Bowleven shares flare up as Scots oil explorer reveals Cameroon success

SHARES in oil explorer Bowleven leapt 35 per cent yesterday after it announced it had hit two "potentially significant " prospects off the west of Africa.

• Kevin Hart: We are explorers, not developers

The firm hailed the finds as "transformational" and said the discoveries off Cameroon of mixed light oil and gas condensate at one level and oil in "high quality sands" lower down the exploration well boded well for the rest of the area, known as the Douala basin. Analysts said there was a 10 per cent chance the middle "deep Omicron" reservoir could hold up to 380 million barrels of oil.

Kevin Hart, chief executive of Bowleven, likened the find to having grasped a tiger by the tail. "The Douala basin has the potential to be a major hydrocarbon province," he said.

"When you have a tiger by the tail, as we think we have, it is not so much what you find in this well - it is the knock on impact for the other prospects you have on the surrounding acreage."

The targets of the Sapele-1 exploration well are a series of five vertically stacked reservoirs. Although the first target showed limited amounts of gas, the two deeper targets revealed "better than expected" amounts of oil and gas.

The firm will continue drilling the last two reservoirs, the deepest of which Hart described as the "star prize" Cretaceous target, which has proved a prolific source of hydrocarbons elsewhere in west Africa.

Hart said the final target was the "principle reason" for drilling the Sapele-1 well.

"It has the potential of being in order of magnitude bigger than anything else we have seen so far," said Hart, although he added that finding hydrocarbons at shallower levels did not indicate more would found further down.

Bowleven has a 75 per cent stake in the well, along with its farm-in partner Vitol. In September, the Netherlands-based oil trading company agreed an option to take a further 10 per cent stake in Bowleven's Etinde permit, but only on block MLHP-7. The Sapele-1 well is in Bowleven's block MLHP-5.

In a statement to the stock exchange, the firm said that its exploration activities across its Douala basin permits provided "very significant promise" to "create further value for shareholders" next year.

The firm said it had a cash balance of $79.2 million (48.4m) and no debt. It was also in the process of selling its stake in a licence offshore Gabon which it expects will raise a further $35m.

Hart added the firm was "pretty well funded for the short term". Shares closed up 69.25p at to 268.75p.

Hart said the firm had "the flexibility if so desired" to bring in additional partners on its current exploration programme, raising the prospect of bringing in more investment to the project.

"We don't want to be the operator of a large development. Exploring is what we do well," said Hart.He said Cameroon produces 70,000 to 75,000 barrels of oil a day which was a "drop in the ocean" compared to its neighbours Nigeria and Gabon which are producing millions of barrels a day.

He said the Cameroon government has been "very supportive" and wants to increase its revenues from energy resources. The government has the right to take a 20 per cent stake in Bowleven's activity under a production sharing contract.