiro Fujita, President and CEO of JAPEX, commented:

"JAPEX is very pleased that we have formed the partnership with Longboat for a Norwegian E&P business. We see a very strong alignment in the business expansion strategy in Norway and believe the combination of the Longboat team's significant experience and expertise in Norway and JAPEX's technical and financial competence will be very beneficial in pursuing such a strategy.

"I look forward to working closely with the Longboat team in pursuit of our common growth strategy in Norway."