Interim Results

Seascape Energy Asia PLC

30 September 2024

 

THIS ANNOUNCEMENT DOES NOT CONTAIN 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").

30 September 2024

Seascape Energy Asia plc

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

Interim Results to 30 June 2024

Seascape Energy, an E&P company focused on Southeast Asia, is pleased to announce its unaudited interim results for the six-month period to 30 June 2024.

Nick Ingrassia (CEO) and James Menzies (Executive Chairman) will host a live presentation for investors via Investor Meet Company at 11.00 BST today. A copy of the presentation can also be found on the Company's website.

Investors can sign up to the presentation via: https://www.investormeetcompany.com/longboat-energy-plc/register-investor. Investors who follow Seascape (previously Longboat Energy) on the Investor Meet Company platform will automatically be invited.

Nick Ingrassia, CEO of Seascape, commented:

"The first half of 2024 has been a period of considerable change for the Company culminating in a strategic pivot to refocus the business on Southeast Asia. This transitional period is reflected in our interim results.

Looking forward, we are excited about the opportunity to use our competitive advantages in the region, including an experienced team with excellent long-term relationships, to grow and diversify our portfolio.

We remain focused on delivering several significant value inflection points in the near-term as we seek to grow the business under our refreshed and reinvigorated brand for the benefit of all our stakeholders."

Ends

Enquiries: Stifel (Nomad and Joint Broker) Tel: [phone] Callum Stewart Jason Grossman Ashton Clanfield [e-mail] Cavendish Capital Markets Limited (Joint Broker) Tel: [phone] Neil McDonald Pete Lynch Leif Powis

Standard

Estimates of reserves and resources have been carried out in accordance with the June 2018 SPE/WPC/AAPG/ SPEE/SEG/SPWLA/EAGE Petroleum Resources Management System ("PRMS") as the standard for classification and reporting. A summary of the PRMS can be downloaded from:-https://www.spe.org/en/industry/petroleum-resources-management-system-2018/. 

Review by Qualified Person

The technical information in this release has been reviewed by Dr Pierre Eliet, EVP Corporate & Business Development, Country Chair Malaysia, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Dr Eliet is a geologist with more than 25 years' experience in the oil and gas industry. Dr Eliet has a BA Degree in Earth Sciences from Trinity College, Dublin and PhD in Geology from Manchester University, UK.

Glossary

"bcf" means billion standard cubic feet

"GIIP" means Gas Initially In Place

"kboepd" means thousand barrels of oil equivalent per day

"m" means meters

"mmboe" means million barrels of oil equivalent

"mmscfd" means million standard cubic feet per day

SEASCAPE ENERGY ASIA PLC (FORMERLY LONGBOAT ENERGY PLC)

STRATEGIC REPORT

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

 

STRATEGY AND OUTLOOK

Following a detailed review of its areas of geographic operation during the period, the board and management of the Company decided on 17 June 2024 to exit Norway and focus on building a full-cycle E&P business in Southeast Asia.  We see significantly more potential in Southeast Asia for a small company than Norway and believe the Company's existing positioning and access to opportunities provide excellent value-creation potential.

Recent structural changes to the Norwegian upstream industry have favoured an increasingly small group of very large companies with long-term investment horizons and access to low cost of capital. This left the Company at a significant competitive disadvantage and, despite enormous efforts and attempts to secure opportunities with shareholder value upside, the Company has been unable to establish a meaningful growth platform in Norway.

In contrast, the Company entry into Malaysia last year coincided with a proliferation of opportunities across Southeast Asia and a positive and supportive attitude of the host governments towards small-and-medium sized companies which are now viewed as crucial to maximizing value from their maturing basins. Furthermore, this positive industry sentiment is set against a macro backdrop of growing economies with increasing energy demands, benign operating environments, a structurally lower cost base and an opportunity to help reduce carbon emissions through the development of indigenous gas resources to displace coal fired power generation.

The Company has competitive advantages in the region, including an experienced team with excellent long-term relationships and networks established across Southeast Asia. In addition, its growing portfolio already includes sought-after acreage and operatorship of a licence in one of the most exciting basins in the region, as well as visibility on accessing many additional opportunities to diversify and grow materially its asset position.

