Seascape Energy Asia (LSE:SEA) — Investor Presentation

0:00 Good morning, and welcome to the Longboat Energy PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would

0:31 like to submit the following poll. I would now like to hand you over to CEO, Helge Hammer. Good morning to you, sir. Good morning. Good morning, everyone, and welcome to our Investor Meet update this morning. I'm joined by Hilde, who will cover some of the Norwegian assets. Before we run through the presentation, you will have seen our press release last week where we announced the award of a deepwater license in a Malaysia bid round. We have secured a potentially extremely valuable option to drill a multi TCF gas prospect at minimal cost commitment. We're very excited about that. We've entered Malaysia, and we've joined a very select group of companies in an industry where we see many opportunities going forward.

1:22 And, hence, it increases our opportunity set significantly. But please note that Norway remains Longboat's key focus area. We've drilled eight wells in Norway in one and a half years, and we've made discovery. And we are now fully focused on commercialization and monetization of these assets.

1:46 Just to give you a little overview first. So the longboard strategy and the overall business objectives remain unchanged. It's to build a full cycle E and P company and deliver growth and shareholder value. We would like to build a portfolio with production and superior serves through value accretive m and a, and we will drill three to five wells per year. That's that's the goal. And Malaysia is really broadening our strategic agreement and adding opportunity. So huge amount of activity ongoing at the moment. We're in a period of very a very active m and a, and the highest focus is on the Norwegian m and a monetization projects.

2:35 We had the process going on late last year, but we had success in the APA round. And when we realized that we had a good chance of winning acreage just next to the Kueichi discovery, we put that process temporarily on hold. Now having having won that license, we have recommenced that process. So we have won the prospect just next to Croatia called Lotus, which where we have 30% equity, and Hilde will cover that. So other than the focus on the M and A, we have a high impact exploration well called Velocet, which is expected to spud

3:19 in late summer. That's a large gas prospect with gross volumes of a 177,000,000 barrels. This is a key well in Norway this year. In terms of finance, we're very happy to have extended the EFF, both with one year extra, and we have increased the size to 800,000,000 NOK. It now covers also 2024, which means we are covered for exploration, finance facility for the new well Lotus and for the additional wells that we are likely to add in the program. We had 9,000,000 of cash at year end. In terms of the management team, there are no changes, so we will skip this one.

4:13 And, just on the Norwegian portfolio, this shows the location of the assets, and many of you have seen this before. I'd just like to highlight the the graph in the corner, which is from the Norwegian Petroleum Directorate, where they have summarized the expiration year 2022, and, they show Traeke and Ulsvik as the third and the fifth largest discoveries in Norway last year.

4:50 The Malaysian license, the new license, which we operate, is a huge license. It covers 12,000 square kilometers. It's offshore Sarawak in the deepwater. The blocks next to us was awarded to Shell. There's a huge amount of infrastructure in this area. It's an old industry in Malaysia, and Sarawak is as as old as the North Sea. Onshore, on the beach, in Sarawak, you have the world's biggest LNG terminal in Ventulu, eight LNG trains. And we are right in the middle of probably the biggest gas market in the world with all Asian countries around us. I know I'll come back to more details on this and hand over to Hilde now on the Norwegian update.

5:44 Thank you, Helge. Good morning, ladies and gentlemen. It's my pleasure to present two of the best discoveries in Norway this year, and is the partner in both of them. So I will start on focusing on the Kresa Expecia area and our Expecia discovery. That is one of the best on the Norwegian continental shelf last year. It's an injected play in an area where you before haven't really had that as a as a play that is working. We've proven off a new play with significant volume potential. It has a range between 35 to 60,000,000 barrels, and this is certified by ERC. As you can see from the map at the right hand side, there's multiple discoveries in the area, and will be part of area development going forward, capturing some of these recent discoveries.

6:40 There's also a lot of ongoing activity in this area with new wells being being drilled, and you have significant infrastructure here with toll and farm as the main host.

6:54 As Helgi already mentioned, monetization process is underway for Croatia. We believe this is a very valuable asset. And then as part of the APA twenty twenty two, because of our in-depth knowledge on Croatia, we were able to identify an upside opportunity just South Of Croatia. It's called Lutus, and we were successful in acquiring a good a 30% share in in this license together with operator DNO and Aker BP. And as you can see, this has a good volume potential. It ranges from 27 to 44,000,000 barrels with a very high chance of success. And as you can see from the the cartoon at the at the base here, it illustrates these injectites.

