By Scott Wright

BOSSES at Longboat Energy have admitted the spike in oil and gas prices sparked by the Russian assault on Ukraine will make conditions “challenging” in the mergers and acquisitions market.

But the North Sea-focused company said moves by western economies to turn their backs on Russian oil will “further strengthen the strategic case for Norwegian resources”.

Longboat was established by the former executive team of North Sea-focused Faroe Petroleum, which was acquired by DNO for £640 million in 2019. The company reported yesterday that it has made three discoveries from the four wells it has made to date, with the Egyptian Vulture find hailed as material.

And it said it was targeting three high-impact exploration wells in the next six months, declaring that each have the potential to be “transformational” for the company. The result of the Kveikje exploration well, located in a “very prolific area of the North Sea” where it is targeting 36 millions of barrels of oil equivalent, is expected in the coming days.

Longboat reported a loss of tax of £4.7 million for the year ended December 31, which included a write down on the Mugnetind well that was found to be dry.

Helge Hammer, chief executive of Longboat Energy, said: “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.”

Longboat said it was loath to reference the “desperate events in Ukraine” with regard to its outlook, but conceded the war would “inevitably” have 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,” the company said. “Conversely the move away from Russian oil and gas will make the case even stronger for Norwegian resources.”

Shares closed up 5.5p at 59.5p.

“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.”

Shares in Longboat closed…