Interim Results
BowLeven Plc
28 March 2008
28 March 2008
Bowleven plc ('Bowleven' or 'the Company')
Interim Results for six months ended 31 December 2007
Bowleven, the African focused oil & gas company listed on AIM, today announces
its Interim Results for the six months ended 31 December 2007.
Company highlights are as follows:
• Encouraging exploration progress - following completion of
successful three well drilling campaign in Cameroon during 2007,
preparation of an exploitation application for MLHP-7 is now underway.
• Near term drilling programme - IF-1r well drilling expected to
commence April/May 2008 with likely further appraisal wells to follow.
• Further asset base evaluation - substantial high quality
prospect inventory being developed across the Company's portfolio.
• Portfolio expansion - doubled acreage in Cameroon with signing
of new Bomono PSC.
• Financial flexibility - proposed placing of up to approximately
12 million shares announced today strengthens the Group enabling the
timely pursuit of the opportunities in its portfolio.
Commenting, Kevin Hart, Chief Executive Officer, said:
'I am delighted with the progress made by the Group to date. The Company is well
positioned to capitalise on its existing asset base and I am hopeful that the
forthcoming activity across the portfolio will help add to and enhance the value
of our existing resources.'
ENQUIRIES
For further information please contact:
Bowleven plc
Kevin Hart, Chief Executive Officer 00 44 131 524 5656
Kerry Crawford, Deputy Finance Director/ 00 44 131 524 5673
Head of Investor Relations
Brunswick Group LLP
Patrick Handley 00 44 207 404 5959
Deborah Spencer
Hoare Govett Limited 00 44 207 678 8000
Andrew Foster
Notes to the Editor:
Bowleven is an African focused oil and gas group, based in Edinburgh and listed
on AIM since December 2004.
It holds, through its wholly-owned subsidiary EurOil Limited, a 100% equity
interest in the Etinde Permit area being three shallow water blocks in offshore
Cameroon, West Africa; namely Blocks MLHP-5, MLHP-6 and MLHP-7. In total,
Bowleven has approximately 2,300 km(2) of exploration acreage located across the
Rio del Rey and Douala basins in the Etinde Permit with current P50 resources
independently certified as 160 mmboe. EurOil Limited has also recently signed a
new licence (the Bomono Permit) in onshore Cameroon covering approximately 2,328
km(2). in the Douala/Kribi Campo Basin. Bowleven has operated in Cameroon since
1999.
During 2007 the Group completed a successful three well exploration and
appraisal programme in Cameroon that resulted in:
• the flow testing of the E field appraisal well (MLHP-7) at 30mmscfd of
gas and 3,800 bpd of condensate.
• the discovery of the D field (MLHP-5) that tested 26mmscfd of gas and
1,454 bpd of condensate.
• the discovery of gas, condensate and oil 700 feet high to prognosis on
the IF structure (MLHP-7) indicating possible connectivity of the IE and
IF accumulations and a possible 1,300 foot hydrocarbon column.
The Cameroon Government has announced a cooperation agreement with the
Government of Equatorial Guinea to investigate a project to export gas from
Cameroon to the gas liquefaction plant on Bioko Island on Equatorial Guinea. It
is proposed that Limbe would be the gathering hub for any such scheme.
Bowleven also holds, through its wholly-owned subsidiary FirstAfrica Oil
Limited, a 100% equity interest in the EOV Block in offshore Gabon, which
contains an existing oil discovery that it is seeking to develop, and a 50%
equity interest in the Epaemeno Block which is approximately 1,340 km(2) of
exploration acreage in onshore Gabon which sits adjacent to a number of recent
discoveries in surrounding blocks.
The combined independently certified P50 resource base for the Group is
currently 167mmboe.
28 March 2008
Chairman/Chief Executive Officer Statement
Introduction
We are delighted to report that over the last six months your Company has
continued to evolve into a business which is capable of delivering material
organic growth and value creation for its shareholders.
The period has seen advances on a number of fronts as we seek to expand our
exploration portfolio and to add to and commercialise some of our existing P50
resource base of 167 million barrels of oil equivalent.
The main achievements over the last six months in this regard have included:
• Successful three well drilling campaign completed on Cameroon acreage in
2007.
• Obtaining an 18 month exploration extension to September 2009 for the
Etinde Permit, Cameroon.
• Following success of recent drilling, preparation of an exploitation
application for Block MLHP-7 now underway.
• Securing the Trident IV drilling rig for IF-1r well; drilling expected
to commence April/May 2008.
