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BowLeven Plc (BLVN)

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Wednesday 08 November, 2017

BowLeven Plc

Preliminary Results Announcement

RNS Number : 8509V
BowLeven Plc
08 November 2017
 



8 November 2017

 

Bowleven plc ('Bowleven' or 'the Company')

 

Preliminary Results Announcement

Bowleven, the Africa focused oil and gas exploration group traded on AIM, today announces its preliminary results for the year ended 30 June 2017.

 

HIGHLIGHTS

Operational

Etinde, offshore Cameroon

 

·    Ongoing operator evaluation of development options, including scope for early-stage development plans that align with the Government's preferred offtake solutions.

·    Two carried appraisal well locations agreed with our partners targeting combined additional in-place volumes of up to 2 tcf of gas and associated liquid resource; drilling to progress once agreed by the Etinde JV partners.

Bomono, onshore Cameroon

·    Bomono development concept defined to access existing Cameroon infrastructure and potential monetisation route.

·    Prospect inventory compiled highlighting both Tertiary and Cretaceous prospectivity.

Other

·    Pre-March 2017, the Board signed an agreement to farm out 80% of the Group's interest in the Bomono Production Sharing contract to Victoria Oil & Gas Plc ("VOG"). The commercial terms and legal documentation remain the subject of negotiations owing to various stakeholder discussions.

·    Cameroon Government approval for the completion of this farm-out arrangement has not been received to date.

·    Impairment of Bomono Intangible exploration asset by $46 million, reflecting the impact of the VOG farm-in agreement on the asset valuation.

 

Corporate

·    Group cash balance at 30 June 2017 circa $86 million; no debt. No outstanding work programme commitments.

·    Under the Etinde transaction, access to further $40 million (net) carry for two appraisal wells (including testing) and $25 million at FID.

·    Completed organisational restructuring commensurate with our non operated portfolio giving rise to significant G&A cost reductions.  

 

OUTLOOK

Key objectives for the next 12 months include:

·    Ongoing focus maintaining the significant reduction in G&A into FY2018

 

·    Ensuring our capital is rigorously guarded to maximise value of every dollar invested for our shareholders

 

·    Working with our partners on Etinde development options and on the appraisal drilling programme in 2018

 

·    Leveraging partner relationships in de-risking Bomono.

 

 

Eli Chahin, Chief Executive Officer of Bowleven plc, said:

"After a year of significant strategic change for Bowleven, I am confident that the Company is well placed to support the advancement of its existing asset base in Cameroon and has the potential to deliver shareholder value into 2018 and beyond.  

 

We enter the year with  a strong cash balance and a deferred consideration structure in place post completion of the Etinde farm-out transaction, no debt or outstanding work programme commitments. Additionally, we have scaled back the overhead base of the organisation, but retained a fit for purpose operating model from which to progress the monetisation of our assets.

 

On Etinde, we anticipate commencing a tightly managed appraisal drilling campaign, according to a comprehensive plan developed with our joint venture partners. In Bomono, we have maintained the farm-in option with Victoria Oil and Gas, which allows us to leverage their infrastructure, but as a non-operator. Key to our business model is partnering, whilst continuing to scrutinise work programme costs and exercise capital discipline wherever possible.

 

As an experienced and focused management team, we move forward from a position of financial strength, confident that we can meet future demands and protect our interests in Cameroon, whilst at the same time maximising value for all shareholders."

 

ENQUIRIES

For further information please contact:

 

Bowleven plc


Eli Chahin, Chief Executive

00 44 131 524 5678



Brunswick Group LLP


Patrick Handley

00 44 207 404 5959

Will Rowberry




Cenkos Securities plc (NOMAD)


Derrick Lee

00 44 131 220 6939

Neil McDonald


 

