Fresh oil find sends shares in Bowleven to new high

BOWLEVEN, the Edinburgh-based explorer which has seen its market value more than double in recent weeks after positive drilling news off the coast of Africa, yesterday said it had found more oil at the site and increased its estimates of the size of the potential discovery.

The company said it now plans to drill the "Sapele-1" exploration well in the Douala Basin off Cameroon deeper than the 4,539 metres already reached in the hope of finding more oil and gas.

Chief executive Kevin Hart, who recently described the well's potential as "transformational" for the company, said yesterday that 2011 "promises to be our busiest year yet with an extensive exploration and appraisal programme planned".

"The ground-breaking Sapele-1 exploration well continues to excite and highlights the potential of the Douala Basin" he added.

Although the firm cautioned that further evaluation was needed, the positive news of oil and gas finds from the well to date has significantly improved its prospects on surrounding acreage in the area.

Yesterday's announcement came two months after Bowleven revealed that the well had made two significant hydrocarbon discoveries and the oil in place figure for the Omnicron Deep level reached by the well has now been upgraded from 55-380 million barrels to 65-430 million barrels.

Bowleven has a 75 per cent stake in the well, along with its US-based farm-in partner Vitol.

The Cameroon government has the right to take a 20 per cent stake in Bowleven's activity under a production sharing contract. Shares in the group rose to a high of 414p before easing back to close at 380p, down 15p on the day, blamed on profit-taking. They have more than quadrupled over the past year with the company's market value rising to more than 800 million. Bowleven also said yesterday that its cash balance at 31 December was around 122m and that it was "well positioned" to fund its forward work programme.

Lionel Therond, an analyst at Fox-Davies, described the latest news as "a very good result" and said that it would de-risk a number of similar prospects for the company in the area.

Phil Corbett of RBS Hoare Govett said details on follow up exploration in the area should also "hopefully become clear in the next couple of months, which we expect will be a powerful driver of positive sentiment".

l Aberdeen-based Dana Petroleum, now the wholly owned subsidiary of Korea National Oil Corporation, said yesterday that the company remained "very encouraged" by the results of its Cormoran-1 well off the coast of Mauritania.

Dana said that the well had established the presence of gas-bearing reservoirs but chief executive Stuart Paton cautioned that "substantial challenges" remain in commercialising gas discoveries in deep water.