• Progress on development plan for EOV field in Gabon (including further
subsurface evaluation) with sanction possible Q2/Q3 2008.
• Signed the new Bomono PSC area in Cameroon covering approximately 2,328
km(2).
• Developing a substantial high quality prospect inventory across the
Company's portfolio.
Operations
Cameroon
MLHP-7 exploration
Block MLHP-7 is situated in the Rio del Rey petroleum province in south west
Cameroon. This prolific hydrocarbon province is responsible for all of
Cameroon's current hydrocarbon production.
Thirteen wells were drilled on the block between the 1960s and 1980s which
resulted in numerous discoveries. These include the Isongo Marine field
discovered by Mobil and the IE discovery made by Total.
In 2005 the Group acquired the first 3D seismic over the block. Interpretation
of the resulting data has refined and improved our understanding of the
prospectivity of the block. In 2007 the Group drilled an up-dip appraisal well
to the IE discovery which yielded extremely high condensate rates on test. The
IF-1 well was then drilled structurally up-dip to the south of the IE field in
August 2007. Encouraging data was gained from this well prior to its early
abandonment due to a high pressure influx of hydrocarbons. The IF-1r well is
scheduled to be re-drilled by Transocean's Trident IV jack-up rig commencing
April/May 2008. If successful, the intention would be to drill up to two further
appraisal wells on Block MLHP-7 in the following 12 months.
In parallel to preparations for the re-drilling of IF-1r, Bowleven has
undertaken to reprocess the 3D data over Block MLHP-7. This is intended to
enhance imaging over the Miocene age section, the principal objective on the
block. Development of a full prospect inventory based upon the re-processed 3D
volume is scheduled for mid 2008 and the Company believes this work has the
potential to highlight further significant prospects on the block.
Exploitation/commercialisation
We are continuing with our activities to progress the development of our gas/
condensate discoveries in Block MLHP-7. The commercialisation of these resources
has the potential to substantially increase the core value of the Group and
remains the top priority going forward.
An initial study indicates that gas recycling (which allows the initial
stripping out and sale of the condensate with the later production of commercial
gas volumes) could be a feasible option for developing the Block MLHP-7 fields
and further work is continuing on this as an initial route towards commerciality
of our resources.
There also remain a number of options for the sale of gas into Cameroon for
power and industrial use. In addition, the high global demand for LNG (liquified
natural gas) combined with the development of smaller scale liquefaction units,
gives further options for development. The recent announcement of the ownership
structure for the second train at EGLNG (the gas liquefaction plant on nearby
Bioko Island in Equatorial Guinea) has provided momentum to plans for the plants
expansion. This is also encouraging for the subsequent development of gas in
MLHP-7 and any other potential discoveries on our acreage. We continue to work
with the Cameroon government and other industry partners to progress all options
for commercial gas sales in the region.
Against this positive technical and commercial background, we are in the process
of applying for an exploitation authorisation from the Cameroonian authorities
in order to allow us to develop the MLHP-7 fields. The application document is
well advanced and it is expected that it will be submitted towards the end of
April 2008.
MLHP-5 & MLHP-6 exploration
Blocks MLHP-5 and MLHP-6 are located in the Douala basin petroleum province of
southern Cameroon which is characterised by numerous onshore oil seeps.
Exploration in the basin commenced in the early 1950s, culminating in the mid
1980s when activity effectively ceased with only sub-commercial volumes of
hydrocarbons having been found. With the application of modern technology
including 3D seismic, interest in the area is being regenerated. In 2007, The
Group found hydrocarbons with its D-1 well (the first to be drilled on either
block). Numerous other wells drilled on adjoining acreage over the last 18
months have further proved the existence of substantial volumes of gas,
condensate and oil.
Detailed seismic interpretation continues to integrate the drilling results and
to further develop what is already quite a meaningful prospect and lead
inventory, with prospects identified at several stratigraphic intervals on the
acreage.
The majority of new wells in the basin have targeted gas-condensate prone
prospects with a high degree of success. Whilst pursuing these targets, oil has
also been encountered and the Group's priority focus on blocks MLHP-5 and MLHP-6
will be to develop this oil play with a view to drilling a number of high impact
exploration wells.
Farm-out activity
The Group is currently evaluating whether to farm-out part of its position in
the Etinde permit prior to further exploration and appraisal drilling. A
decision will be made based on a thorough analysis of the risk reward
proposition of maintaining 100 percent exposure versus any offer received. In
any event, it is considered unlikely a farm-out will take place until after the
IF-1r well is drilled.
