Oil firm awaiting the presidential go-ahead

OIL and gas minnow Bowleven yesterday said it would press ahead with exploratory drilling off Cameroon in May while it awaits the final go-ahead from Cameroon president Paul Biya.

Analysts said the prospects for the well – known as MLHP-5 on the Etinde permit – could be "hugely significant" for the group, with estimates ranging between 104 million to 3.7 billion barrels of oil to be recovered.

In its half-year update, Kevin Hart, the Edinburgh company's chief executive, admitted the estimates provided a "very broad range of outcomes", but said there was a 90 per cent chance the reserves will be at the lower end of the estimate, while there was a 10 per cent chance of finding 3.7 billion barrels or more. The company confirmed it had a leased rig in Limb, Cameroon, awaiting mobilisation to Etinde.

Hart also said the firm was likely to get "first oil" from its first discoveries on Etinde a year ahead of previous estimates. Following a partnership "farm out" deal with Swiss firm Vitol last year, Hart estimated oil from two other appraisal wells would likely come in 2012-13 rather than 2014.

Hart said the next 12 to 18 months were "key" to the company which said it had a cash balance at the end of 2009 of about $110m plus access to a further $100m from Vitol. The firm said it is "more than fully funded" for its planned 2010 work programme. The group reported a 1m profit for the six months ended 31 December 2009.

Last year it spent $15.2m, primarily on seismic and pre-drilling activity on the Etinde Permit. This also included the 1m purchase of shares for the employee benefit trust.

Hart said "provided there aren't too many train wrecks", Vitol would take its option to up its stake in the permit to 50 per cent before September. "We have an exciting six to 12 months," he said. "Hopefully the drill bit will give us the answers. But we are well prepared. From my perspective it is one of the most exciting periods in oil and gas I have ever been involved in."

Phil Corbett, an analyst with RBS, rates the firm a "buy". He said: "The impact on Bowleven of a discovery in line with the mean case would be hugely significant." However, analysts at Evolution said the shares were a "reduce". Shares fell 6.3 per cent to 125.25p.