This announcement may include statements that are, or may be deemed to be "forward-looking statements".  These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "projects", "expects", "intends", "may", "will", "seeks" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions.  These forward-looking statements include all matters that are not historical facts.  They include statements regarding the Company's intentions, beliefs or current expectations concerning, amongst other things, the results of operations, financial conditions, liquidity, prospects, growth and strategies of the Company and its direct and indirect subsidiaries (the "Group") and the industry in which the Group operates.  By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.  Forward-looking statements are not guarantees of future performance.  The Group's actual results of operations, financial conditions and liquidity, and the development of the industry in which the Group operates, may differ materially from those suggested by the forward-looking statements contained in the announcement.  In addition, even if the Group's results of operations, financial conditions and liquidity, and the development of the industry in which the Group operates, are consistent with the forward-looking statements contained in the announcement, those results or developments may not be indicative of results or developments in subsequent periods.  In light of those risks, uncertainties and assumptions, the events described in the forward-looking statements in the announcement may not occur.  Other than in accordance with the Company's obligations under the AIM Rules for Companies, the Company undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.  All written and oral forward-looking statements attributable to the Company or to persons acting on the Company's behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in the announcement.

 

Notes to Editors:

Bowleven plc is an African focused oil and gas group, based in London and traded on AIM. It is dedicated to realising material shareholder value from its assets in Cameroon, whilst maintaining capital discipline and employing a rigorously selective approach to other value-enhancing opportunities.

 

Bowleven holds equity interests in three blocks in Cameroon, with one block located offshore in shallow water (operated by NewAge) and two onshore (operated by Bowleven), which are currently the subject of a farm-out transaction for 80 % interest.

 

Notes to Announcement: 

1.  The technical information in this release has been reviewed by David Clarkson, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies.  David Clarkson, Chief Operating Officer of Bowleven plc, is a Chartered Engineer and Fellow of the Institution of Mechanical Engineers with extensive oil and gas industry experience. 

2.  The information in this release reflects the views and opinions of Bowleven and has not been reviewed in advance by its joint venture partners.

 

CHAIRMAN'S REVIEW

 

2017 has been a transformative year for Bowleven, both in terms of its Board and its operating model.

 

Responding to Shareholders

 

Crown Ocean Capital P1 Limited ("Crown Ocean"), then and now a major shareholder of the Company, approached Eli Chahin and myself around the turn of the year. They shared their analysis of the Group's historic strategy, which had pursued expensive and unsuccessful exploration activities that resulted in significant value destruction to shareholders. They asked us if we would be prepared to be nominated as directors of Bowleven and we each agreed to stand for election as independent directors.

 

Board Changes

 

A General Meeting was requisitioned and, as shareholders now know, on 14 March 2017 Eli Chahin and I were elected Directors and the then Chief Executive Officer, Chief Financial Officer and three of the Non-Executive Directors were removed from office. David Clarkson, the Chief Operating Officer, was not the subject of a requisition to remove him and remained in post as COO.

 

On 30 March, it was announced that Billy Allan had resigned from the Board and I became Chairman of the Company. On 3 April it was announcement that Eli Chahin had been appointed as Chief Executive Officer and Joe Darby joined the board as Non-Executive Director, bringing extensive oil and gas experience. With David Clarkson, we were a newly constituted Board, determined to refocus the company's strategy on maximising value from our existing assets and reducing corporate expenses.  Subsequent discussions which we conducted with our institutional shareholders, confirmed that this strategy enjoys strong support throughout our shareholder base.

 

New Leadership

 

Six months have passed in which we have swiftly put this strategy into action. I would like to pay tribute to Eli Chahin for his bold and efficient leadership and to David Clarkson for his tireless efforts in support, which have allowed the Bowleven Group to achieve such a material transformation in such a short period of time.

 

Our overhead base has been substantially reduced with new exploration activity costs virtually eliminated.  We have relocated our head office from a large prestigious Edinburgh building to a small operation near London Bridge. This has resulted in a reduction in full time employees from 40 to fewer than ten, a workforce which has proven to be sufficient and effective for the Company's activities.  These were challenging steps for the individuals affected, and the Board would like to thank both current and former employees for their co-operation and patience during a difficult period. The Board is now able to look forward to executing its strategy from a sustainable footing. That is to maximise the value of both our  25% Etinde offshore interest (prior to SNH back-in)and our interest in Bomono, utilising the prospective arrangement with Victoria Oil & Gas plc, and dealing with any future demands for funding of these investments through careful deployment of the Company's $86 million cash balance.

