Interim Results
BowLeven Plc
23 March 2006
BowLeven Plc
23 March 2006
BowLeven Plc ('BowLeven' or 'the Company')
Interim results for the six months to 31 December 2005
BowLeven, the Cameroon-focused oil & gas company listed on AIM, today announces
its interim results for the six months ended 31 December 2005.
Highlights include:
• Cash of £62 million
• 3D seismic survey underway on blocks MLHP 5 and MLHP 6 of Etinde
permit
• Reserves of 60.3 mmboe remain in place
• Four well drilling programme being prepared for early 2007
• Loss for the period £0.7 million
• Concentration on original strategic plan including implementation of
Gas To Electricity ('GTE') Plant in Cameroon
Commenting, Terry Heneaghan, Executive Chairman, said:
'Although it has been a highly disappointing six months, with the drilling of
two unsuccessful exploration wells and the dismissal of Philip Rhind, the Chief
Executive, I am still confident that BowLeven is in a good position to generate
considerable value for shareholders.'
'We are funded through the next 18 months, during which time we will concentrate
on implementing the GTE business plan with the support of the government of
Cameroon and monetising our existing and future recoverable hydrocarbon
resources. We will continue the exploration of blocks MLHP-5 and MLHP- 6 and
intend to drill four wells in the Etinde Permit in early 2007, at least one of
which will be an appraisal/development well in the Isongo Marine field. We are
also looking to secure one or more industry joint venture partners for the
permit area.'
For further information contact:
Terry Heneaghan, Executive Chairman, BowLeven Plc 0131 260 5100
Adam Westcott, Noble & Company Limited 0131 225 9677
Neil Bennett, Maitland 020 7379 5151
CHAIRMAN'S STATEMENT
Since reporting our 2005 annual results in October of last year, the Company has
suffered a number of setbacks. We have drilled two disappointing exploration
wells, our share price has fallen by around 75% from its historic high and
Philip Rhind, the Chief Executive, has been dismissed. However, following some
new director appointments and management changes, your company is returning to
the path that was set out in our AIM Admission Document in December 2004, with
the clear objective of generating considerable value for shareholders.
The Two Exploration Wells
Two exploration wells, Manyikebi-1 and Bachuo-1, were drilled during the last
quarter of 2005.
Manyikebi-1 was a Biafra sands oil exploration prospect with an estimated 1 in 3
chance of success. It was a potentially high impact well, which had been
assessed to contain in place hydrocarbons (P50) of around 280 million barrels of
oil and 100 Bcf of gas. As was expected from the seismic data, the well
discovered gas but, despite encountering around 950 feet of high quality
reservoir sands, no oil was found. The well, which was drilled to a total depth
of 5,050 ft, was plugged and abandoned, as a small gas discovery, at a total
cost of approximately US$7 million for our 100% interest.
The Bachuo-1 exploration well was an Isongo sands gas/condensate target with an
estimated chance of success of 1 in 5. It was another potentially high impact
well, which had been assessed to contain in place hydrocarbons (P50) of around
2.6 Tcf of gas and over 430 million barrels of condensate. Although hydrocarbons
were encountered they would not flow when tested. The reservoir consisted of
volcanoclastic debris of low permeability. This well was drilled to a total
depth of 10,353 ft and cost approximately US$21 million in total for our 100%
interest. It has been suspended and will probably be abandoned in due course at
no additional cost.
It is worth emphasising however, that the results of these two wells have had no
adverse impact on the Company's (P50) recoverable hydrocarbon Reserves and
Contingent Resources (as stated in our AIM admission document), which were
independently appraised by Scott Pickford at 118.5 million barrels of oil
equivalent (60.3 mmboe of Reserves and 58.2 mmboe of Contingent Resources). This
document, including the full report by Scott Pickford, is available on our
website: www.bowleven.com. We intend to include a reserves update as part of the
announcement of the Company's results for the full year.
The Business Plan
The Company's business plan has been re-examined and we are focussing on the
original objectives, which were stated in our AIM Admission document. Over the
next 18 months, management will concentrate on the following activities:
- implementing its Gas to Electricity ('GTE') business plan with the support
of the government of Cameroon,
- monetising our existing and future recoverable hydrocarbon resources,
- acquiring and interpreting 3D seismic over blocks MLHP-5 and MLHP- 6,
- securing one or more industry joint venture partners,
- assessing the additional exploration potential of the Etinde Permit, and
- drilling four wells in early 2007.
The Company is being actively encouraged, by the Cameroon authorities, to bring
gas to shore from the Isongo Marine Field, which is located in block MLHP-7, for
the initial purpose of fuelling an existing heavy fuel oil-fired electricity
generating plant near Limbe. It is expected that this plant will be converted to
burn gas and its capacity will then be expanded, in staged phases, over
subsequent years. We are currently engaged in securing the commercial agreements
necessary for this project and we have already started conceptual development
design. Associated condensate production will be sold separately at prices that
are close to world market prices.
