Longboat Energy Share Discussion Threads

[ohisay] 17/8/2023 09:54

"Still very busy in the M/A market not just Velocette..."

[sogoesit] 16/8/2023 09:05

Indeed the game is not random; it is stochastic! ;-)
But neither is it scientific!

But is it like investing?
Taleb gives you his answers in "Fooled by Randomness".
Or, just take a "random walk down wall street" for the experience!

Good "luck" ;-)!

[hpcg] 15/8/2023 16:34

Sogoesit - you are correct mathematically. Indeed the odds of eventually flipping a head in repeated coin tosses is never 1 because the odds only ever approach 1, they never reach one. On the other hand do it long enough an the heads vs tails frequency will tend toward 1/2 but will only be exactly that some of the time.

I don't think this mathematics can be precisely applied to oil exploration because these are not random discrete events. I would expect a half decent asset team working in a mature and understood basin to hit 1 or more target over 4 30% drills, and a bad asset team to hit none over twice as many. From what I recall the Faroe Oil and Gas team had a pretty strong hit rate. If you like the odds of the odds are favourable because the game is not random. To put it another way, based on the data, we already know that the results of, for want of a much better term, the coin toss series, is 1/3. We have no idea of, and what frankly doesn't have a meaning, is are the individual odds for each drill.

A better way of putting it is that the true odds could only be assessed by drilling at the node of a kilometre grid. Then we could work out the odds of a random well on that grid, presumably well under 1%. It is pretty clear that explorers do much better than random.

As you say, plenty of junior oil companies have wiped out drilling consecutive uneconomic wells. So in my opinion conventional risk discounting is the way to go, and that the upside should be worth the risk. That and don't put much of one's personal capital on the line.

[sogoesit] 14/8/2023 12:27

Nope...
(Need to think about the Coin Toss Problem. No matter how many times you toss an evenly weighted coin the probability of getting a heads, or tails, on the next toss is 50%, never greater, to infinity).

You need to use the Binomial Distribution for discrete probability of success trials each having the same probability of success.

Refer here:


I think BP did a major study on the Norwegian Basin in its maturity which found that the chance of success was about 35% for an exploration well iirc.

More recent activity suggests higher probabilities of success, here:



Also worth reading up on the main issue in Petroleum Exploration which is that of Gambler's Ruin and solving for how much money one needs to "stay in the game" given a well cost, the chance of success for each well and the number of wells to be drilled (Binomial Distribution).

Good "Luck" all holders!

[hpcg] 11/8/2023 15:31

greedfear - three unconnected 30% chance of success makes a 90% chance of one being a success. Note though that in reality with oil exploration the CoS is a bit finger in the air, if informed by history. It isn't a true mathematical chance. I think somewhat more important is the prospects for successful development and what that means for the company.

[greedfear] 11/8/2023 15:05

66%. 66%. No more wine for me.

[greedfear] 11/8/2023 14:34

Anyone knows how much wells they'll be drilling? Only one: change of failure 70%.
Three? Change of failure: 0.7*0.7*0.7, more or less like 34%. Chance of succes 76%.
Genuinely asking. No clue.

[hpcg] 11/8/2023 09:59

The liability in Norway is limited because "Special tax value of losses is reimbursed at the tax settlement, the year after it accrued."

[sogoesit] 11/8/2023 05:54

Exactly, "sell losers and pyramid winners".... and spread risk.
It's the compound effect and only that way will your winners pay out for your losers.
(After all E&P companies spread risk and they should know their business, in most cases).

My discrete Win/Loss ratio performance is 45%/55% but most years my returns are positive.

Most active investors lose money. That's not just PIs but 80% or more of Hedge Funds and Fund Managers do not beat either their benchmark or the general market. Log on to any broker platform and you will see the warning that over 80% of clients lose money. It's a fact. Show me the contrary.