Delivering Value

 

With Crown Ocean's representative, Matt McDonald, having recently joined the Board, we are completely aligned on our ambition to deliver value for all shareholders. We are looking forward to  the new operating model for the Group and the value of our Etinde and Bomono assets being recognised in the Bowleven share price, as progress towards monetisation of these fields materialises during 2018.

 

Chris Ashworth

Chairman

7 November 2017

 

 

CHIEF EXECUTIVE'S REVIEW

 

2017 was a year of significant change for Bowleven. Having substantially reduced the operating costs and maintained a strong balance sheet, the Company is well positioned to develop its assets.

 

As an incoming CEO, considerable effort was spent in engaging stakeholders to ensure the disruptive start to 2017 would result in a positive transformative change. Whilst the work is ongoing, Bowleven now has in place a fit-for-purpose organisation and business model that have the potential to deliver shareholder value into 2018 and beyond.

 

The Board has strongly supported the turnaround agenda, and within a short period, the Company right sized  its cost base, initiated a more disciplined approach towards capital allocation and retained the capacity to deliver meaningful progress in  its Etinde and Bomono assets. 

 

With a small central team we have been able to leverage our stakeholder relationships to navigate the complexity of these acreage developments with a view to delivering value from our assets.

 

This focus has delivered the positive progress made with Société Nationale des Hydrocarbures ("SNH") in Etinde, which has indicated support for the appraisal drilling programme  that supports an economically viable FLNG scheme. In Bomono, we have maintained the farm in option with Victoria Oil and Gas, which allows us to leverage their infrastructure, but as a non-operator. Key to our business model is partnering,  whilst continuing to scrutinise work programme costs and exercise capital discipline wherever possible.

 

Our capital discipline is underpinned by a strong financial position, which will remain a recurring theme into next year. With a strong cash balance and a deferred consideration structure in place post completion of the Etinde farm-out transaction, no debt or outstanding work programme commitments, the Group is well placed financially to progress its existing asset base.

 

The prolonged downturn in the industry is creating opportunities for Bowleven by providing the ability to access lower development costs for its assets and to continue to challenge cost efficiency in the investment cycle. With its robust financial position, Bowleven is in an ideal position to capitalise on these opportunities as they arise.  We remain determined and committed to challenging costs and proper capital allocation in operational delivery. The farm-in agreement with Victoria Oil & Gas Plc in respect of the Bomono licence area, has de-risked our funding obligations whilst retaining some long term ability to extract some shareholder value, notwithstanding the reduction in the Group's share of the asset. However, contractual terms of the farm-in as agreed by the previous Board, provide limited financial value for the 80 % of the asset transferred to VOG and efforts continue to mitigate the associated contingent liabilities.

 

Our discussions with VOG to date have suggested that there is limited prospects of negotiating more favourable commercial terms.  Should the farm-in arrangement with VOG not complete,  the Group will not be in a position to present the Government with an alternative development plan for the licence area in the remaining time before the existing agreement terminates in December 2018.

Furthermore, there is a risk that the Government will not approve a further extension to the Exploration Authorisation. In which case, any PEA would cease to be valid. Therefore, when considering these risks as a whole, the Board deems it unlikely that Government will seek to extend the existing licence any further at the current time without attaching additional work commitments.

 

Given the ongoing negotiations and fundamental uncertainties, the recoverable amount of the Bomono asset has been determined to be zero at the current time, resulting in an impairment charge of $45.6 million (2016: $61.0 million) in the Income Statement as detailed in the financial statements.

 

The focus on reducing G&A costs through organisational and work-process efficiencies was taken to a new level towards the end of the financial year. The ongoing costs savings will significantly reduce the Group's Corporate G&A footprint in both the UK and Cameroon. The Board is now focused on agreeing similar G&A efficiencies with the Operator of the Etinde asset. The outlook for Etinde is encouraging, and as the  proposed appraisal well drilling programme materializes, this has important implications for the Company.

