Longboat Energy picks up stakes in two North Sea fields

Longboat Energy, an emerging full-cycle E&P company established by the former management team of Faroe Petroleum, is in the process of expanding its oil and gas portfolio with stakes in two fields, which will become its initial production assets offshore Norway. This comes when the firm is ticking off all the boxes required to create its Norwegian joint venture (JV) with Japan Petroleum Exploration (JAPEX).

According to Longboat Energy, a sale and purchase agreement (SPA) has been inked with INPEX Idemitsu to acquire a 9.60 per cent interest in PL 089, equating to a 4.80 per cent unitised interest in the Statfjord Øst field and a 4.32 per cent unitised interest in the Sygna field on the Norwegian Continental Shelf (NCS), for cash consideration of $12.75 million. The firm claims that this acquisition represents its “first producing assets.” This acquisition will be carried out through Longboat’s subsidiary Longboat Energy Norge, which is expected to become a joint venture with Japan Petroleum Exploration by mid-July 2023.

In addition, Longboat Norge has entered into a decommissioning security agreement with INPEX Idemitsu and will pay a further deferred, post-tax consideration of $1.75 million in equal stages over the next 18 months, which will be returned to Longboat Norge after the successful decommissioning of the Statfjord Satellites, currently anticipated in the late 2030s.

Helge Hammer, Chief Executive of Longboat, commented: “We are pleased to announce our first production acquisition in Norway, the next step in realising our growth ambitions on the Norwegian Continental Shelf. The Statfjord Satellites are two high-quality, long-life assets undergoing an exciting and transformative redevelopment led by Equinor.

“Longboat’s ability to secure this acquisition through a bilateral negotiation continues to demonstrate the company’s deep relationships in Norway and is an important next step in creating a full cycle E&P company. We would also like to thank our new joint venture partner, JAPEX, with whom we have worked in close cooperation to execute this important transaction. The Statfjord Satellites help position the enlarged business for future success and proves the benefits of joint venture concept.”

The effective date of the transition is 1 January 2023. In addition to the customary regulatory, lender, and partner approvals, the acquisition is subject to the successful carve-out of Statfjord Øst and Sygna from PL 089 and the completion of the investment by JAPEX in Longboat Norge, announced on 2 May 2023. The completion of the acquisition of the Statfjord Satellites is anticipated prior to the end of 2023.

Related ArticleFurthermore, Longboat explains that this acquisition and subsequent capital expenditures on the Statfjord Satellites will be funded by a combination of existing cash on hand in Longboat Norge and the pending investment by JAPEX, made up of the initial $16 million base investment and the additional $4 million contingent payment previously agreed with JAPEX which will be triggered by the transaction.

In conjunction with the acquisition, Longboat commissioned ERCE to produce an independent, competent persons report (CPR) in relation to the Statfjord Satellites, which values Longboat Norge’s net entitlement 2P reserves in these assets at NPV10 of $15.3 million, based on a long-term Brent oil price assumption of $75.7/bbl (real 2023) and an NBP gas price of 108.4 p/therm.

Overview of two North Sea producing fields

Located seven kilometres to the northeast of the Statfjord field in a maximum water depth of 190 metres, Statfjord Øst produces oil and gas from good quality, Middle Jurassic sandstone in the Brent Group. It began production in 1994 from two subsea production templates and one water injection template tied back to the Statfjord C platform.

A redevelopment plan was approved in 2021 to drill five new production wells into potentially undrained areas of the field while also adding gas-lift to increase production levels. This infill drilling programme is currently underway and anticipated to last until the end of 2023, resulting in a material uplift to production in 2024. The field is currently anticipated to produce until the late 2030s.

In the period to 30 April 2023, Statfjord Øst had gross production of around 5,200 boepd from one well, equivalent to about 250 boepd net to the acquired INPEX Idemitsu working interest. The Statfjord Øst partners are Equinor (operator, 43.25 per cent), Petoro (30 per cent), Vår Energi (20.55 per cent), INPEX Idemitsu Norge (4.80 per cent) and Wintershall Dea Norge (1.40 per cent).

On the other hand, the Sygna field is located just northeast of the Statfjord Nord field at 300 metres water depth. It produces oil and gas from good quality, Middle Jurassic sandstone in the Brent Group. Originally discovered in 1996, the field began production in 2000 from three production wells tied back via a subsea template to the Statfjord C platform. A long-reach water injection well was also drilled from the Statfjord Nord template and the field is anticipated to produce until the early 2030s.

In the period to 30 April 2023, Sygna had gross production of approximately 1,300 boepd from one well, equivalent to around 60 boepd net to the acquired INPEX Idemitsu working interest. The Sygna partners are Equinor (operator, 43.425 per cent), Petoro (30 per cent), Vår Energi (20.995 per cent), INPEX Idemitsu Norge (4.32 per cent) and Wintershall Dea Norge (1.26 per cent).

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