Bowleven looks to play to its strength

BOWLEVEN, the Edinburgh oil and gas explorer focused on Africa, said yesterday it was well-placed to make the most of its prospects after a recent farm-out deal left it with a $145 million (£96m) cash pile.

Picture: AFP

Chief executive Kevin Hart said the deal earlier this year, which saw saw LukOil and NewAge take stakes in the Etinde permit off the coast of Cameroon, had given the company “a strong financial foundation” for growth.

His comments came as the group reported a loss of $90m for the year to 30 June – up from $13.6m in 2014 – although the latest figure included a $76m impairment charge connected to Etinde. But with Bowleven now debt-free and with significant financial resources, analysts agreed the group was in a stronger position than many other smaller oil and gas firms.

Hart said that although it was a difficult market, for those companies with strong balance sheets there were opportunities.

“We will evaluate this new business potential against a background of capital discipline and operational capability while continuing to drive forward progress on our existing assets,” he said.

Brokers at SP Angel said that after “interminably slow progress over the previous few years” it had been a good end to the financial year for the group and that its outlook looked brighter than for a long time.

“We believe that with the market as it is currently, and the cash resources available to the company, that it is well positioned to take the company forwards further, faster than it has done thus far,” they said in a note.

Craig Howie at Shore Capital also highlighted the company’s net cash balance which he said provided “significant valuation support”.

Bowleven recently made a discovery during exploration drilling at Bomono, onshore Cameroon, and Hart said a positive outcome from the extended well testing programme “could deliver a home grown revenue stream for the group in the near-term”.

The focus on Etinde is the drilling of the two appraisal wells, targeting what the company said was “significant potential upside” identified in a reservoir.

Bowleven is funded for its anticipated share of the drilling and testing of the wells under an agreement secured as part of the Etinde farm-out deal.

“With well locations agreed we are looking forward to the operator drilling these wells as soon as practicable in 2016,” Hart said. Shares in Bowleven closed down 1p at 24.75p yesterday,

A slight rise in optimism has been reported by the UK oil and gas industry, according to a survey.

Oil & Gas UK’s business sentiment index for the third quarter of 2015 showed that while the UK oil and gas industry remains very concerned about the future, there had been a “slight improvement in mood” for the second quarter in a row. Respondents cited the positive impact of efficiency initiatives as among reasons for the optimism.