 

OUTLOOK

 

Much progress has been made and the benefits of the relentless effort will be clearer into 2018. The task in hand is clear. We are determined to protect cash, maintain capital discipline and optimise the value and return from our assets.

 

We will continue to focus on a strategy that preserves our financial robustness within the context of developing our assets in a manner that manages the risks and creates value over the longer term. The potentially transformational Etinde appraisal drilling campaign during 2018 will enable us to further define the asset monetisation route for this potentially world class asset. The operating model is fit for purpose and I look forward to FY2018 and beyond as we grow shareholder value.

 

Eli Chahin

Chief Executive Officer

7 November 2017

 

Group Income Statement

for the year ended 30 June 2017



2017

$'000

2016

$'000

 

Revenue


-

 

-

 

Administrative expenses


(11,720)

(9,085)

Impairment charge


(45,589)

(122,305)

Unsuccessful exploration costs


-

(11,816)

Operating loss before financing costs


(57,309)

(143,206)





Finance income


3,617

13,937

Loss from continuing operations before taxation


(53,692)

(129,269)

 

Taxation


-

-

Loss for the Year from Continuing Operations


(53,692)

 (129,269)





Loss attributable to:




Owners of the parent undertaking


(53,692)

 (125,632)

Non-controlling interest


-

(3,637)

 

Basic and diluted loss per share

($/share) from continuing operations


(0.17)

(0.39)

 

Statements of Comprehensive Income

for the year ended 30 June 2017

 

Group






2017

$'000

2016

$'000

Loss for the year


(53,692)

(129,269)





Other Comprehensive Income:




Items that will be reclassified to profit and loss:




Currency translation differences


(3,183)

(15,794)

Total Comprehensive Loss for the Year


(56,875)

(145,063)

Attributable to:




Owners of the parent undertaking


(56,875)

(141,426)

Non-controlling interest


-

(3,637)





Company






2017

$'000

2016

$'000

Loss for the year


(49,460)

(57,735)





Other Comprehensive Income:




Items that will be reclassified to profit and loss:




Currency translation differences


(7,905)

(76,057)

Total Comprehensive Loss for the Year


(57,365)

(133,792)

 

Group Balance Sheet

30 June 2017



2017

$'000

2016

$'000

Non-current Assets




Intangible exploration assets


172,698

213,669

Property, plant and equipment


177

853



172,875

214,522





Current Assets




Inventory


2,353

3,650

Trade and other receivables


2,242

2,955

Deferred consideration


39,679

54,688

Bank deposits


500

500

Cash and cash equivalents


85,307

88,026



130,081

149,819

Total Assets


302,956

364,341





Current Liabilities




Trade and other payables


(1,511)

(2,366)

Total Liabilities


(1,511)

(2,366)

Net Assets


301,445

361,975





Equity




Called-up share capital


56,186

55,504

Share premium


861

-

Foreign exchange reserve


(71,843)

(68,660)

Other reserves


4,730

15,102

Retained earnings


311,511

359,998

Total Equity


301,445

361,944




Owners of the parent undertaking


301,445

361,944

Non-controlling interest


-

31

Total Equity


301,445

361,975

 

Company Balance Sheet

30 June 2017



2017

$'000

2016

$'000

Non-current Assets




Property, plant and equipment


171

404

Investments


216,602

274,787



216,773

275,191





Current Assets




Trade and other receivables


1,180

1,084

Bank deposits


500

500

Cash and cash equivalents


84,936

86,605



86,616

88,189

Total Assets


303,389

363,380





Current Liabilities




Trade and other payables


(997)

(1,788)

Total Liabilities


(997)

(1,788)

Net Assets


302,392

361,592





Equity




Called-up share capital


56,186

55,504

Share premium


861

-

Foreign exchange reserve


(154,652)

(146,747)

Other reserves


1,246

9,798

Retained earnings


398,751

443,037

Total Equity


302,392

361,592

 

The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the individual parent undertaking Income Statement. The result for the Company for the year was a loss of $49,460,000 (2016: loss of $57,735,000).

