Bowleven to drill first well in over a year

BOWLEVEN, the Edinburgh-based oil explorer, is preparing to drill its first exploration well in more than a year this spring.

The Aim-listed company, which has exploration assets in West Africa, put operational activity on hold in 2009 because of a lack of cash and difficulty finding a development partner.

However, after raising more than 71 million through a rights issue last year and later securing a partnership deal with Vitol to develop one of its prospects in Cameroon, the company said yesterday that 2010 was set to be "the busiest year in Bowleven's history".

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The group announced that it had signed a letter of intent to take up a rig that would allow it to drill up to four wells this year, the first of which is likely to come in April or May.

Chief executive Kevin Hart said he was looking forward to a move back into exploration.

"Last year was all about farm-in agreements and raising equity; this year is all about operational development," he said.

Under Bowleven's agreement with Vitol, the Swiss-based company must cover the first $100m (61.6m) of costs of drilling on the Etinde permit in offshore Cameroon.

On top of this, Bowleven said its cash reserves stood at some $110m at the end of December.

The agreement with Vitol requires approval by the Cameroon government but Bowleven said this was "anticipated shortly".

As well as three wells in the Etinde permit, the company said it was about to begin to gather seismic data for its blocks in onshore Cameroon, while it is planning to drill in nearby Gabon.

Phil Corbett, of Royal Bank of Scotland, said recent agreements struck by Bowleven "leaves the company in a healthy financial position ahead of this year's activity programme", arguing that the current share price does "not reflect the upside potential" of its exploration campaign.

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However, shares in Bowleven fell 3.5p, or 3.3 per cent, to 102.5p yesterday.