JAPEX will obtain a 49.9% stake in the new joint venture Longboat JAPEX by making an investment of up to $50m, which includes a first tranche of $16m, the second tranche of $4m, and a third tranche of up to $30m, in addition to a $100m acquisition financing facility
JAPEX to invest $150m in Longboat’s subsidiary. (Credit: Arvind Vallabh on Unsplash)
Japan Petroleum Exploration (JAPEX) is set to form a joint venture with UK-based Longboat Energy by investing $150m in Longboat’s Norwegian subsidiary, Longboat Energy Norge.
Under the terms of the agreement, JAPEX will obtain a 49.9% stake in Longboat JAPEX by making an investment of up to $50m, which includes a cash investment of $16m upon completion.
The Japanese company will pay contingent consideration of $4m upon successful negotiation and completion of a small production acquisition.
It will make up to a $30m payment contingent on the successful discovery of the Velocette prospect, located in licence PL1016 and is scheduled to be drilled in Q3 2023.
Furthermore, JAPEX will provide the JV with a five-year acquisition financing facility of $100m to finance acquisitions and related development costs.
Longboat chief executive Helge Hammer said: “Longboat is delighted to have found a strong and complementary strategic partner in JAPEX. JAPEX has been looking for the best way to enter Norway and identified Longboat as an excellent match to reach its strategic objective.
“The Longboat team has significant experience and expertise in the Norwegian E&P sector and has strong local industry relationships. JAPEX is a long-established E&P company with a strong balance sheet and significant worldwide technical competence, including in the North Sea.
“By joining forces, we will have greater opportunities and strong financial backing to pursue them. We believe that this agreement has laid the foundations for exciting growth in the coming years.”
The new joint venture (JV) will be formed by renaming Longboat Energy Norge as Longboat JAPEX Norge, which will operate as a Norway-focused exploration company.
It aims to create value through the acquisition of development projects, 2P reserves growth and establishment of a significant production level within three to five years.
The JV will leverage the technologies, expertise, and networks of both JAPEX and Longboat.
Both parties will work together for the exploration and evaluation of development in the existing licenses, along with the acquisition of additional under-development or producing assets.
The investment is expected to complete in the third quarter of 2023, subject to customary regulatory, lender and partner approvals.