Group Cash Flow Statement

for the year ended 30 June 2017                                                                              



2017

$'000

2016

$'000

Cash Flows from Operating Activities




Loss before tax


(53,692)

(129,269)





Adjustments to reconcile Group loss before tax to net cash used in operating activities:


 

Depreciation of property, plant and equipment


249

655

Impairment charge


45,589

122,305

Unsuccessful exploration costs


-

11,816

Finance income


(3,617)

(13,937)

Equity-settled share based payment transactions


802

1,332

Loss on sale of property, plant and equipment


310

21

Adjusted loss before tax prior to changes in working capital


(10,359)

(7,077)

 

Decrease in inventory


1,297

1,720

Decrease/(Increase) in trade and other receivables


1,209

(423)

(Decrease) in trade and other payables


(246)

(807)

Exchange differences


93

(354)

Net Cash used in Operating Activities


(8,006)

(6,941)





Cash Flows from/(used in) Investing Activities




Net proceeds from deferred consideration arising from sale of intangible exploration assets in prior years


15,000

-

Purchases of property, plant and equipment


(292)

(390)

Purchases of intangible exploration assets


(5,675)

(47,821)

Receipts from sale of property, plant and equipment


443

40

Interest received


659

450

Net Cash from/(used in) Investing Activities


10,135

(47,721)





Cash Flows used in Financing Activities




Proceeds from issue of share capital


1,543

-

Purchase of Treasury shares


(2,566)

-

Shares purchased by EBT


(3,434)

(186)

Net Cash Flows used in Financing Activities


(4,457)

(186)





Net Decrease in Cash and Cash Equivalents


(2,328)

(54,848)





Effect of exchange rates on cash and cash equivalents


(391)

(1,877)

Cash and cash equivalents at the beginning of the year


88,026

144,751

Cash and Cash Equivalents at the Year End


85,307

88,026

 

 

Company Cash Flow Statement

for the year ended 30 June 2017



2017

$'000

2016

$'000

Cash Flows from Operating Activities




Loss before tax


(49,460)

(57,735)





Adjustments to reconcile Company loss before tax to net cash used in operating activities:

 

Depreciation of property, plant and equipment


236

231

Impairment of investment


58,147

64,148

Finance income


(3,609)

(14,337)

Equity-settled share based payment transactions


753

1,239

Dividend received


(15,000)

-

Loss on disposal of fixed assets


264

-

Adjusted loss before tax prior to changes in working capital


(8,669)

(6,454)





Decrease in trade and other receivables


578

910

Decrease in trade and other payables


(278)

(414)

Exchange differences


73

122

Net Cash used in Operating Activities


(8,296)

(5,836)





Cash Flows from/(used in) Investing Activities




Dividend from subsidiary undertaking


15,000

-

Proceeds from the sale of fixed assets


11

-

Funding to subsidiaries


(4,635)

(47,695)

Loan to subsidiary in respect of Employee Benefit Trust funding


(2,715)

-

Purchases of property, plant and equipment


(291)

(385)

Interest received


659

450

Net Cash from/(used in) Investing Activities


8,029

(47,630)





Cash Flows (used-in)/from Financing Activities




Proceeds from issue of share capital


1,543

444

Purchase of Treasury shares


(2,566)

-

Net Cash Flows (used-in)/from Financing Activities


(1,023)

444





Net Decrease in Cash and Cash Equivalents


(1,290)

(53,022)





Effect of exchange rates on cash and cash equivalents


(379)

(1,948)

Cash and cash equivalents at the beginning of the year


86,605

141,575

Cash and Cash Equivalents at the Year End


84,936

86,605

 


Group Statement of Changes in Equity

for the year ended 30 June 2017

The format of the Group Statement of Changes in Equity has been changed slighly to improve the clarity of presentation.


