The Edinburgh-based firm hailed the farm-out agreement with Victoria Oil & Gas (VOG) as a “milestone” and said it would generate “attractive returns” compared with an option to sell gas from the development for a power scheme in Cameroon.
Under the deal, Bowleven will remain as operator of the Bomono project with an 20 per cent stake. It will also receive £100,000 worth of shares in fellow Aim-quoted company VOG, along with royalties of 3.5 per cent.
Chief executive Kevin Hart said: “This deal offers shareholders the opportunity to access VOG’s robust commodity pricing framework, which offers attractive returns relative to a gas-to-power option, and requires minimal further investment by Bowleven to reach first production.”
The agreement, which is subject to approval from the Cameroon government, comes as Bowleven prepares for a showdown with rebel shareholder Crown Ocean Capital, which is seeking to replace most of the board members and convert the Africa-focused business into a holding company. Investors will vote on Crown’s plans at a general meeting to be held on 14 March.
VOG has the right to terminate the Bomono farm-out deal if any of Crown’s resolutions are approved at the shareholder gathering.