Audited Full Year Results to 31 December 2021

RNS Number : 5272F

Longboat Energy PLC

22 March 2022

 

Longboat Energy PLC

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

Audited Full Year Results to 31 December 2021

London, 22 March 2022  - Longboat Energy, the emerging company established to build a significant North Sea-focused E&P business, announces its full-year results for the period ended 31 December 2021.

Highlights

Operations Summary

•	Three bilateral transactions executed in June 2021 to farm-in to seven, near-term material exploration wells on the Norwegian Continental Shelf
•	Four wells drilled to date with three discoveries:
	▪	Egyptian Vulture: material discovery, significant upside potential
	▪	Rødhette: potential commersialisation via existing infrastructure
	▪	Mugnetind: sub-economic discovery
	▪	Ginny/Hermine: dry well (completed post period)
•	All four wells were delivered safely on time and budget

Financial Summary

•	Remains fully-funded to complete its ongoing committed drilling programme and to pursue its business development activities
	▪	Cash reserves of ~£26.3 million as at 31 December 2021 and a tax rebate receivable of £8.1 million (31 Dec 2020: £7.7 million)
	▪	Exploration Finance Facility for £50 million (NOK600m) available for 2022
•	Loss after taxation of £(4.7)million which includes write down of Mugnetind well

Outlook

•	Three high-impact exploration wells over the next ~6 months
	▪	targeting 69 mmboe (net) and total upside of 254 mmboe (net)
	▪	primarily gas prospects (83%)
•	Result of the Kveikje exploration well targeting 36 mmboe (gross) expected in coming days
•	Proposed Norwegian tax changes will lower breakeven commodity prices and increase returns for non-sanctioned projects allowing the Company to consider acquiring development as well as production assets
•	Currently participating in a number of processes where we have specific knowledge and can take advantage of the continuing market dislocation
•	In the short term, the spike in commodity prices will make the M&A market challenging but the move away from Russian oil and gas will further strengthen the strategic case for Norwegian resources
•	Longboat is well positioned to pursue the expected forthcoming transactional opportunities, guided by a management team with a strong track record of delivering value through M&A

Helge Hammer, Chief Executive Officer of Longboat Energy, commented:

"Longboat remains well-positioned having made one material discovery and another with commercialisation potential from our first four wells.  In the next six months, we will have results from three further exploration wells, each of which could be transformational for the business.

"Furthermore, we continue to leverage our excellent industry relationships and are currently participating in a number of M&A processes."

This announcement does not contain inside information

Enquiries:
Longboat Energy	via FTI
Helge Hammer, Chief Executive Officer
Jon Cooper, Chief Financial Officer
Stifel (Nomad)	Tel: [phone]
Callum Stewart Jason Grossman Simon Mensley Ashton Clanfield
FTI Consulting (PR adviser)	Tel: [phone]
Ben Brewerton Ntobeko Chidavaenzi	[e-mail]

 

Results

For the period to 31 December 2021, the Group's loss after taxation was £4,680,620.

 Dividends

It is the Board's policy that the Company should seek to generate capital growth for its shareholders but may recommend distributions at some future date when the investment portfolio matures, and production revenues are established and when it becomes commercially prudent to do so.

Statement of going concern

The Directors, having considered cash flow forecasts, sensitivities and stress tests and undertaken careful enquiry, are of the opinion that the Group has adequate working capital to continue its operations and meet its liabilities and commitments for a period of at least the next 12 months. Accordingly, the directors have made an informed judgement to continue to adopt the going concern basis of accounting in preparing the annual financial statements. In forming their assessment, the Directors have carefully considered potential risks and uncertainties associated with the Group's business model and additionally the continuing conflict in Ukraine and associated international sanctions on Russia.

The forecasts indicate that sufficient liquidity is maintained across the going concern period and have been prepared on the basis of committed exploration expenditure and budgeted operating costs, continuation of the Norwegian tax refund arrangements based on proposals issued by the Norwegian Ministry of Finance and the continued availability of the Exploration Finance Facility ("EFF") in 2022 and 2023.

In considering the continued access to the EFF, the Directors (and the EFF lending banks based on enquiries made by the Directors) considered written assurances from the Norwegian Ministry of Finance that the existing security structure of the tax refunds will be preserved for 2022, which will enable the EFF to continue to be available. Whilst an element of inherent uncertainty regarding the availability of the EFF remains until the legislative process is complete, the assurances received from the Norwegian Ministry of Finance are such that the Directors consider the risks of the security structure not being preserved for 2022 to be remote. Confirmation of the continued availability of tax refunds as security for the EFF is anticipated when details of the new Norwegian tax regime are published.  In March 2022 Longboat made its first drawing of NOK 15 million under the EFF. The Directors believe this addresses the material uncertainty of being able to draw down the EFF during 2022 that existed and was highlighted in the 2021 interim results.

Outlook

Longboat has established itself as a licence holder in Norway with an outstanding team of professionals, committed to the Company's ethos and strategy, and we are very grateful for their commitment and achievements. Looking ahead, our confidence remains high both in the remaining committed exploration wells and in delivering further successful acquisitions.