Called-up

 share capital

$'000

 

 

 

Share Premium

$'000

Foreign exchange reserve

$'000

Other

reserves

$'000

Retained earnings

$'000

Attributable to owners of parent company

$'000

Non-controlling interests

$'000

 

Total

equity

$'000

At 1 July 2015

55,060

-

(52,866)

15,309

485,949

503,452

2,440

505,892

Loss for the year

-

-

-

-

(125,632)

(125,632)

(3,637)

(129,269)

Other comprehensive income for the year

-

-

(15,794)

-

-

(15,794)

-

(15,794)

Total comprehensive income for the year

-

-

(15,794)

-

(125,632)

(141,426)

(3,637)

(145,063)

Proceeds from issue of share capital

444

-

-

(444)

-

-

-

-

Share based payments

-

-

-

1,332

-

1,332

-

1,332

Transfer between reserves

-

-

-

(909)

(319)

(1,228)

1,228

-

Shares purchased by EBT

-

-

-

(186)

-

(186)

-

(186)

At 30 June 2016

55,504

-

(68,660)

15,102

359,998

361,944

31

361,975

Loss for the year

-

-

-

-

(53,692)

(53,692)

-

(53,692)

Other comprehensive income for the year

-

-

(3,183)

-

-

(3,183)

-

(3,183)

Total comprehensive income for the year

-

-

(3,183)

-

(53,692)

(56,875)

-

(56,875)

Proceeds from issue of share capital

682

861

-

-

-

1,543

-

1,543

Share based payments

-

-

-

802

-

802

-

802

Transfer between reserves

-

-

-

(6,788)

6,819

31

(31)

-

Transfer from EBT reserve

-

-

-

1,614

(1,614)

-

-

-

Purchase of Treasury shares

-

-

-

(2,566)

-

(2,566)

-

(2,566)

Shares purchased by EBT

-

-

-

(3,434)

-

(3,434)

-

(3,434)

At 30 June 2017

56,186

861

(71,843)

4,730

311,511

301,445

-

301,445

 

 


Company Statement of Changes in Equity

for the year ended 30 June 2017

The format of the Company Statement of Changes in Equity has been changed slighly to improve the clarity of presentation.

Attributable to Owners of Parent Company


Called-up

share capital

$'000

Share premium

$'000

Foreign exchange reserve

$'000

Other

reserves

$'000

Retained earnings

$'000

 

Total

equity

$'000

At 1 July 2015

55,060

-

(70,690)

9,993

499,862

494,225

Loss for the year

-

-

-

-

(57,735)

(57,735)

Other comprehensive income for the year

-

-

(76,057)

-

-

(76,057)

Total comprehensive income for the year

-

-

(76,057)

-

(57,735)

(133,792)

Proceeds from issue of share capital

444

-

-

-

-

444

Share based payments

-

-

-

1,332

-

1,332

Transfer between reserves

-

-

-

(1,527)

1,527

-

Transfer from EBT

-

-

-

-

(617)

(617)

At 30 June 2016

55,504

-

(146,747)

9,798

443,037

361,592

Loss for the year

-

-

-

-

(49,460)

(49,460)

Other comprehensive income for the year

-

-

(7,905)

-

-

(7,905)

Total comprehensive income for the year

-

-

(7,905)

-

(49,460)

(57,365)

Proceeds from issue of share capital

682

861

-

-

-

1,543

Share based payments

-

-

-

802

-

802

Purchase of Treasury shares

-

-

-

(2,566)

-

(2,566)

Transfer between reserves

-

-

-

(6,788)

6,788

-

Transfer from EBT

-

-

-


(1,614)

(1,614)

At 30 June 2017

56,186

861

(154,652)

1,246

398,751

302,392

 

NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2017

 

(1)        Accounting Policies

Basis of preparation 

The financial information in the preliminary financial statements has been extracted from the statutory accounts which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial assets and liabilities (including derivative instruments). The preliminary announcement has been prepared on a basis consistent with the accounting policies applied to the statutory accounts for the year ended 30 June 2017.

 

Bowleven plc as a company operates using a functional currency of Great British Pounds. These financial statements are presented in United States Dollars, the Group's presentation currency, rounded to the nearest $'000.

