Longboat Energy pleased with progress at Egyptian Vulture

North Sea-focussed exploration and production company Longboat Energy updated the market on its operations on Monday, reporting that at the Egyptian Vulture exploration well, it had been informed by the operator Equinor ASA that the prospect, where it holds a 15% working interest was on-track to spud in late August, using the West Hercules semi-submersible drilling rig.

The AIM-traded firm said the well was targeting gross mean prospective resources of 103 million barrels of oil equivalent, with further potential upside to bring the total to 208 million barrels.

It said the geological chance of success associated with the prospect was 25%, with the key risk being related to reservoir quality and thickness.

The well was expected to take up to four weeks to drill, with a pre-carry net cost to Longboat of around $5m, or $1m post-tax.

Upon success, there was the potential to provide low-carbon dioxide blending gas to the nearby Equinor-operated infrastructure at Åsgard, allowing for the possibility of “rapid” monetisation.

Egyptian Vulture is an Upper Cretaceous turbidite play bounded within a regional graben located in the prolific Halten-Dønna Terrace.

The prospect had been “significantly” de-risked by a strong AVO anomaly analogous to the large Hades discovery made by Faroe Petroleum in 2018, along with several other nearby Cretaceous discoveries also made by the Longboat management team at Solberg, Rodriguez and T-Rex.

Longboat said Egyptian Vulture marked the first of an expected seven-well exploration programme, which it would drill over the next 18 months on the Norwegian continental shelf, targeting net mean prospective resource potential of 104 million barrels of oil equivalent, with additional 220 million barrels of upside and follow-on prospectivity.

The drilling programme had the potential to create a net asset value of over $1bn, based on precedent transactions on the Norwegian continental shelf for development assets.

Longboat said the next well in the programme was scheduled to start in mid-September, and would target the Rodhette prospect where it had a 20% interest, using the deep water ‘Scarabeo 8’ semi-submersible drilling rig.

The board described it as a proven Jurassic play in the Hammerfest Basin with a potential 30 kilometre tie-back distance to the Goliat Field, for early potential monetisation.

“We are excited at the prospect of drilling our first exploration well and can now look forward to a busy period of almost continuous drilling and frequent value catalysts during the next 18 months, with a combined upside value potential in excess of $1bn,” said chief executive officer Helge Hammer.

“Exploration activity in Norway is picking up and during the first six months of 2021, a total of 17 exploration wells have been completed, resulting in eight discoveries.

“On Egyptian Vulture we are partnering with one of the most successful explorers on the Norwegian continental shelf, and a successful well could add more than 15 million barrels of oil equivalent of net contingent resources with significant monetisation opportunities.”

Hammer said the company’s plan remained to build Longboat into a full-cycle, North Sea exploration and production company.

“We believe the momentum built by the initial acquisitions will enable us to take advantage of the increasing number of opportunities we are seeing in the market.”

At 1543 BST, shares in Longboat Energy were flat at 67p.