We are currently drilling the Kveikje prospect which is in a very prolific area of the North Sea north of Troll close to many recent Equinor operated discoveries. If successful, Kveikje is likely to become part of a new subsea cluster development, which could include several of the nearby discoveries such as Røver Nord, Swisher and Toppand. Subsequently, Cambozola will be drilled back-to-back after Kveikje and followed by Copernicus in the summer. Cambozola and Copernicus are large gas prospects amongst the most exciting wells to be drilled in Norway in 2022 as has been highlighted by Woodmac in their "Wells to Watch" list for the year. The prospects being targeted by these three exploration wells have been estimated by ERC Equipoise Limited to contain prospective resources of 69 mmboe (net) and are primarily gas prospects (83%)  with total upside identified by the Company of 254 mmboe (net).

We are loath to reference the outlook for the Company to the desperate events in Ukraine but inevitably there will be an impact.  In the short term, the spike in commodity prices will make the M&A market challenging for both buyers and sellers, although more so for buyers. Conversely the move away from Russian oil and gas will make the case even stronger for Norwegian resources. 

That aside, Longboat remains well-placed to transact. We have an experienced team with excellent relationships across the industry and we believe there are now many excellent opportunities for Longboat to pursue. However, patience will still be required given the commodity price levels and the competitive landscape.
 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2021

			2021					2020
	Notes		£					£
GROUP
Administrative expenses				(4,720,133)					(2,399,204)
Exploration and evaluation expenses	9			(6,399,134)				-
Operating loss	6			(11,119,267)					(2,399,204)
Finance income	5		11,412					18,736
Finance costs	8			(484,527)				-
Loss before taxation				(11,592,382)					(2,380,468)
Income tax credit	10		6,911,762					754,289
Loss for the year				(4,680,620)					(1,626,179)
Other comprehensive income:
Currency translation differences			580,447					524
Total items that may be reclassified to profit or loss			580,447					524
Total other comprehensive income for the year			580,447					524
Total comprehensive loss for the year				(4,100,173)					(1,625,655)
Loss per share	11		pence					pence
Basic				(12.97)					(16.26)
Diluted				(12.97)					(16.26)

 

	Statement of financial position As at 31 December 2021			2021					2020
	GROUP	Notes		£					£
	Non-current assets
	Exploration and evaluation assets	12		23,988,754					-
	Property, plant and equipment	13		29,600					11,798
	Right of use asset	13		560,709					-
				24,579,063					11,798
	Current assets
	Cash and cash equivalents			26,282,067					7,021,105
	Inventories	14		92,798					-
	Trade and other receivables	15		1,136,081					75,807
	Current tax recoverable	16		8,149,906					777,823
				35,660,852					7,874,735
	Total assets			60,239,915					7,886,533
	Current liabilities
	Trade and other payables	17		4,772,167					351,610
	Lease liabilities	18		96,172					-
				4,868,339					351,610
	Net current assets			30,792,513					7,523,125
	Non-current liabilities
	Lease liabilities	18		486,630					-
	Deferred tax liabilities	19		18,766,424					431
				19,253,054					431
	Total liabilities			24,121,393					352,041
	Net assets			36,118,522					7,534,492
	Equity
	Called up share capital	22		5,666,665					1,000,000
	Share premium account	23		35,570,411					7,808,660
	Other reserves			450,000					450,000
	Share option reserve	24		353,550					97,763
	Currency translation reserve	25		580,996					549
	Retained earnings				(6,503,100)					(1,822,480)
	Total equity			36,118,522					7,534,492
The financial statements were approved by the board of directors and authorised for issue on 22 March 2022 and are signed on its behalf by:
..............................
Helge Hammer
Chief Executive

 

Statement of changes in equity As at 31 December 2021		Share capital		Share premium account			Share option reserve			Currency translation reserve		Other reserves		Retained earnings			Total
	Notes	£		£			£			£		£		£			£
GROUP
Balance at 1 January 2020		1,000,000		7,808,660			-			25		450,000			(196,301)			9,062,384
Period ended 31 December 2020:
Loss for the period		-		-			-					-			(1,626,179)			(1,626,179)
Other comprehensive income		-		-			-			524		-		-			524
Credit to equity for equity settled share-based payments		-		-			97,763			-		-		-			97,763
Balance at 31 December 2020		1,000,000		7,808,660			97,763			549		450,000			(1,822,480)			7,534,492
Year ended 31 December 2021:
Loss for the year		-		-			-			-		-			(4,680,620)			(4,680,620)
Other comprehensive income		-		-			-			580,447		-		-			580,447
Issue of share capital	22	4,666,665		30,333,334			-			-		-		-			34,999,999
Credit to equity for equity settled share-based payments		-		-			255,787			-		-		-			255,787
Costs of share issue		-			(2,571,583)			-		-		-		-				(2,571,583)
Balance at 31 December 2021		5,666,665		35,570,411			353,550			580,996		450,000			(6,503,100)			36,118,522