7:44 You can see on the left hand side with the wells going through it, the oil water contact, and the gas water contact. And just to the south there, you can see our Lutus prospect, which we will drill most likely next year, which will be a significant add on to our glacier development. Then moving on to our our next discovery last year, we discovered gas condensate in our prospect. This is a high pressure, high temperature discovery, very close to and which are kind of giant producing fields. We conducted a successful sidetrack and production tested this this well, and it has very large in place volumes ranging from a 100 to 250,000,000 barrels.

8:43 And at the moment, this is still kind of a a recent discovery, so we're analyzing the the results from the well. And but the focus is then to kind of focus on technologies to maximize the recovery factor to get out these big volumes that are there. As part of this work, we were also awarded as part of the APA twenty twenty two. And as you can see from the map in the left hand corner, this is really one big fault block, and we have drilled the northern part of that and the proven gas down to in in that area. But if you continue further south, you'll see that there is something called. It's a prospect, which is significantly shallower and could have better wrestler quality.

9:32 So we are very excited to have secured this opportunity. And it also comes with the low commitment, so it will be mature together with the discovery,

9:45 and the studies are they're ongoing there. And as you can see from the kind of cross sections, you have to the left and with the gas down to and the well and sidetrack. And as you move towards, you see that you have coming up shallower and could be a significant volume addition to ouswig in itself. It has the potential to double the volume of ouswig. So this was the discoveries we made last year. Now we're gonna move over to our very exciting well that's coming up in in this year. It's called Velocet. It's located in the Norwegian Sea, very close to Osta Hans Den. It is a license where we're gonna drill development prospects. But as you can see from from the map, there's significant follow on prospectivity in this license.

10:41 The LASET in itself is a Cretaceous turbidite

10:44 prospect in the large fault block. It is supported by amplitude, and it's believed to be a gas prospect. It has very large mean resources of 177,000,000 barrels and a chance of success of 30%. And this is again from a CPR report from ERC conducted last year. The key risk is the reservoir presence and quality.

11:10 And as you can see from the the the map, it would when you have success in Vendelessek, there's multiple options for follow on up until 200,000,000 barrels of follow on potential. And this these will, of course, be significantly derisked with success in Vendelessek. And all of this can be tied back to Osta Hanssen, 45 kilometers away. And will come back to this, but this is a very exciting well that we also get a lot of attention from in in Norwegian and international press. I'll hand over to you, Helge. Thank you, Hilda. So back to the entry into Malaysia. So we entered there. We are joining a very select group of companies.

11:57 And the interesting aspect of this is that when you compare, the North Sea and Norway particularly to Malaysia, you you'll find quite a few similarities. And and a lot of similarities with the way Norway and and and the North Sea was, some years back. And, the characteristics is that you have a very large and active E and P industry still, with many of the majors still very active. You have a very well developed infrastructure both for oil and gas with terminals and network and network of pipelines. You have very supportive authorities with very important and stable framework conditions, which are locked in in in PSC agreements.

12:47 We see in in this region, as in many places in the world, that the majors are increasingly focusing on the big gas opportunities, and that oil oil opportunities and, smaller gas opportunities are becoming, immaterial to these companies, and and which then opens up a lot of BD opportunities for small cap E and P. So that that's that's very similar to, to the North Sea, and particularly the North Sea, some years back, which makes us very excited excited about it. We have no intention to go mad here in any way, but, we will look and screen for, for high quality opportunities.

13:36 A few interesting differences as well if you compare to the North Sea is that the, the cost environment is is much lower, and and the short term and and and a much shorter lead time from, making a discovery to bringing, developments on stream, which are which are huge positives compared to to Norway. And and, another positive is that, for us is that the presence of PE funded E and P companies, which have been very dominant in the North Sea is much less. So so we think that this, is a very smart move, and we have significant competence in the company, and we have some strong, advisers that we're working with.

14:22 So so far, this we we think this could add a very significant, new lag to the to the the business. Just, then specifically on the license we have been awarded. So we are the operator. This license is in the Central Leucomia province, a very prolific, area in in in the deep water on the old old skirts of it. It's it's a very large block. It has, water depth from 100 to 1,400 meters. It is already covered with, two d and three d seismic. It it has multiple potential prospects.

15:15 It has DHIs. DHIs, the direct hydrocarbon indicator, so basically means, flat spots. The main prospect, Katang, is a multi TCF, huge anticline, more than 10 kilometers wide, multi TCF potential in it. We have a very low work commitment here, three years of studies, and then, we will have to make a a drilling commitment on on this well.

15:46 We have two state companies as partners here, Petronas Karigali from from the relations company and and Petros or petroleum Sarawak, which is a a newer Sarawakian estate, oil company. And then we have our, partners to pass who we work closely with here, headed up by by James Menzies. He used to be CEO in Salamander, working closely with Nick in that company. So going forward, what do we have to look forward to? We have the Velocet well, which is the only well that we have at the in the in the program for this year at the moment.

