THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014 AS AMENDED AND TRANSPOSED INTO UK LAW IN ACCORDANCE WITH THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR").

17 June 2024

Longboat Energy plc

(the "Company", "Longboat Energy" or "Longboat")

Sale of Shares in Longboat Japex Norge and Exit from Norway

Longboat Energy, an emerging full-cycle E&P company, announces it has reached agreement to sell its 50.1% holding in Longboat Japex Norge AS ("LJN") to its joint venture partner Japan Petroleum Exploration Co. Ltd ("JAPEX").

Transaction Highlights

·    Longboat to sell its interest in LJN to JAPEX for a cash consideration of $2.5 million plus Longboat's share of drawn debt under the JAPEX Acquisition Facility (currently $8.5 million net)

·    JAPEX to assume all future financial obligations of the joint venture

·    Proceeds to be used to fund Longboat's working capital and operations in Malaysia

·    Plan to pivot Longboat's strategy to build a business in Southeast Asia

Transaction Detail

In light of the near-term financial challenges facing the business, the board and management of Longboat Energy have made the decision to exit Norway to ensure capital is being directed towards the areas with the greatest value-creation potential for an E&P company with a limited capital base.

This decision follows the continuing scarcity of acquisition opportunities suitable for Longboat, the disappointing performance of the Statfjord Satellites (comprised of a 4.80% unitised interest in the Statfjord Øst Unit and a 4.32% unitised interest in the Sygna Unit) and slow progress on monetising the Kveikje discovery (LJN, 10%), all of which have contributed to a near-term projected working capital shortfall in LJN which could result in Longboat forfeiting some-or-all of its shares in LJN.

Following a process to explore all options available to the Company under the Shareholder Agreement to realise value for shareholders, Longboat has entered into a sale and purchase agreement to sell its 50.1% interest in LJN to its joint venture partner, JAPEX, for a cash consideration of $2.5 million payable on completion (the "Transaction") plus the assumption of the entire debt drawn by LJN under the Acquisition Bridge Facility ("Acquisition Facility") provided to the joint venture by JAPEX. Net drawings to Longboat under the Acquisition Facility are currently $8.5 million ($17 million gross).

As part of the Transaction, JAPEX will also assume all financial obligations associated with LJN including all staff and running costs going forward and has amended the Acquisition Facility pre-completion to allow further drawings to manage the immediate working capital needs at LJN. The Management Services Agreement providing for transitional services between LJN and the Company will remain in-place until 30 September 2024 resulting in an estimated net outflow of up to ~£20k per month until that point.

The Transaction remains subject to regulatory approvals in Norway, approval by the lenders under the Exploration Finance Facility and the transfer of any third-party contracts. In the period prior to completion, Longboat has agreed to vote in favour of certain resolutions put to the LJN board as instructed by JAPEX.

Completion of the Transaction is anticipated during Q3 2024. If the Transaction does not complete, as previously announced by the Company, Longboat is forecast to have limited liquidity during H2 2024 and will require additional funding. In the event Longboat cannot meet its share of additional working capital shortfalls at LJN in a timely fashion, the terms of the Shareholder Agreement and Acquisition Facility could result in Longboat forfeiting some-or-all of its shares in LJN.

Impact of the Transaction

As detailed in its Report and Accounts to 31 December 2023, Longboat now equity accounts for the LJN joint venture in its financial statements and therefore the Transaction is not anticipated to have an impact on its future profitability. The loss after tax attributable to the in the year to 31 December 2023 was £5.3 million.

As at 31 December 2023, Longboat had a carrying value of £12.5 million for its investment in LJN, which made certain assumptions on the performance of LJN's asset base, which will be significantly impaired at the next reporting date to reflect the sales price. The reduction in value in Longboat's investment into LJN is directly attributable to the performance of the underlying assets and certain restrictive provisions in the Shareholder Agreement which limit the marketability of the LJN shares.

Due to the equity accounting of the joint venture, Longboat does not book oil & gas reserves related to LJN and the previous production guidance range detailed on 29 May 2024 should now be disregarded.

Use of Proceeds

Longboat intends to use the proceeds from the Transaction to fund its working capital requirements and ongoing operations in Malaysia as part of the Company's plan to pivot its efforts to building a business in Southeast Asia. The Transaction consideration, along with ongoing efforts to cut Longboat's cost base, are forecast to provide capital to run the Company through the end of Q1-25.

The change in geographic focus is detailed in a separate press release made by the Company today.

Related Party Transaction

At the time of the entry into the Transaction, JAPEX was a Related Party of the Company and therefore the entry into the sale of the shares in LJN by Longboat, amendment to the Acquisition Facility and amendment to the Management Services Agreement are deemed to be Related Party Transactions under Rule 13 of the AIM Rules. The Company's directors consider, having consulted with Stifel, the Company's Nominated Adviser, that the terms of Transaction are fair and reasonable insofar as shareholders are concerned.

Nick Ingrassia, CEO of Longboat commented:

"I am proud of what Longboat and its team has achieved in the three years since it became active in Norway. In this short period, the business safely drilled nine exploration wells resulting in six hydrocarbon discoveries, was awarded two APA licenses in the highly prolific Norwegian North Sea, executed a total of seven transactions and welcomed JAPEX as an active participant into the Norwegian Continental Shelf through the creation of an innovative joint venture.

While we leave Norway with mixed emotions, I am pleased that the transaction delivers JAPEX a full-cycle business with an exceptional team, providing an excellent platform for a large company with access to significant capital to build long-term success."

Ends