Consolidated statement of cash flows for the Period to 31 December 2020					2021						2020
	Notes	£			£			£			£
GROUP
Cash flows from operating activities
Cash absorbed by operations	29					(4,197,318)						(2,164,648)
Tax paid					1,429,635							(23,533)
Net cash outflow from operating activities						(2,767,683)						(2,188,181)
Investing activities
Purchase of exploration and evaluation assets			(26,513,457)					-
Tax refund relating to investing activity		17,173,053						-
Purchase of property, plant and equipment			(25,769)						(12,359)
Interest received		11,412						18,736
Net cash (used in)/generated from investing activities						(9,354,761)					6,377
Financing activities
Issue of ordinary shares		32,428,416
Interest paid			(484,527)					-
Loan facility fees			(604,085)					-
Net cash generated from/(used in) financing activities					31,339,804						-
Net increase/(decrease) in cash and cash equivalents					19,217,360							(2,181,804)
Cash and cash equivalents at beginning of year					7,016,199						9,197,479
Foreign exchange					48,508						524
Cash and cash equivalents at end of year					26,282,067						7,016,199
Relating to:
Bank balances and short term deposits					26,282,067						7,021,105
Credit cards					-							(4,906)

 

 

Notes to the financial statements

for the Period to 31 December 2020

1.  Statutory information

Longboat Energy plc is a public limited company, limited by shares, registered in England and Wales. The Company's registered number is 12020297 and registered office address 5^th Floor, One New Change, London, England, EC4M 9AF.

2.  Accounting policies

2.1.  Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The 2021 Annual Report was approved by the Board of Directors on 21^st March 2022. The financial information in this statement is audited but does not have the status of statutory accounts within the meaning of Section 434 of the Companies Act 2006. The auditors report was unqualified and did not contain statements under s498(2) or (3) Companies Act 2006, nor did they contain a material uncertainty in relation to going concern.

The financial statements of Longboat Energy plc and the Company have been prepared in accordance with International Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006.

The financial statements have been prepared on the historical cost basis.

2.2.  Going concern

The Directors, having considered cash flow forecasts, sensitivities and stress tests and undertaken careful enquiry, are of the opinion that the Group has adequate working capital to continue its operations and meet its liabilities and commitments for a period of at least the next 12 months. Accordingly, the directors have made an informed judgement to continue to adopt the going concern basis of accounting in preparing the annual financial statements. In forming their assessment, the Directors have carefully considered potential risks and uncertainties associated with the Group's business model and additionally the continuing conflict in Ukraine and associated international sanctions on Russia.

The forecasts indicate that sufficient liquidity is maintained across the going concern period and have been prepared on the basis of committed exploration expenditure and budgeted operating costs, continuation of the Norwegian tax refund arrangements based on proposals issued by the Norwegian Ministry of Finance and the continued availability of draw down under the EFF in 2022 and 2023.

In considering the continued access to the EFF, the Directors (and the EFF lending banks based on enquiries made by the Directors) considered written assurances from the Norwegian Ministry of Finance that the existing security structure of the tax refunds will be preserved for 2022, which will enable the EFF to continue to be available. Whilst an element of inherent uncertainty regarding the availability of the EFF remains until the legislative process is complete, the assurances received from the Norwegian Ministry of Finance are such that the Directors consider the risks of the security structure not being preserved for 2022 to be remote. Confirmation of the continued availability of tax refunds as security for the EFF is anticipated when details of the new Norwegian tax regime are published.  In March 2022 Longboat made its first drawing of NOK 15 million under the EFF. The Directors believe this addresses the material uncertainty associated with being able to draw down under the EFF during 2022 that existed and was highlighted in the 2021 interim results.

The Ministry of Finance has not yet confirmed if the pledge will continue in 2023, however, the bulk of the Group's committed E&A expenditure is scheduled for the current year and sensitivity scenarios in which no draw downs are available in 2023 demonstrate that sufficient liquidity is retained for at least 12 months from the date of approval of the financial statements.  The Directors have obtained legal advice which confirms that contractual repayment terms of amounts drawn down in 2022 would be unaffected by an adverse revision to the security package in 2023. The Directors have further considered combination stress case scenarios in which exploration cost escalation is combined with inability to access the EFF which indicates that liquidity is retained until Q4 2023, however, the Directors are at a well progressed stage with lending banks regarding alternate facilities being available should they be required.

Having considered the forecasts the Directors consider that the Group will have sufficient liquidity and no material uncertainties are considered to exist in respect of going concern.

 

3.  Critical accounting estimates

 

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Exploration and evaluation assets (note 6 and 12)

Judgement is required to determine whether impairment indicators exist in respect of the Group's exploration assets recognised in the statement of financial position. The Group has to take into consideration whether the assets have suffered any impairment, taking into consideration the results of the drilling to date, and the likelihood of reserves being found. The Group relies upon information from third parties to take these decisions, and can be subject to change if future information becomes available. At 31 December 2021 the Group determined that impairment of £6.9 million was required in respect of the Mugnetind licence detailed in note 6 and 12.  Judgment was further exercised in evaluating the extent to which an impairment indicator existed at year end in respect of the Ginny/Hermine licence however based on the timing of substantive drilling post year end and the continued evaluation of the well no impairment indicator was considered to exist.