16:35 We keep our eyes open for for another well this year, but but, I think in the short term, in terms of news flow, it's more likely to be M and A related than, another well. Then in 2024, we have Lotus, and we have, Usvik, which is a drill or drop position towards, early next year. And then, you know, if things go very quickly, you could see us drilling in in Malaysia already, yeah, in the next next year. But but on the Katang, specifically, we do have we do have time. So, to to summarize, so Norway remain our key focus area, and the activity that we are most, focused on at the moment is the monetization projects, and further m and a in Norway, and then to deliver the Velocet exploration well in q three.

17:39 Velocet is, actually, on the westward. It's the only Norwegian well on the westward key wells to watch in 2023 because it is, the most significant well in Norway this year. So we add we add Malaysia, because it has, a lot of attractions and similar characteristics to Norway, and we have significant expertise and and, experience, in the country. And and we are welcomed, and there are lots of opportunities. So we it it should help us to accelerate our growth as a company. And with that, I thank you for your attention, and we will move to that ends the presentation.

18:28 Helga, Hilde, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via investor dashboard. Helga and Hilde, as you can see, we have received a number of questions throughout today's presentation. And if I could just hand over to you to read out the questions and give responses where appropriate to do so, and I'll pick up from you both at the end. Thank you. Thank you. So I will will read some of the questions here and and, and answer, and Hilde will answer some of them.

19:15 First question, are you able to indicate the rough size in barrels per day of the current production deals you are looking at? That is a difficult question to answer because the answer really no. But rough size, we are not looking at huge deals, obviously. So they could be anything from, you know, typically in the thousand to 3,004 thousand barrels per day would be a sweet spot for deals. Second question, by how much do you expect that Lotus can upward uplift the valuation of SEASCAPE and even trade monetization?

20:01 That's all that's a good question and and, difficult to answer. We, we we are kind of open minded with respect to whether lotus is sold in entirety together with creche, or lotus could be sold as as an element. So so what we could do is sell creche and and, farm down lotus, for example. So it remains to be seen, but the whole area is becoming more and more valuable. And there's also to mention here a recent discovery by Equinor, called over over the south, which adds further to the volume. So the whole the whole area development around Traj is becoming multiple 100,000,000 barrels. So it's becoming a very big big project.

20:57 Next question. Gibson Vulture has gone very quiet. On Discovery, you said an appraisal might be drilled in spring of twenty twenty two. I know it's seemingly a maybe for 2024. Maybe you could answer this one, Hilda. Yeah. I'll do that, Hakim. So Egyptian vulture is potentially a large discovery, and a lot of work has been carried out since we made the discovery in '21. This is, however, a complex asset, and the companies in the license have different drivers and different technical views. And the partnership is not aligned and the best on the best way forward for this discovery and a potential appraisal well.

21:42 Efforts are still ongoing to align a partnership ahead of the license expiry date next month, and we will make announcements as soon as decision has been made. Thanks, Hilda. We have another question here. You recently announced an entry into Malaysia, but, again, it's expiration and no imminent activity. You mentioned in the previous r and s that you were looking at opportunities throughout the e f E and P life cycle. Has any progress been made on acquiring production either nowhere or elsewhere? Yeah. I think we can say here that we recognize the Norwegian m and a market has been slow. We have we have been active very active, and we have we have been active on on almost everything. So there are no regrets.

22:34 It's just fewer deals, and, and many of the deals sold at higher values than we've been willing to pay. However, I think Norway is still a very attractive region for building an E and P position, and and we have by no way given up, but some patience have have been required. But at the moment, there's a lot of lot going on actually, so maybe maybe the tide is turning. I I don't know. But it looks looks more promising than it has been for a long time following the the COVID and maybe prices are a bit more stable, all all helping. So we keep working very hard to delivering these production and development deals in Norway. And I think in Malaysia, I mean, it's an option. It just makes the play playing field larger for us, and, and and we're very excited about it.

23:31 The, next question, the share price performance has been absolutely dismal or late. What are management doing to ensure shareholders' value is restored? Can we have assurance there won't be a dilutive equity raise at these levels? Well, we are also very, very unhappy with the share price, to be honest, and we don't believe it it reflects anything close to the values we have in the company. I think the monetization project, and BD project that we are in is is actually key to, to financing going forward, demonstrating the value in what we have. So I think I think that's kinda where we hope to see a significant improvement in share price performance.

