Lukoil takes stake in Bowleven’s Cameroon project

Kevin Hart's move described as a 'solid step forward'. Picture: Phil Wilkinson
Kevin Hart's move described as a 'solid step forward'. Picture: Phil Wilkinson
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Oil and gas explorer Bowleven today announced plans to raise about $250 million (£147m) by selling a 50 per cent stake in its project off the coast of Cameroon.

The deal, with Russian energy giant Lukoil and African firm NewAge, will see the Edinburgh-based explorer’s stake in the Etinde development fall from 75 per cent to 25 per cent.

Bowleven chief executive Kevin Hart said the so-called “farm out” deal will strengthen the group’s balance sheet and enable it to focus on its “proven exploration skillset”.

He added: “Bowleven’s strategy is to focus on our core strengths of exploration and appraisal and enable the conversion of resources to reserves, ensuring that we realise value for shareholders at the appropriate time. This transaction endorses the value of Etinde while allowing us ongoing participation in its significant remaining potential.”

Hart added he believed it was the “right time” in the development of Etinde for such a deal.

Analysts at oil research firm SP Angel described the deal as a “solid step forward for the company” as it placed a value on its assets and provided it with flexibility.

“While it will still have to pay its way for the development, the risky end of the programme has been covered and with the additional milestone payments, the monies from NewAge and Lukoil will go some way to meeting those costs,” it said in a note today.

“This is a solid deal for the company, and one which should see investors pleased with the management.”

Under the arrangement, which needs formal approval from the Cameroon government and Bowleven shareholders, Lukoil will acquire a 37.5 per cent interest and NewAge will acquire an additional 12.5 per cent interest in the Etinde Permit to increase its holding to 37.5 per cent.

Camop, a subsidiary of NewAge, will become operator of the Etinde Permit following completion.

Shares in Bowleven closed up 2.25p, or 5.66 per cent, at 42p.