Share-based payments (note 25)

Estimation was required in determining inputs to the share-based payment calculations including share price volatility as detailed in note 25.

The fair value of the options were determined by an external valuation provider using an industry accepted pricing model.  For the July and September 2020 awards, the vest date calculation required judgment to determine the point at which the Group and recipients had a shared mutual understanding of the terms of the awards. The Board consider that IPO Admission Document provided such a shared mutual understanding given the detailed disclosure of the terms of the scheme. Accordingly, the estimated fair value of the awards has been spread over the vesting period which commenced at IPO. For the awards issued during 2021, the vesting period was seen to commence on date of issue.

Cost Allocation

The issue of new shares needs to be treated in accordance with IAS 32. According to IAS 32, the costs of issuing new shares and a stock market listing should be accounted for as follows:

•	Incremental costs that are directly attributable to issuing new shares should be deducted from equity, share premium, (net of any income tax benefit) - IAS 32.37; and
•	Costs that relate to the stock market listing, or are otherwise not incremental and directly attributable to issuing new shares, should be recorded as an expense in the statement of comprehensive income.

The directors exercised judgement in allocation of the costs that relate to both share issuance and listing. These were allocated between those functions on a rational and consistent basis.  In the absence of a more specific basis for apportionment, an allocation of common costs based on the proportion of new shares issued to the total number of (new and existing) shares listed is an acceptable approach. The total costs that were deducted from share premium were £2,572k.  These are all directly attributable to the issue with the remainder of the costs (£451k) being expensed as they were related but not directly attributable. These are accounted for through administrative expenses in the Statement of Comprehensive Income.

Expected credit loss (note 16)

Determining an expected credit loss on an intercompany loan for an exploration business is very subjective, as unlike a financial institution there is no default credit history on a loan book to a portfolio of customers.  This is exploration and one successful well would have the ability to provide the necessary value ultimately to repay any intercompany loans.  The next three wells are important wells and are some of the larger wells in the portfolio.  Consequently, the directors have determined a provision equivalent to 25% of the loan value is appropriate based on assessment of scenarios related to well success factors.

	4.	Employees
	GROUP
	The average monthly number of persons (including directors) employed by the group and company during the year was:
							2021					2020
							Number					Number
	Executive Directors						3					2
	Non-Executive Directors						4					4
	Staff						4					2
	Total						11					8
Their aggregate remuneration comprised:
						2021					2020
						£					£
Wages and salaries						1,703,062					646,485
Social security costs						245,771					82,826
Pension costs						133,047					41,782
Foreign currency gains								(33,844)					-
Share based payment charge						255,737					97,763
						2,303,773					868,856
Foreign currency gains arise on wages and salaries due to one of the executive directors salaries being declared in GBP and paid in NOK.
The remuneration of the highest paid director is shown below.
				Taxable	Annual
			Salary	Benefits	Bonus	Pension					Total
		Helge Hammer	231,099	16,890	55,514	-					303,504

	5		Investment income
			GROUP			2021									2020
						£									£
			Interest income
			Bank deposits			11,412									18,736
			Total interest income for financial assets that are not held at fair value through profit or loss is £11,412 (2020: £18,736).
6		Operating loss
		GROUP			2021									2020
					£									£
		Operating loss for the year is stated after charging/(crediting):
		Exchange losses			151,369									28,037
		Fees payable to the company's auditor for the audit of the company's financial statements			36,190									36,170
		Other assurance services			126,000									16,000
		Subsidiary audit fees			4,190									4,170
		Depreciation of property, plant and equipment			30,057									2,767
		Costs associated with share issue			451,000									-
		Share-based payments			255,787									97,763
		Executive Director's remuneration			799,860									226,024
		Non-Executive Director remuneration			262,938									230,541
		Wages and salaries			640,264									150,719
		Pensions and payroll taxes			344,924									124,608
		Operating leases less than 12 month term			77,815									96,519
7		Auditor's remuneration
		GROUP			2021									2020
		Fees payable to the group's auditor and associates:			£									£
		For audit services
		Audit of the financial statements of the group			36,190									36,170
		During the year the auditor provided non-audit services of £110,000 in their role as Reporting Accountant in relation to the work on the admission to AIM and £16,000 (2020: £16,000) relating to the interim review.
8		Finance costs
					2021									2020
		GROUP			£									£
		Interest on bank overdrafts and loans			484,527									-
		The Group has entered into a rolling exploration funding facility with 1 SR-Bank ASA and ING Bank N.V. in Norway which will allow the Group to receive funding for exploration activities to take place. The loan interest charged for the facility is a margin of 2.50% p.a. plus NIBOR. For the undrawn loan amount, a commitment fee equal to 40% of the margin is charged.
9		Exploration and evaluation expenses
					2021									2020
		GROUP			£									£
		Amounts written off on exploration activity						(6,399,134)									-
		During the year, the Group acquired working interests in seven exploration wells on the Norwegian Continental Shelf, which completed on 1 September 2021.
		During the year, the evaluation of the licences was completed, and it was determined that the Mugnetind well was dry, therefore the Directors have evaluated the potential future cashflows from that well and future licence prospectivity, and have decided to write off the value of the well and associated licence costs. Further information in respect of subsequent events can be found in note 28.
10		Income tax expense
							2021									2020
		GROUP					£									£
		Current tax
		Foreign tax on losses for the current period							(25,971,588)									(754,708)
		Deferred tax
		Origination and reversal of temporary differences					19,059,826									419
		Total tax (credit)							(6,911,762)									(754,289)
		The charge for the year can be reconciled to the loss per the income statement as follows:
							2021									2020
							£									£
		Loss before taxation							(12,172,830)									(2,380,992)
		Expected tax credit based on a corporation tax rate of 19.00% (2020: 19.00%)							(2,312,838)									(452,284)
		Effect of expenses not deductible in determining taxable profit					581,294									29,421
		Effect of overseas tax rates					1,463,583											(16,696)
		Deferred tax not recognised					442,003									439,559
		Foreign taxes and reliefs							(6,911,762)									(754,289)
		Reameasurement of deferred tax for changes in tax rates							(172,264)									-
		Fixed asset differences							(1,778)									-
		Taxation credit for the year							(6,911,762)									(754,289)