24:28 Next question. The 800,000,000 RBF is in which currency, please? Yeah. That's the the exploration finance facility. Sorry. That wasn't provided in the presentation. That's Norwegian kroner. So the exploration finance facility is Norwegian kroner because, you know, the tax bill in Norway is is in kroner, so it it has to be in kroner. So that, you know, roughly, it's, around, I think, the £70,000,000 or something like that. Next question. You keep mentioning your exploration success and these wonderful discoveries even being named explorer of the year, but the share price has dropped.

25:19 You must realize the shareholder have currently lost significant amount of value. Or is it going to turn the share price around? Well, I think I've I have a reply to that question. It you know, it is it's true, what is said there. But I think what needs to be recognized is that exploration from making exploration, you always hope that it's a very big bang and then immediately value is recognized. Sometimes there is a bit of time taken from a discovery is made till till evaluation is recognized, and and visible. So the both the Uzuite and the and the Tracer have very significant and and it just seems like they have very significant potential and and has not been recognized by the market that's clear in this year.

26:11 The the I think we already answered. The monetization project is is key to to showing that value. Next question. While I recognize LBE as a quality company with quality prospects and with experienced quality people, your track record of shareholder value disruption is too severe for me to ignore. Is the focus of exploration and m and a really the best way to create share value? Won't a strategy of growth funded by production revenue be a more sustainable path? Well, that's good good observations, and I think, that is I mean, we are we have one exploration well on the program this year.

27:01 We have a couple next year. So I think that we are on that path, and we haven't delivered, the production deal yet, I know, but, it's clearly the intention. It's very clearly communicated in the strategy. We plan to be a full cycle m and a. But we also recognize that exploration, a significant exploration, can create very, very substantial values as as we have kind of demonstrated previously with in other companies. So I think the the the go the way forward for us is to is to grow production and, continue to deliver one, two, three, four exploration wells per year of of very high quality, but we're not we're not gonna compromise on quality.

27:55 The next question. Do any of the board have previous experience of Malaysia? I don't recall if Taro had any assets there. Is that correct? Seems to be a significant change in strategy. Okay. So the on the board, we have most significant experience is, Nickin Gracia, who who, was a BD manager in Salamander, and and he's worked in Malaysia and has a very big network there. Also, work closely with Topaz, where we have, James Nancy and Pierre Elliott, who who are very, very experienced.

28:44 We've been, so and and and but it's correct that Taro was not active in, Malaysia. I I worked in in in Shell in the area, and, but that's quite a while back. But I would say we have available very, very good good, fantastic resources, actually, in our partners with Interpass and also, with Nick. Okay. I think I think, we'll take another, three questions, and then and then we'll we'll close off because, yeah, it's becoming, slightly some of the you saw a little bit repetitive.

29:38 Next question is, very impressed with the work content and the upcoming work program. How else do you propose to increase share price, and is BlackRock selling down position? I think the the the demonstration of value in a monetization is the key to to turning the share price around, and and that's what we are focused on. Other than that, it's also delivering the first production deals at at good at really good terms, which we're also extremely focused on. So I think I think we're on the back on on the right track.

30:27 In terms of individual shareholders selling, we couldn't we couldn't comment on on that. Okay. One more question here. Question. Where will m and a focus be? Mainly Norway or other regions? So I think that we we we really we have a small team, and we really need to remain focused. So the the M and A focus is very much Norway and and now also Malaysia. So so so those are kind of the two the two regions we're looking in. I mean, we're keeping an eye on on The UK, and the North Sea region, and we're keeping an eye on the Southeast Asia region, but but that's it.

31:17 And and main focus being Norway and Malaysia. Okay. One last question. Any chance to explore more in Southeast Asia, I. E. Vietnam, Indonesia? What is your new unique proposition to the regulator then? Well, I think we we are I think we have to take one step at a time. And for us, I think, now it's it is really Norway and Norway and Malaysia, particularly when it comes to exploration. Exploration is really only those two areas.

32:03 If we if if we do anything else and if if there was a fantastic production opportunity that came along in in in the North Sea or in Southeast Asia elsewhere, we we may we may look at it, but we really need to remain very focused, which we are. And I think with that, we will end this session. Thank you all for a lot of good questions. And I'm sorry we couldn't answer them all, But that we will aim to do. Helga, thank you for addressing those questions you can for investors. And of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet company platform.

32:50 But Helga, perhaps before redirecting investors to provide you with their feedback, which one is particularly important to the company, could I please ask you for a few closing comments? Thank you, Yasmeen. I think thank you all for listening to Hilda and I this morning. And we think we are at the turning point. It's a this is a very exciting step for the company, and I hope to be able to come up with some announcements later this spring that can cheer us all up and help the share price. Thank you. Perfect. Helga Hilde, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

33:44 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Longboat Energy PLC, we would like to thank you for attending today's presentation. That concludes today's session. Good morning to you all.