Bomono
A production sharing contract (PSC) was signed for the Bomono permit area,
Cameroon on 12 December 2007. The Bomono permit area comprises onshore blocks
OLHP-1 and 2 and covers approximately 2,328 km(2) in the Douala/Kribi Campo
basin petroleum province. The permit area is characterized by numerous oil seeps
and has not been actively explored since the 1980s. The first phase of the PSC
requires 500km of 2D seismic and one well to be completed within a five year
term. Preparations are underway to commence geological fieldwork later in 2008
and to conduct an airborne geophysics survey in the 2008/2009 dry season. A
seismic programme is expected to commence in 2009.
Gabon
EOV field
Pre-sanction work is continuing for the 7mmbo EOV oil development with a
reservoir development study due for completion in April 2008. This study has
been undertaken to provide additional confidence over the current reserves
estimates for the field, and also to identify further development well
locations. Negotiations are also continuing on evacuation options for oil from
the field. Depending on the results of the reservoir study, the Company will be
in a position to make a decision on project sanction by Q2/Q3 2008. Assuming
sanction at that stage, commercial production from the field could then be
expected in Q2/Q3 2009.
Epaemeno
The PSC for the 1,340 km2 Epaemeno permit area located onshore Gabon entered its
second three year term in August 2007 with an obligation to drill one well prior
to August 2010. The farm-out of 50 percent of the Group's interest in the
Epaemeno PSC to Addax was approved by the Gabonese government in December 2007.
Addax are now preparing to acquire up to 700 km of 2D seismic with activity
expected to commence later in 2008.
Financial Results
This is the first period that the financial statements for the Group have been
prepared under International Financial Reporting Standards (IFRS) as adopted by
the European Union (EU). It is also reporting in US Dollars for the first time,
the revised presentational currency for the Group. A detailed conversion and
restatement document was issued on 20 November 2007, and a copy of this is
available on the Company's website.
The Group reported a loss of $6.6 million for the 6 months ended 31 December
2007 (H1 2006: loss $11.6 million). The main contributor to this loss was
administrative expenses of $9.5 million (H1 2006: $4.4 million). The scale of
this expense reflects the ongoing efforts across the group to properly assess
and exploit the asset base. The overall loss for the period also includes a
$0.9m foreign exchange gain. This is included within finance income and results
primarily from the treatment under IFRS of exchange movements on intra-group
funding arising from the weakening of the US dollar against sterling (H1 2006:
foreign exchange losses of $9m are included within finance costs)
The principal cash outflow during the period under review was the expenditure
of approximately $49 million, primarily on exploration drilling activity.
At the period end, the Company has approximately $55million of net cash and was
fully funded for its committed work programme. However, in order to improve
financial and operational flexibility, the Company announced today the proposed
placing of up to approximately 12 million shares to new and existing
institutional investors. The separate announcement by the Company sets out the
terms of the placing. These additional funds will enable the group to best
pursue the significant exploration opportunities in its existing portfolio.
Board Appointment and strengthening of management team
I am pleased to announce that Ed Willett, who currently serves as Exploration
Director on the Group Management Board, has been appointed as a director on the
Board of Bowleven plc with effect from 28 March 2008.
Kerry Crawford joined us in January 2008 as Deputy Finance Director and Head of
Investor Relations. Kerry will sit on the Group Management Board and is a
welcome addition to the team.
Outlook
It is our vision to build an Africa focused, exploration and production company
which becomes renowned for its ability to consistently create and realise
material shareholder value through exploration led organic growth and niche
acquisitions. Against a backdrop of high oil prices and substantial cost
inflation Bowleven has now amassed what it considers to be a highly prospective
portfolio of exploration acreage. Your Company is well positioned to evaluate
and exploit this position with the overall goal of creating significant value
for shareholders. In addition to pursuing opportunities in our existing asset
portfolio we continue to evaluate new venture opportunities across the West
African province.