Unused tax losses in the UK on which no deferred tax asset has been recognised as at 31 December 2021 was £2,871,071  (2020: £1,288,521) and the potential tax benefit was £717,768 (2020: £439,559). Deferred tax assets, including those arising from temporary differences, are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised. The current tax (rebate) of GBP 25.9 million (NOK 306.3 million) represents what has been paid out during 2021 and will be paid out during 2022 according to Norwegian Tax Legislation.  As per 31 December 2021 GBP 18.5 million (NOK 209.1 million) has been refunded, leaving GBP 8.2 million (NOK 97.2 million) to be paid during 2022.  The deferred tax charge represents the tax portion on capitalised intangibles being deductible for tax purposes.

	11	Earnings per share
		GROUP		2021			2020
				£			£
		Number of shares
		Weighted average number of ordinary shares for basic earnings per share		36,082,191			10,000,000
		Earnings
		Earnings for basic and diluted earnings per share being net profit attributable to equity shareholders of the group for continued operations			(4,680,620)			(1,626,179)
		Basic and diluted earnings per share (expressed in pence)
		From continuing operations			(12.97)			(16.26)
		Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume to conversion of all dilutive potential ordinary shares. 2,281,667 (2020: nil) of share options are not included because they are anti-dilutive.
12			Exploration and evaluation assets
			GROUP						£
			Cost
			Additions - purchased						29,716,850
			Foreign currency adjustments						671,038
			Exploration write off							(6,399,134)
			At 31 December 2021						23,988,754
			Carrying amount
			At 31 December 2021						23,988,754
			During the year, the Group acquired interests in seven exploration licences on the Norwegian Continental Shelf, which completed on 31 August 2021.
			During the year, the evaluation of the licences was completed, and it was determined that the Mugnetind well was dry, therefore the Directors have evaluated the potential future cashflows from that well and future licence prospectivity, and have decided to write off the value of the well and associated licence costs.  There have been no post balance sheet events to indicate any further indicators of impairment that were in place at the year end

 

13	Property, plant and equipment
		Right of use assets			Fixtures and fittings			Computers			Total
	GROUP	£			£			£			£
	Cost
	At 1 January 2020	-			-			2,245			2,245
	Additions	-			-			12,360			12,360
	At 31 December 2020	-			-			14,605			14,605
	Additions	580,044			3,340			37,869			621,253
	Disposals	-			-				(15,322)			(15,322)
	Foreign currency adjustments	-			-				(119)			(119)
	At 31 December 2021	580,044			3,340			37,033			620,417
	Accumulated depreciation and impairment
	At 1 January 2020	-			-			-			-
	Charge for the year	-			-			2,767			2,767
	Foreign currency adjustments	-			-			40			40
	At 31 December 2020	-			-			2,807			2,807
	Charge for the year	20,015			167			9,875			30,057
	Eliminated on disposal	-			-				(2,050)			(2,050)
	Foreign currency adjustments		(680)			-			(26)			(706)
	At 31 December 2021	19,335			167			10,606			30,108
	Carrying amount
	At 31 December 2021	560,709			3,173			26,427			590,309
	At 31 December 2020	-			-			11,798			11,798

	14		Inventories
				2021				2020
			GROUP	£				£
			Materials and supplies	92,798				-
			Closing inventories are equal to their net realisable value.
15		Trade and other receivables
					2021				2020
		GROUP			£				£
		Trade receivables			22,662				-
		Taxes recoverable			81,737				22,161
		Other receivables			40,462				-
		Prepayments			991,220				53,646
					1,136,081				75,807

The directors consider that the carrying amount of trade and other receivables approximates to their fair value.