In order to reflect this change in strategic focus, the Company has now been renamed and rebranded as Seascape Energy Asia plc ("Seascape").

 

OPERATIONS AND ACTIVITY

Norway

As announced on 17 June 2024, the Company agreed the sale of its 50.1% interest in Longboat JAPEX Norge AS ("LJN") to Japan Petroleum Exploration Co. Ltd ("JAPEX") for £1.9 million ($2.5 million in cash). In addition, JAPEX assumed all current and future financial obligations associated with LJN, which included £13 million ($17 million) of debt, £6.5 million ($8.5 million) of which being formerly attributable to the Company.

This decision followed the continuing scarcity of acquisition opportunities suitable for the Company, 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 contributed to a near-term projected working capital shortfall in LJN which could have resulted in the Company forfeiting some or all of its shares in LJN.

However, the principal catalyst that led to the exit from Norway was the working capital pressures caused by the poor performance of the Statfjord satellites. While the Statfjord satellites infill drilling project had been executed successfully technically, there were delays, in both the development programme and production ramp up, and these in addition to the cost overruns had a significant negative impact on LJN's projected working capital. 

While this departure from Norway was not anticipated when the joint venture was set up last year, LJN, renamed JAPEX Norge, will continue under JAPEX's ownership as a full-cycle business with an exceptional team, providing an excellent platform for a large company with access to significant low-cost capital to build long-term success on the Norwegian Continental Shelf.

Southeast Asia

The Company entered Malaysia in the Malaysian Bid Round 2022 by winning operatorship of a Production Sharing Agreement for Block 2A (the Company 36.75% (subsequently increased to 52.5% following the Topaz acquisition, completed in December 2023)). This deep-water exploration block, offshore Sarawak, covers an area of more than 12,000 km² and contains material exploration opportunities with an associated low initial cost obligation with up to three years until a drill decision.

Block 2A contains the giant Kertang prospect and the Company commissioned ERCE to undertake a competent persons report ("CPR") to confirm the potential size and risk associated with Kertang, believed to be one of the largest undrilled structures in Malaysia. The CPR, which was completed in June 2024, confirmed the giant scale of the Kertang prospect assigning total gross, unrisked mean prospective resources of 9.1 TCF plus 146 mmbbls of Natural Gas Liquids ("NGLs") across the four target horizons.

Following recent increased interest levels in exploration for world-scale fields, multiple large companies have approached the Company regarding Block 2A. Having consulted with PETRONAS, the Company has commenced a farm-out process to identify a suitable partner.

In addition, an Area of Mutual Interest ("AMI") in Shallow Water Sarawak was signed at the end of 2023, between the Company and another international E&P company active in Malaysia, to pursue discovered resource opportunities ("DROs") being offered by PETRONAS. In June 2024, the Company announced that it had provisionally been granted an award, subject to the successful negotiation of certain key contractual terms, for acreage in shallow water offshore Sarawak containing several material, undeveloped gas fields capable of near-term development. These resources are an important addition to the Company's growing Asian portfolio and it is expected that an announcement giving details of this award will be made shortly.

Cost Base

The strategic pivot to Southeast Asia has given the Company the opportunity to streamline and reduce its cost base. These actions include reducing the management team and board of directors to ensure both remain fit-for-purpose without compromising management's ability to properly govern the day-to-day operation of the business.

The operational cost reduction measures taken will not be visible until the second half of 2024 but will result in annual savings of ~$2 million from the start of 2025. These savings, together with the cash proceeds from the LJN sale, are forecast to provide sufficient capital through to the end of Q1 2025.

With its smaller organisation after exiting Norway, the Company will continue to ensure its cost base remains streamlined to maximise the capital directed towards value-accretive growth opportunities.

Financial Results

At 30 June 2024 the Group had net cash reserves totalling £1.3 million (1H 2023: £2.1 million) excluding £1.9 million in cash that was received post-period end following the completion of the sale of its 50.1% interest in LJN to JAPEX.

Exploration and evaluation assets of £676k (1H 2023: £nil) represented capitalised expenditures incurred on Block 2A in Malaysia and were deemed fully recoverable at the balance sheet date.

