Hart cagey over mystery bid as joint venture could allow independence

Published on Monday 23 March 2009 20:47

BOWLEVEN, the credit crunched oil and gas explorer, yesterday maintained that it could still retain its independence in the face of the surprise takeover bid launched by a mystery buyer last week.

Speaking as the company released its half-year results, Kevin Hart, Bowleven's chief executive, said an alternative plan to bring in a joint venture (JV) partner to develop their fields in Cameroon was "still ongoing".

Hart maintained that the JV negotiations were running "in parallel" to talks with the bidder, which made a 150p per share bid valuing Bowleven at $183 million (126m).

The chief executive of the Edinburgh-based firm said he hoped to seal a deal on either the sale or the JV in "weeks rather than months" as the cash-strapped group struggles to maintain an active programme of exploration in west Africa.

Bowleven yesterday revealed it has just $29m left in the bank while the group needs as much as $150m to begin extracting oil from its first oil find offshore Cameroon.

Hart said the turmoil in the banking sector and the capital markets has "severely impacted" on the company's access to either debt or equity needed to drive the production programme.

As a result, the group said last week it was "minded" to accept the 150p per share offer, but will also hold out for the so-called "farm-out" joint venture if it appears a better prospect.

Hart explained: "We will continue to run with the two horses and see which is best value for shareholders. If a farm-out offer came up that was substantially better than the potential offer, clearly we would be obligated to go down the farm-out route."

Although analysts said the $183m bid was "too good to be true", Hart insisted an alternative was still feasible. He added: "There are people out there who would contemplate the asset transaction as opposed to the corporate one. Some people require different things. Some people might not be interested in Gabon for example.."

Although the company has been caught short due to the credit crunch, Hart said it continued to perform well.

Following its oil find last year off Cameroon on part of its Etinde permit, Bowleven agreed a 20 per cent production sharing contract with the Cameroon government.

Although analysts called the find "inconclusive" Hart was bullish about the prospect.

He said: "We only need one further well to get it to the point where we are confident enough to commit capital expenditure to bring it on stream."

Part of the deal with the Cameroon government would see gas also recovered from the Etinde permit pumped to a converted energy plant.

"In this day and age setting alight gas and sticking it in the atmosphere is not the solution," said Hart.

In the half year to the end of 2008, the group reported a profit of $82.7m, compared to a $6.6m loss in the first half. The company said the accounting profit arose from foreign exchange movements on intra-group funding and had little material impact on the group's finances.

Shares closed up slightly to 111.75p. The share price has gone up 223 per cent from 34.5p since it announced the potential bid last week.