	16	Current tax recoverable
							2021				2020
		GROUP					£				£
		Current tax receivable					8,149,906				777,823
17			Trade and other payables
								2021				2020
			GROUP					£				£
			Trade payables					580,084				129,713
			Accruals					2,753,202				115,309
			Social security and other taxation					239,922				94,850
			Other payables					1,198,959				11,738
								4,772,167				351,610
18			Lease liabilities
				GROUP
				The Group has lease contracts for buildings used in its operations. The Group has agreed a new lease for its Stavanger office which was signed in September 2021. The Group's obligations under its leases are secured by the lessor's title to the leased assets.
				Set out below are the carrying amounts of right of use assets recognised and the movements during the period:
												2021
												£
				At 1 January 2021								-
				Additions								585,706
				Depreciation charge for the year									(20,015)
				Foreign exchange									(4,982)
				At 31 December 2021								560,709
				Set out below are the carrying value of lease liabilities and the movements.
												2021
												£
				At 1 January 2021								-
				Additions								585,706
				Interest								2,758
				Foreign exchange									(5,662)
				At 31 December 2021								582,802
												£
				Within one year								96,172
				In two to five years								486,630
												582,802
				Maturity analysis								£
				Within one year								111,799
				In two to five years								514,273
				Total undiscounted liabilities								626,072
				Future finance charges and other adjustments									(43,270)
				Lease liabilities in the financial statements									(582,802)
				Amounts recognised in profit or loss include the following:								£
				Depreciation expense of right of use assets								19,335
				Foreign exchange on depreciation								680
				Interest expense for right of use assets								2,758
19			Deferred taxation
			GROUP
			The following are the deferred tax liabilities and assets recognised and movements thereon during the current and prior reporting period.
														ACAs
														£
			Deferred tax balance at 1 January 2020											-
			Deferred tax movements in prior year
			Differences in tax basis for depreciation in Norway											431
			Deferred tax liability at 1 January 2021											431
			Deferred tax movements in current year
			Differences in tax basis for offset of tax losses in Norway											19,059,825
			Foreign exchange												(293,832)
			Deferred tax liability at 31 December 2021											18,766,424
			Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so. The Group has tax losses that arose within Longboat Energy Norge AS that are available indefinitely for offsetting against future taxable profits of that entity. These have been recognised as a deferred tax asset on the basis that there are future taxable profits expected within that entity which will allow it to be offset. The Group has not recognised a deferred tax asset within Longboat Energy plc, as there is not evidence to support their recoverability in the near future.

20	Financial risk management
	The Group is exposed to financial risks through its various business activities. In particular, changes in interest rates exchange rates can have an effect on the capital, financial situation of the Group. In addition, the Group is subject to credit risks. The Group has adopted internal guidelines, which concern risk control processes and which regulate the use of financial instruments and thus provide a clear separation of the roles relating to operational financial activities, their implementation and accounting, and the auditing of financial instruments. The guidelines on which the Group's risk management processes are based are designed to ensure that the risks are identified and analysed across the Group. They also aim for a suitable limitation and control of the risks involved, as well as their monitoring. The Group controls and monitors these risks primarily through its operational business and financing activities.
	Credit Risks

The credit risk describes the risk from an economic loss that arises because a contracting party fails to fulfil their contractual payment obligations. The credit risk includes both the immediate default risk and the risk of credit deterioration, connected with the risk of the concentration of individual risks. For the Group, credit and default risks are concentrated in the financial institutions in which it places cash deposits.

The Group's policy is to place its cash with banks with an appropriate credit rating in accordance with the Company's Treasury Risk Management Policy.
Notwithstanding existing collateral, the amount of financial assets indicates the maximum default risk in the event that counterparties are unable to meet their contractual payment obligations. The maximum credit default risk amounted to £26,345,191 at the balance sheet date, of which £26,282,067 was cash on deposit at banks.
Liquidity Risks
Liquidity risk is defined as the risk that a company may not be able to fulfil its financial obligations. The Group manages its liquidity by maintaining cash and cash equivalents sufficient to meet its expected cash requirements to implement its investment policy. In the event that there is a risk that the cash required to follow the investment policy is greater than the Group's liquid resources, the Group would seek confirmation of the continuation of the policy and the raising of further financing at a shareholder general meeting.
At 31 December 2021, the Group has cash on deposit of £26,282,067 (2020: £7,021,104).
Market Risks
Interest Rate Risks
Interest rate risks exist due to potential changes in market interest rates and can lead to a change in the fair value of fixed-interest bearing instruments, and to fluctuations in interest payment for variable interest rate financial instruments.
The Group is exposed to interest rate risk on cash held on deposit at banks. Interest income for the year to 31 December 2021 was £11,412 (2020: £18,736). These accounts are maintained for liquidity rather than investment, and the interest rate risk is not considered material to the Group.
Currency risks
The Group operates in the UK and Norway, incurs expenses in Sterling, United States Dollars and Norwegian Kroner ("NOK"), and holds cash in sterling, US Dollars and NOK. The Group incurs some expenditure in foreign currency when the investment policy requires services to be obtained overseas. The foreign exchange risk on these costs is not considered material to the Group.
The Group's exposure to foreign currency risk at the end of the reporting period is summarised below. All amounts are presented in GBP equivalent.
						2021
						£
Cash and cash equivalents				11,804,980
Trade and other receivables				1,104,580
Trade and other payables					(4,693,250)
Lease liabilities					(582,803)
Net exposure				7,633,507
Foreign currency gains and losses were not material in 2020 and therefore have not been disclosed.
	Sensitivity analysis
	As shown in the table above, the Company is exposed to changes in exchange rates through its balances held in non-GBP. The table below shows the impact in GBP on pre-tax profit and loss of a 10% increase/decrease in the exchange rates, holding all other variables constant.
						2021
						£
	Exchange rate increases by 10%					848,167
	Exchange rate decreases by 10%					(693,955)