Bowleven plc
GROUP INCOME STATEMENT
for the six months ended 31 December 2007
6 months 6 months Year ended
ended ended 30 June 2007
31 Dec 2007 31 Dec 2006 (Audited)
(Unaudited) (Unaudited) (As re-stated)
(As re-stated)
$'000 $'000 $'000
Administration
expenses (9,509) (4,408) (11,649)
Operating loss
Continuing operations (9,509) (4,408) (9,908)
Acquisitions - - (1,741)
(9,509) (4,408) (11,649)
Finance income 2,909 1,845 5,108
Finance costs (27) (9,043) (13,606)
Loss before tax (6,627) (11,606) (20,147)
Tax - - -
Loss for the
period (6,627) (11,606) (20,147)
Basic and
diluted
earnings per
share $(0.09) $(0.33) $(0.37)
Bowleven plc
GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2007
6 months 6 months Year ended
ended ended 30 June 2007
31 Dec 2007 31 Dec 2006 (Audited)
(Unaudited) (Unaudited) (As re-stated)
(As re-stated)
$'000 $'000 $'000
Opening equity
attributableto equity
holders 309,359 121,387 121,387
Currency
translation
differences (872) 12,063 13,728
Total income
recognised
directly in
equity (872) 12,063 13,728
Loss for the
period (6,627) (11,606) (20,147)
Total recognised
income and expenses
attributable to equity
holders for the period (7,499) 457 (6,419)
New shares issued in
respect of employee share
options 1,336 - -
Share based payments 1,048 610 1,539
New shares issued - 131,533 192,852
Closing equity
attributable
to the equity
holders 304,244 253,987 309,359
Bowleven plc
GROUP BALANCE SHEET
As at 31 December 2007
6 months 6 months Year ended
ended ended 30 June 2007
31 Dec 2007 31 Dec 2006 (Audited)
(Unaudited) (Unaudited) (As re-stated)
(As re-stated)
$'000 $'000 $'000
Non-current assets
Intangible
exploration
assets 179,964 58,697 149,709
Property plant
and equipment 68,940 724 63,932
248,904 59,421 213,641
Current assets
Inventory 7,080 8,238 7,802
Trade & other
receivables 1,874 21,660 2,080
Other
financial
assets - 18,007 -
Cash and cash
equivalents 54,614 155,153 105,307
63,568 203,058 115,189
TOTAL ASSETS 312,472 262,479 328,830
Current liabilities
Trade and
other payables 8,228 8,492 19,471
Total current
liabilities 8,228 8,492 19,471
Net assets 304,244 253,987 309,359
Equity attributable to equity
holders of the parent
Called-up share capital 14,451 11,420 14,378
Share premium 341,321 281,696 340,058
Foreign currency
translation 12,856 12,063 13,728
Other reserves 8,431 6,454 7,383
Retained earnings (72,815) (57,646) (66,188)
Total equity
attributable to the equity
shareholders 304,244 253,987 309,359
Bowleven plc
GROUP CASH FLOW STATEMENT
For the six months ended 31 December 2007
6 months 6 months Year ended
ended ended 30 June 2007
31 Dec 2007 31 Dec 2006 (Audited)
(Unaudited) (Unaudited) (As re-stated)
(As re-stated)
$'000 $'000 $'000
Cash flows used in operating
activities
Cash used in
operations (5,075) (37,349) (22,176)
Interest paid (27) - (19)
Net cash used
in operating
activities (5,102) (37,349) (22,195)
Cash flows used in investing
activities
Expenditure on
intangible
exploration
assets (42,261) (11,439) (70,755)
Expenditure on
property,
plant and
equipment (6,531) (184) (5,149)
Interest
received 2,010 1,845 5,108
Acquisitions - - (962)
Net cash used
in investing
activities (46,782) (9,778) (71,758)
Cash flows from financing
activities
Proceeds from
issue of
shares 1,336 131,417 140,818
Pre-acquisition
loan
advanced to
First Africa
Oil (26,071)
Net cash flows
from financing
activities 1,336 131,417 114,747
Net
(decrease)/increase
in cash
and cash
equivalents (50,548) 84,290 20,794
Opening cash
and cash
equivalents at
beginning of
period 105,307 77,108 77,108
Exchange
(losses)/gains
on cash and
cash
equivalents (145) 11,762 7,405
Closing cash
and cash
equivalents 54,614 173,160 105,307
Bowleven plc
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
For the six months ended 31 December 2007
6 months 6 months Year ended
ended ended 30 June 2007
31 Dec 2007 31 Dec 2006 (Audited)
(Unaudited) (Unaudited) (As re-stated)
(As re-stated)
$'000 $'000 $'000
Operating loss (9,509) (4,408) (11,649)
Depreciation 231 172 353
Loss on
disposal of
property,
plant and
equipment - - 73
Decrease/(increase)
in
stocks 722 (7,492) (5,769)
Decrease/(increase)
in
debtors 125 (23,577) 679
Increase/(decrease)
in
creditors 2,111 767 (1,814)
Exchange
differences 197 (3,421) (5,704)
Share
options/LTIP
charge 1,048 610 1,539
Non-cash
payment of
director's
share option
scheme dues - - 116
Net cash
outflow from
operating
activities (5,075) (37,349) (22,176)
Bowleven plc
NET FUNDS
For the six months ended 31 December 2007
At 1 July 2007 Cash flow Exchange At 31 December
movements 2007