 

The disclosed figures are not statutory accounts in terms of section 434 of the Companies Act 2006. The statutory accounts give full disclosure of the Group accounting policies and are scheduled to be posted to shareholders on 20 November 2017 and will be filed with the Registrar of Companies in due course. On the statutory accounts for the year ended 30 June 2017 and 30 June 2016, the auditor gave an unqualified opinion that did not contain an emphasis of matter and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The statutory accounts for the year ended 30 June 2016 have been filed with the Registrar of Companies.

 

Going concern 

After making enquiries, the Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis as the Directors are of the opinion that the Group has sufficient funds to meet ongoing working capital and committed capital expenditure requirements. In making this assessment, the Directors considered the Group budgets, the cash flow forecasts and associated risks.

 

(2) Other Notes

 

a)   The loss attributable to ordinary shares and the number of ordinary shares for the purpose of calculating the diluted earnings per share are identical to those used in the basic earnings per share. The exercise of share options or warrants would have the effect of reducing the loss per share and consequently are not taken into account. In the prior year, the loss attributable to ordinary shares and the number of ordinary shares for the purpose of calculating the diluted earnings per share were identical to those used in the basic earnings per share.

 

b)   Directors have not recommended a dividend (2016: nil).

 

c)   An impairment charge of circa $45.6 million on Bomono has been recognised following a review of the asset carrying values, following the conclusion of  initial discussions with Victoria Oil & Gas plc ("VOG"), an AIM listed oil and gas utility business with operations in Cameroon, to sell 80 % of its Investment in the Bomono PSC, subject to the finalisation of a number of conditions precedent, the most significant of which related to the receipt of Governmental approval, further extension of the licence term and the award of a PEA. The Group have used this contractual arrangement as providing a reasonably definitive third party valuation point for the Bomono exploration asset at 30 June 2017. The principal consideration for the asset transfer is a royalty against future gas sales from the Moambe well, along with a small amount of VOG shares and a carry of up to $3 million in value against an estimate of $6 million capital cost to bring the existing gas to market. The carry is subject to a claw back arrangement under which Bowleven might repay up to $2 million. In respect of the royalty agreement, there is some uncertainty regarding both the gas selling price, where there is a range of possible gas selling prices based on the agreement with VOG, upon which the royalty would be calculated and the amount of gas that would be produced from the Moambe well. As a result, we are not able to determine the net present value of the royalty at the current time with sufficient reliability to estimate the net present value of Bowleven's continuing 20 % share of the Bomono licence under the commercial terms agreed with VOG. Given the ongoing negotiations and fundamental uncertainties, the recoverable amount of the Bomono asset has been determined to be zero resulting in an impairment charge of $45.6 million (2016: $61.0 million) in the Income Statement.

 

d)   As at 30 June 2017 there is a current financial asset of $39.7 million (2016: $54.7 million) arising from the Etinde farm-out. The amount relates to the deferred consideration relating to the appraisal drilling carry. $15 million deferred cash consideration was received on 30 September 2016.

 

e)   As at 30 June 2017, a contingent asset of $25 million is disclosed for the FID consideration relating to the Etinde farm-out and will be credited to intangible exploration assets once further clarity around Etinde project sanction/FID is obtained.

 

f)    In the Company Balance Sheet, an impairment review of the carrying value of the investment in Bowleven Resources Limited was carried out following the impairment of the Bomono asset in the year (held by Bowleven Resources Limited). As a result of the impairment review a charge of $58.1 million has been recognised against the investment in Bowleven Resources Limited. This adjustment does not impact the Group results.

 

g)   The Company initiated a share buyback programme on 19 August 2016 for a maximum aggregate consideration of up to $10 million, the purpose being to reduce the outstanding issued share capital of the Company. The programme ceased in December 2016. As at the date of this release, the Company has repurchased 7,807,281 shares into treasury, having a nominal value of £780,281. The aggregate amount of consideration paid by the Company for those shares was £2,566,000.