Where ohisay is right, if I interpret the comment correctly, is that once committed to a position patience is needed to ride the position unless one's view changes.
However, in E&P, with a small-cap, no matter the EV the risk of failure is high and liability is unlimited. Luckily for shareholders that means a 100% loss. For the company it can be more.
For shareholders all we can hope for is that, if Risk is High, the expected Reward will High. (Note the word "expected").

The question is do PIs, or professionals for that matter, know why an E&P company faces potential risk of unlimited liability losses?

[darcon] 11/8/2023 01:23

There's a few mentions of its JV with LBE in Japex's financial results for the 3 month period ending 30 June 2023 (see: :

page 4: In the section on business progress: "Capital participation in a subsidiary of U.K.-based Longboat Energy PLC (Longboat JAPEX Norge AS : LBJ) which promotes exploration and development in offshore Norway (May)"

page 30: "Norway: Offshore Blocks (Longboat JAPEX Norge AS*)" and "Company name was changed upon completion of capital participation (49.9% stake) in Jul. 2023"

[ohisay] 10/8/2023 22:04

Pray how do you KNOW that MOST private investors dont know what they are doing .??
What arrogance to spout such stuff.

There is no nuance and no consideration of fundamentals in your position ..

Are you really saying that Enterprise Value going into a drill is of no consequence whatsoever ?.

[trader465] 10/8/2023 17:53

You are correct, most PI’s don’t understand risk management, most are undercapitalised and add/compound losses until they eventually blow their account. I use a 3% position size and a 15% trailing stop, my risk is therefore 0.45% per position, stop to B/E at @ +10%, sell losers and pyramid winners, pyramiding into a high risk drill increases the chance of a large unacceptable loss in the event of a duster. Each to their own, most don’t understand.

[sogoesit] 10/8/2023 10:18

Maybe quite a few traders/investors have little concept of the unlimited liability nature of exploration and production and the commensurate High Return required for High Risk?
Risk management and position size apply to all or "Don't bet the farm" as the saying goes!
A 1% of my portfolio position with a 100% loss outcome I think is quite tolerable.

[trader465] 09/8/2023 14:23

Others seem to have no concept of risk. A duster can result in a 50% fall in share price and a 50% capital loss for holders, the smart money is banking profit looking to buy back if the well is a success.

30% chance of success is 70% chance of a duster

[dbnout76] 09/8/2023 14:10

And they have determined this after day 1 of a 50day drill????

[trader465] 09/8/2023 11:36

Perhaps a duster coming?

[anley] 09/8/2023 11:26

I suspect some short term punters on CFD's being sold out.

It has been a good stock for the short termers and you only have to look at the posters to see who they are.

Keep fingers crossed that the new drill will be successful and the team can press on with all it has on its plate.

[dbnout76] 09/8/2023 11:24

I'm definitely invested if that's aimed at me

[jeanesy] 09/8/2023 11:23

No such thing as investing for people these days just short term trading !!

[dbnout76] 09/8/2023 11:18

Nasty drop here????

[ohisay] 08/8/2023 11:46

Cenkos today.

Re Rating Opportunity on Success – Our Longboat valuation is c66p/share.
We value the Velocette prospect at c8.6p/share, using an 11% overall chance of success.
At c8.6p, Velocette makes up just c13% of our target price, providing shareholders with downside protection.
On success, our valuation of Velocette would increase from c8.6p/share to c28.6p/share, as the geological risk would be eliminated.

And just to repeat they have fc end year 2023 LBE cash at £9M.

[e43] 08/8/2023 09:59

Company est 50days to drill to target depth,if it hits then another 50odd days for a possible sidetrack and testing.
Market hasn't really priced in any hope value for Velocette at current price.
Japex though place a high potential value on it as if it comes in at the top end of potential estimates they will put another US30m into JV.
So by definition extremely valuable for LBE in a best case outcome.

[sogoesit] 08/8/2023 09:47

Sizeable target as well... about 1 Tcf gross.