$'000 $'000 $'000 $'000
Cash at bank 6,212 (3,994) - 2,218
Short term
deposits 99,095 (46,553) (146) 52,396
Cash and cash
equivalents/net
funds 105,307 (50,547) (146) 54,614
6 months ended 6 months ended Year ended
31 Dec 2007 31 Dec 2006 30 June 2007
(Unaudited) (Unaudited) (Audited)
(As re-stated) (As re-stated)
$'000 $'000 $'000
Cash at bank 2,218 15,847 6,212
Short term
deposits 52,396 139,306 99,095
Cash and cash
equivalents 54,614 155,153 105,307
Other
financial
assets - 18,007 -
Net funds 54,614 173,160 105,307
1. ACCOUNTING POLICIES
Basis of Preparation
This Interim Report has been prepared on a basis consistent with the accounting
policies expected to be applied for the year ended 30 June 2008. AIM
(Alternative Investment Market) listed companies are required to report under
International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU) for financial years commencing on or after 1 January 2007. The first
results to be prepared on this basis are the company's Interim Results for the
six months ending 31 December 2007. The company will present its first annual
report and accounts under IFRS for the year ended 30 June 2008.
The company issued a 'Restatement of 2006-07 Results from UK GAAP (United
Kingdom Generally Accepted Accounting Practices) to IFRS' document on 20
November 2007 that highlighted the principal accounting differences between IFRS
and UK GAAP. This restatement document contained revised accounting policies
under IFRS and presented restated financial information under IFRS in
conjunction with reconciliations between UKGAAP and IFRS.
The disclosed figures are not statutory accounts in terms of section 240 of the
Companies Act 1985. Statutory accounts for the year ended 30 June 2007, on which
the auditors gave an unqualified report, have been filed with the Registrar of
Companies.
Comparative information
Comparative information for the six months to 31 December 2006 and for the
twelve months to 30 June 2007 have been restated to comply with the IFRS
accounting policies as contained within the above mentioned restatement
document. As discussed below, this comparative information was also restated in
US$ in this document following a revision to the presentational currency of the
group. Foreign currency exchange differences in the Income Statement have also
been reclassified. Those previously recorded within administrative expenses have
been reclassified within finance costs in the Income Statement.
a) Change in Oil and Gas Accounting policy
In preparing the accounts for the twelve months to 30 June 2007, Bowleven
followed the full cost method of accounting for oil and gas assets. Under this
method, all expenditure incurred in connection with the acquisition,
exploration, appraisal and development of oil and gas assets was initially
capitalised. Following the implementation of IFRS Bowleven has changed its
accounting policies for both exploration/appraisal assets and development/
production assets (including in property, plant and equipment) to successful
efforts based policies. The comparative information for the six months to 31
December 2006 and the 12 months to 30 June 2007 have been restated accordingly.
Further details can be found in the restatement document discussed above.
b) Change in Presentational Currency
The functional currency of Bowleven plc, the ultimate parent company of the
Group, is sterling. These financial statements have been presented in US$. This
is a change from 30 June 2007 when the financial statements were presented under
UK GAAP in the functional currency of the ultimate parent company (sterling). As
it is deemed to be more appropriate to present the financial statements in line
with the functional currency of the majority of the Group the comparative
information provided has been revised to reflect this change.
2. OTHER NOTES
a) The basic earnings per ordinary share is calculated on a loss of
$6,627,000 (H1 2006 restated: loss of $11,606,000) on a weighted average of
74,643,415 (H1 2006: 35,569,899) ordinary shares.
b) In respect of the six months to 31 December 2007, 861,254 potential
ordinary shares were anti-dilutive.
c) No dividend has been declared (2006: nil).
3. INTERIM REPORT
This document represents the Interim Report and half yearly results of Bowleven
plc. Copies of the Interim Report will be sent to shareholders and can be
obtained, free of charge, from the Company at 1 North St Andrew Lane, Edinburgh,
EH2 1HX for a period of one month
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
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