 

(3) 2017 Annual Report and Accounts

 

Full accounts are scheduled to be posted on 20 November to shareholders who elected to continue to receive a hard copy report and can be obtained, free of charge, at the Company's registered office, 50 Lothian Street, Edinburgh, EH3 9WJ for a period of one month. For shareholders who opted to receive the annual report electronically notification will be provided when the annual report is available to access from the company website www.bowleven.com.

 

GLOSSARY

 

                                                 

ABI

Association of British Insurers

Adamantine

Adamantine Energy (Kenya) Limited, the operator of, and holder of a 50% participating interest in block 11B

AGM

annual general meeting

AIM

Articles of Association

the market of that name operated by the London Stock Exchange

the internal rules by which a company is governed

bbl

barrel of oil

bcf or bscf

billion standard cubic feet of gas

block 11B

the production sharing contract between the Republic of Kenya, Adamantine Energy (Kenya) Limited and Bowleven (Kenya) Limited dated 30 May 2012, in respect of the area of approximately 14,287 km² onshore Kenya and designated as block 11B; or, as the context may require, the contract area to which this production sharing contract relates

Board of Directors

the Directors of the Company

boe

barrels of oil equivalent

Bomono Permit

the production sharing contract between the Republic of Cameroon and EurOil Limited, dated 12 December 2007, in respect of the area of approximately 2,328km² comprising former blocks OLHP-1 and OLHP-2 onshore Cameroon; or, as the context may require, the contract area to which that production sharing contract relates

Bowleven

Bowleven plc (LSE: BLVN) and/or its subsidiaries as appropriate

Bowleven (Kenya) Limited / Bowleven Kenya

Bowleven (Kenya) Limited, an affiliate of the Company, incorporated in Scotland

CFA

Companies Act 2006 ('the Act')

Central African CFA Francs

the United Kingdom Companies Act 2006 (as amended)

Company

Bowleven plc

contingent resources

those quantities of hydrocarbons that are estimated to be potentially recoverable from known accumulations, but which are not currently considered to be commercially recoverable

CSOP

Company share option plan

EBT

employee enefit trust

Etinde Permit

 

 

 

EurOil

the Etinde Exploitation Authorisation (EA) area. The Etinde EA, granted on 29 July 2014, covers an area of approximately 461km² (formerly block MLHP-7) and is valid for an initial period of 20 years. Currently SNH have exercised their right to back into this licence, but this is subject to completion

EurOil Limited, an indirectly wholly-owned subsidiary of Bowleven plc, incorporated in Camroon

FID

final investment decision

First Oil

First Oil Expro Limited, a private UK independent exploration and production company based in Aberdeen. On 19 February 2016 First Oil went into administration

FLNG

floating liquefied natural gas

G&A

general and administration

GIIP

Government

gas initially in place

Cameroon Government

Group

HSSE

the Company and its direct and indirect subsidiaries

health, safety, security and environment

IAS

IFRS

International Accounting Standards

International Financial Reporting Standards

IM

the Isongo Marine Field area, block MLHP-7, Etinde Permit

km²

square kilometres

LNG

liquefied natural gas

LUKOIL

LUKOIL Overseas West Project Ltd, a subsidiary undertaking of OAO LUKOIL

mmboe

million barrels of oil equivalent

mmscfd

million standard cubic feet of gas per day

NewAge

New Age (African Global Energy) Limited, a privately owned oil and gas company

ordinary shares

ordinary shares of 10p each in the capital of the Company

PEA

provisional exploitation authorisation

PSC

production sharing contract

P50

50% probability that volumes will be equal to or greater than stated volumes

P90

90% probability that volumes will be equal to or greater than stated volumes

Q1, Q2 etc.

first quarter, second quarter etc.

SNH

Société Nationale des Hydrocarbures, the national oil and gas company of the Republic of Cameroon

tcf

trillion cubic feet

US

VOG

United States of America

Victoria Oil & Gas Plc

2D

two dimensional

$ or US Dollars

United States of America Dollars

£ or GB Pounds

Great Britain Pounds Sterling

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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