Net assets with respect to LJN totalled £1.9 million (1H 2023: £11.1 million) following the impairment of the carrying value on disposal as noted below. Included within net assets were £308k (June 2023: £nil) of amounts due to the Group from LJN.

On 14 June 2024, the Company sold its 50.1% interest in its Norwegian subsidiary LJN to JAPEX. The transaction completed on 12 July 2024, however, as the key condition precedent was met on 26 June 2024 (Government consent), all of the losses with respect to the joint venture sale have been recognised in discontinued operations during the period, including writing the investment carrying value down to its deemed fair value, the carrying value of £8.7 million exceeded the recoverable amount of £1.9 million, leading to an impairment charge of £6.8 million (2023: £nil).

During the period, the Group recognised other income of £719k (2023: £nil) with respect to management service charges to LJN, and time writing to the 2A Operatorship.

Administrative costs for the period totalled £3.5 million (2023: £2.0 million) with the increase primarily related to the cost of a new venture opportunity which failed to transact of £900k (2023: £nil) and increased wages and salaries during the period of £1.4 million (2023: £700k) with respect to the new Malaysia team in 2024 along with certain head office restructuring costs.

The total loss for the period was £12.5 million (2023: £6.2 million) and comprised £2.7 million (2023: £2.0 million) from continuing operations and £9.8 million (2023: £4.1 million) from discontinued operations.

The total loss on discontinued operations of £9.8 million (2023: £4.1 million), comprised the Group share of

loss from the equity accounted joint venture of £3.0 million (2023: £4.1 million) and the impairment charge on the LJN investment of £6.8 million (2023: £nil). The Group's share of the loss that related to the impairment of the Statfjord Satellites licences was £2.0 million and is included within the loss from the equity accounted joint venture of £3.0 million.

The total comprehensive loss for the period included currency translation differences that were taken directly to reserves of £0.8 million (2023: £1.7 million) and totalled £13.4 million (2023: £7.9 million).

Going concern

The directors have completed the going concern assessment, including considering cash flow forecasts up to the end of 2026, sensitivities, and stress tests to assess whether the Company and its subsidiaries ("Group") are a going concern. Having undertaken careful enquiry, the directors are of the view that the Group will need to access additional funds during 2025 in order to fund on-going operations and pursue growth opportunities. This is in line with the Company's current activities of exploring, maturing its discoveries and seeking acquisitions. In the absence of such funding, the Group is forecasted to have limited or no liquidity by the end Q1 2025. It is anticipated that these funds will be sourced through asset disposals / farm downs, issuing new equity or a combination of these actions. To the extent that growth opportunities will support debt, this will be considered where appropriate for example to support production acquisitions.

The financial statements for the period to 30 June 2024 have been prepared assuming the Group will continue as a going concern. In support of this, the directors believe the liquid nature of asset market combined with historical shareholder support, adequate funds can be accessed if and when required. However, the ability to continue as a going concern is not guaranteed at the date of signing these financial statements. As a consequence, this funding requirement represents a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

On behalf of the board

NA Ingrassia

…………………………………………..

Nicholas Andrew Ingrassia

Director

30 September 2024

DIRECTORS RESPONSIBILITY STATEMENT

The directors are responsible for preparing the interim report in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under the AIM Rules for Companies of the London Stock Exchange they are required to prepare the financial statements in accordance with UK adopted international accounting standards.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

In preparing these financial statements, the directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates that are reasonable, relevant and reliable;

·      state whether they have been prepared in accordance with UK adopted international accounting standards; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that  the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006.  They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication

The directors are responsible for ensuring the annual and interim reports and financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

*Restatement of the prior period is explained in detail in note 20.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2024

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

21    Events after the reporting date

On 15 July 2024, the Company completed the sale of its interest 50.1% interest in LJN to JAPEX for cash consideration of £1.9 million ($2.5 million).

On 17 September 2024, the Company changed its name from Longboat Energy plc to Seascape Energy Asia plc.

22	Other information
	A copy of this interim report and financial statements is available on the Company's website www.seascape-energy.com.

 

END