Longshore Resources: A junior built to survive
By October 2021 edition of Business in Calgary, and Business in Edmonton 13 October 2021 5 min read
Longshore Resources is a private oil and gas exploration and production company with a fresh, new approach on how to best operate and be profitable in North America’s volatile energy sector. Longshore takes the view that capital constraints on the oil sector requires that every company be financially secure and survivable throughout the commodity cycle. In addition to innovative operations, Longshore leads the way in environmental stewardship, safety, and community building.
President and CEO Byron Nodwell founded Longshore in 2015 and is also a member of the Board of Governors of the Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada (EPAC).
“I wanted to take advantage of the 2014 price crash to form a company that married high-quality assets with high-quality, next-generation talent,” says Nodwell. “With the 10+ years of experience I had working with junior oil companies, I knew that only very carefully crafted companies could survive and thrive.”
Longshore raised capital from ARC Financial and opened in 2015. Growth was immediate and rapid. Between May and October of that year, Nodwell was able to hire the founding team members.
He continues, “We acquired assets in June 2016, chasing a new exploration target in Alberta and drilled initial wells with success. In 2017 Longshore accumulated large acreage blocks, and further drilling with technological improvements increased productivity of the lower Charlie Lake.”
The pace continued. In 2018 Longshore acquired Shiningstar Energy. In 2020 there was a four-way merger with Rife Shot Oil Corp., Steelhead Petroleum Ltd., and Primavera Resources Corp.
Nodwell explains, “In 2015 I was a 38-year-old first-time CEO attempting a startup. I was introduced to ARC Financial by our independent director and it has been a very fruitful relationship ever since. Despite my lack of experience, they saw something they liked in me and have been very supportive. The four other companies we merged with were also backed by ARC, which to me, shows their high level of trust in myself and the Longshore team. ARC Financial is Canada’s largest energy-focused private equity manager; working with their team has been a great benefit to the success of Longshore.”
The innovation in how Longshore does business has carried them through the dark days of the oil crash and pandemic.
“Many junior oil companies have a tendency to only look at the upside and seek investment capital in the event of difficulties. Longshore is different in that we strive to ensure that we thrive during good times but also are protected in case of bad times. Our balance sheet is clean, and our revenues are protected the last 18 months,” says Nodwell. “The last year has brought unprecedented challenges to energy companies, but this sector has been very challenging for years, I would argue since around 2008 or 2009. I got into start-up junior oil companies at around that time, so I have only ever lived in difficult times. This is why we set up Longshore to survive. We had a clean balance sheet and were well hedged going into the COVID pandemic. That served to protect the company for the duration of the crisis. Over the past year we have seen oil prices range from $30 to $70. During that time period our assets, team and financial strength ensured the company was never at risk, even during the darkest days.”
Longshore was able to use its financial strength to assist the communities where they operate during the depths of the pandemic. “With so many people out of work across western Canada we felt it was our duty to provide financial assistance to various crisis and community assistance organizations that support our local communities. All members of our head office and field teams were asked to help prioritize our donations and we gave charitable support to over 30 organizations across BC, Alberta and Saskatchewan.”
For everyone at Longshore, environmental responsibility is a top priority.
“We take environmental responsibility very seriously,” confirms Nodwell. “Our operations have an impact on the environment and we ensure that when operations on a Longshore site cease that the land is returned to its original state. During the pandemic, Longshore stopped all development capital activity but we did not stop our well abandonment and site reclamation activity.
“Longshore is actively reducing our Greenhouse Gas (GHG) intensity during all of our activities. Our financial sponsor (ARC Financial) has been tracking the GHG intensity of all of their investments for over 15 years and requires that their investment companies reduce emissions. This is something that I think most quality oil companies do, and yet may be overlooked by the general public. The Canadian oil and gas industry is the number one spender on environmental initiatives and technology in the country.”
Innovative operations and environmental sustainability are two things that set Longshore apart; Nodwell also credits the team.
“We have great people! I know this sounds cliché, but we deliberately ensure we have a high-performing, and collaborative work culture.”
ATB is also a part of Longshore’s success story.
“ATB has banked Longshore since our founding,” says Nodwell. “We have had a great relationship with Clayton Martin since 2015 and he has worked closely with Longshore to understand our business, our capital needs and the services that will contribute to our success. We do all of our day-to-day banking through ATB, and ATB has contributed capital to the business through a reserve-based-lending product.”
He continues, “ATB is local to Alberta and this means that it is strongly incented to ensure the success of Alberta-based businesses. More than that, the people at ATB understand the local business environment intimately. Alberta has its own style and business culture and having that local knowledge is very helpful. Good business is about good relationships.”
The future is bright for Longshore Resources and Nodwell is excited about what comes next for his company, and for the industry.
"Longshore is profitable at $40/barrel, so at $70 we are thriving. We are currently executing a growth plan to get our production to 20,000 BOEPD by early 2022. After that growth phase, the company will be well positioned with abundant free cash flow and a clean balance sheet. At that time, we will likely start returning capital to our shareholders to make good on our promise to them, when they entrusted us with their money, that we would make them a return.”
Nodwell concludes, “Canadian oil and gas is the best regulated, most environmentally sound oil industry in the world. Amongst oil exporting countries in the world, we (along with Norway) are considered the gold-standard in this regard. Canadians should know that they have a world champion industry right here at home.”