21	Retirement benefit schemes
	GROUP
			2021		2020
	Defined contribution schemes		£		£
	Charge to profit or loss in respect of defined contribution schemes		133,047		41,782
	The Group does not operate any defined benefit schemes.

	22		Share capital
			GROUP
							2021		2020		2021						2020
			Ordinary share capital				Number		Number		£						£
			Issued and fully paid
			Ordinary of 10p each of 10p each				56,666,665		10,000,000		5,666,665						1,000,000
			On 10 June 2021 46,666,666 Ordinary Shares were allotted at 75p per Ordinary Share. This brought the total share capital to 56,666,666 ordinary shares.
	23		Share premium account
											2021						2020
											£						£
			At the beginning of the year								7,808,660						7,808,660
			Issue of new shares								30,333,334						-
			Costs of share issue									(2,571,583)						-
			At the end of the year								35,570,411						7,808,660
24		Share option reserve
													2021			2020
													£			£
				At the beginning of the year									97,763			-
				Arising in the year									255,787			97,763
				At the beginning and end of the year									353,550			97,763
				During the year, Longboat Petroleum plc operated three share incentive schemes:  the  Founder Incentive Plan (FIP), the Long Term Incentive Plan (LTIP) and the Co-investment  plan (CIP).  Details of the schemes are summarized below:
				Founder Incentive Plan
				Under the FIP, the founders are eligible to receive 15% of the growth in returns of the Company from its Admission to AIM in November 2019 over a five year period. The awards are expressed as a percentage of the total maximum potential award, being 10% of the Company's issued share capital.
				Should a hurdle of doubling of the Total Shareholder Return ("TSR") over the five-year period be met, the awards will be converted into nil cost options over ordinary shares of 10p each in the share capital Company.  The hurdle is adjusted for any capital raises that occur during the performance period, including the share placing of 10 June 2021, and for any additional value to accrue to the founders, those placing shares will need to increase by the same hurdle but as adjusted for time to reflect the shorter period between the date of the placing and the original measurement dates in years three to five.
				For the purpose of determining the fair value of an award, the following assumptions have been applied and a valuation calculation run through the Monte Carlo Model:
				Grant date - 3 July 2020 and 24 September 2020												£
				Weighted average share price at grant date												0.78
				TSR performance												-
				Risk free rate												-0.08%
				Dividend yield												-
				Volatility of Company share price												50.44%
				The risk-free rate assumption has been set as the yield as at the calculation date on zero coupon government bonds of a term commensurate with the remaining performance period.
				The historical 3 year volatility of the constituents of the FTSE AIM Oil & Gas supersector, as of the date of grant, was used to derive the volatility assumption.
				The weighted average exercise price of outstanding options is nil.
				The weighted average remaining contractual life as at 31 December 2021 is 27 months.
				Co-Investment Plan (CIP) awards
				The awards granted under the CIP are nil cost options to acquire Matching Sharesbeing ordinary shares of 10p each in the share capital of the Company.. The awards are subject to a share price performance condition, where the share price growth over the vesting period must be greater than 30%. No options will vest if this condition is not met.
				For the purpose of determining the fair value of an award, the following assumptions have been applied and a valuation calculation run through the Monte Carlo Model:
				Grant date												02-Jul-21
				Performance period (years)												3
				Share price at grant date												£0.70
				Exercise price												£0.10
				Risk free rate												15.00%
				Dividend yield												0%
				Volatility of Company share price												51.00%
				Fair value per award												£0.38
										2021			Weighted average fair
										No.			value (£ per share)
				Outstanding at beginning of the period						-						-
				Granted during the period						639,900						£0.38
				Forfeited during the period						-						-
				Exercised during the period						-						-
				Expired during the period						-						-
				Outstanding at the end of the period						639,900						-
				Exercisable at the end of the period						-						-
				The weighted average exercise price of outstanding options is £0.10.
				The weighted average remaining contractual life as at 31 December 2021 is 30 months.
				Long Term Incentive Plan
				The awards issued under the LTIP are nil-cost options subject to a performance condition.
				For the purpose of determining whether the condition has been met, the TSR of the Company is measured over the three year performance period, commencing at the grant date. The return index is averaged over the 30 dealing day period prior to the start of the performance period and over the final 30 days of the performance period.

