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UK-based exploration and production specialist Longboat Energy has confirmed the strategic pivot of its business to focus on Southeast Asia following the sale of its 50.1 per cent holding in Longboat JAPEX Norge. Following a detailed review of its areas of geographic operation, the board and management of Longboat Energy have made the decision to exit Norway and to focus on building a full-cycle E&P business in Southeast Asia.
The pivot to the new region comes after Longboat sees significantly more potential there for a small company than Norway. Longboat also believes its existing positioning and access to opportunities provide excellent value-creation potential for the company.
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 has left the company at a significant competitive disadvantage and, despite enormous effort and attempts to secure opportunities with shareholder value upside, Longboat has been unable to establish what is calls a meaningful growth platform in Norway.
In contrast, Longboat's 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 that are now viewed as crucial to maximising value from their maturing basins. Also, 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.
Longboat's focus in the near-term will remain on its Malaysian activities, offshore Sarawak. These will include the giant Kertang prospect offshore Sarawak, believed to be one of the largest undrilled structures in Malaysia.