The awards have been valued using the Monte Carlo model, which calculates a fair value based on a large number of randomly generated simulations of the Company's TSR.

				For the purpose of determining the fair value of an award, the following assumptions have been applied:
				Grant date				01 Sept 20	2 July 21		11 Oct 21				8 Nov 21
				Weighted average share price at grant date				0.885	0.72		0.78				0.705
				TSR performance				-	-		-				-
				Risk free rate				-0.1%	0.15%		0.60%				n/a
				Dividend yield				0.0%	0.0%		0.0%				0.0%
				Volatility of Company share price				58.00%	51.00%		50.00%				n/a
				Weighted average fair value				£0.33	£0.33		£0.36				£0.33
			The risk-free rate assumption has been set as the yield as at the calculation date on zero- coupon government bonds of a term commensurate with the remaining performance period.
			The historical three year volatility of the constituents of the FTSE AIM Oil & Gas supersector , as of the date of grant, was used to derive the volatility assumption.
Opening share awards													40,000
Awarded in the period													1,375,100
Exercised during the period													-
Expired during the period													(98,600)
Outstanding at the end of the period													1,316,500
Exercisable at the end of the period													-
The weighted average exercise price of outstanding options is £0.10.
The weighted average remaining contractual life as at 31 December 2021 is 27 months.
25		Currency translation reserve
		GROUP
										2021				2020
										£				£
		At the beginning of the year								549				25
		Currency translation differences								580,447				524
		At the end of the year								580,996				549
		The currency translation reserve relates to the movement in translating operations denominated in currencies other than sterling into the presentation currency.

 

26		Related party transactions On 10 June 2021, the Company announced a conditional placing and subscription for New Ordinary Shares (the "Fundraising") raising gross proceeds of £35 million. The following related parties subscribed for shares at a price of 75 pence per share as set out below:
Blackrock Investment Management 7,000,258 Graham Stewart 200,000 Helge Hammer 506,667 Jonathan Cooper 200,000 Nicholas Ingrassia 160,000 Jorunn Seatre 26,667 Blackacre Trust No 1 100,000 Blackacre Trust No 2 100,000
	Remuneration of key management personnel Members of the Board of Directors are deemed to be key management personnel. Key management personnel compensation for the financial period is the same as the Director remuneration set out in note 4 to the accounts. Other information Directors' interests in the shares of the Company in the current and prior period, including family interests, were as follows:
										Ordinary shares
	Helge Hammer									837,023
	Jonathan Cooper									333,432
	Graham Stewart									350,000
	Jorunn Saetre									51,667
	Nick Ingrassia									179,023
	Julian Riddick (PDMR)									272,648
	Hilde Salthe (PDMR)									11,805
	Under IAS 24 section 4, all intragroup transactions which have been eliminated on consolidation are exempt from being disclosed as the Group have prepared consolidated financial statements.
	In addition, the following conditional awards have been made to the Executive Directors and Company Secretary under the FIP which are expressed as a percentage of the total maximum potential award, being 10% of the Company's issued share capital:
	Founder		Percentage entitlement of Initial Award pool		Maximum percentage entitlement of growth in value from IPO					Maximum percentage of issued share capital
			%		%					%
	Helge Hammer		23.50%		3.53%					1.48%
	Graham Stewart		19.75%		2.96%					0.62%
	Jonathan Cooper		19.13%		2.87%					0.59%
	Julian Riddick		18.50%		2.78%					0.48%
	The Group does not have one controlling party.
27	Subsequent Events
	Post the year end, the results of the Equinor operated Ginny and Hermine well were announced on 4th February 2022 with the well failing to find hydrocarbons. The operator is currently assessing if there is further prospectivity on the licence. Post the year end Russia invaded the Ukraine.  The Board has assessed the risks to the Company associated with the Russian invasion of Ukraine and, unless the conflict escalates into a conflict between Russia and NATO, has concluded that there are no direct consequences to the Company although there are indirect risks as outlined, in the Principal Risks and Uncertainties section, notably as regards commodity prices, FX rates and the impact on the M&A market.
28		Cash absorbed by operations
						2021					2020
		GROUP				£					£
		Loss for the year after tax before other comprehensive income					(4,680,620)					(1,626,179)
		Adjustments for:
		Taxation credited					(6,911,763)					(754,289)
		Exploration write off				6,399,134					-
		Release of prepaid bank fees				103,517					-
		Investment income				-						(18,736)
		Interest payable				484,527					-
		Interest receivable					(11,412)					-
		Time writing adjustments					(448,071)					-
		Depreciation				27,982					2,807
		Other				-					431
		Equity settled share based payment expense				255,736					97,763
		Movements in working capital:
		Increase in inventories					(92,798)					-
		Decrease in trade and other receivables				104,906					7,192
		Increase in trade and other payables				571,544					126,363
		Cash absorbed by operations					(4,197,318)					(2,164,648)

 

END

 

 

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