A 3D seismic acquisition and interpretation programme is currently underway over
blocks MLHP- 5 and 6. Processing and initial interpretation of the seismic data
are expected to be completed during the 4th quarter of 2006.
The Company still owns a 100% working interest, subject to government
participation, in the Etinde Permit and the Board is committed to reduce the
financial risks for shareholders on exploratory drilling and to secure a 'second
pair of eyes' to review technical risks and select drilling locations.
As a result, we are actively seeking joint venture partners on an asset farm-out
basis over blocks MLHP-5 and 6. This farm-out process is currently being planned
in two stages. Stage 1 will be a selective process, which will take place while
the 3D seismic acquisition over MLHP-5 and MLHP-6 is being processed and
interpreted: it is likely to begin in April of this year. It is possible that a
further selective farm-out exercise, Stage 2, will be conducted after the
initial 3D seismic interpretation has been completed but before drilling on
these blocks has started. Drilling in MLHP-5 and 6 is expected to begin during
the second quarter of 2007.
We are also considering a farm-out of block MLHP-7 and this exercise is likely
to start after a gas sales contract for the GTE business plan has been signed
and at least one Isongo Marine appraisal well has been drilled and tested. It
should be noted that considerable exploration potential still remains in this
block.
As stated in our AIM Admission Document, we may also consider other forms of
corporate partnerships, alliances or joint ventures.
Drilling locations for first quarter 2007 have not yet been selected, but at
least one well (possibly two) of the four-well drilling programme will be an
appraisal/development well in the Isongo Marine Field to support the GTE
business plan. The remaining wells will depend upon the interpretation of our
existing and new 3D seismic databases and the success of our farm-out strategy.
New geological and geophysical consultants have been appointed to assist in the
technical evaluation of our three offshore blocks and in selecting our next
drilling locations.
Sanaga Sud
For approximately three years, the Company has been trying to secure this dry
gas field. However, we were informed recently that a Production Sharing Contract
for Sanaga Sud has been signed between the Cameroon government authorities and
another oil and gas company. This fact has not impacted the Company's plans and
objectives for the Etinde Permit.
Dismissal of Chief Executive and Management Changes
As was announced on 15th February 2006, the Company's Chief Executive, Philip
Rhind was dismissed.
As a consequence, the directors have asked me to put my previously stated plan
to retire on hold. I will continue as Executive Chairman until a new CEO is
appointed. John Morrow, previously Technical Director, has been appointed Chief
Operating Officer and the Technical, Exploration, Drilling and Commercial
functions report directly to him. John Morrow reports to me as do the Financial
and Corporate functions.
No management void has occurred as a consequence of Philip Rhind's dismissal.
The Board
At the beginning of January, Jerry Anthony joined the Company as Exploration
Director. Jerry, a geologist and formerly an employee of Sasol and Chevron, is
well experienced in West Africa and he is already making an impact on
exploration and farm-out strategy. I am delighted that he has joined our team.
The resignation of Robert Walvis (Non-Executive Chairman Designate) on 13th
January, shortly before Philip Rhind was suspended from office and subsequently
dismissed, was a blow to succession planning on the board. In early January,
Robert came to the conclusion that the role of Chairman would require more
executive involvement than he was able or prepared to commit to the Company and,
as a consequence, he resigned. I am very sorry that he did not continue with us;
his corporate input, during the short period that he was a director, was very
useful.
It is still my aim to retire sometime during 2006. I will do so when the roles
that I am currently fulfilling have been filled to the satisfaction of the board
and the Company's advisers, Noble & Company. Easton Wren will continue as a
Non-Executive Director until a suitable replacement for him has been found.
Your directors are well experienced and qualified to take the Company forward
and the board will be strengthened as necessary during the coming months.
Executive Share Option Scheme
Employees and directors who have joined the Company since the beginning of 2006,
including Jerry Anthony, are entitled to receive share options based upon recent
average market prices which are well below the exercise prices of the options
packages granted in the past to their colleagues. This clearly creates an
anomalous position within the management team. Therefore the Remuneration
Committee will be considering changes to the options packages of all employees
to ensure that they are properly incentivised in the future.
AIM Guidelines for Resources Companies
The London Stock Exchange has recently published guidelines for resources
companies. We endorse these guidelines and will implement them fully.
Financial Results
As expected, the Group reported a loss of £0.7 million for the six months ended
31st December 2005. The main contributor to this loss was administrative
expenses of £1.5 million reflecting the Group's efforts to exploit its assets.
Following the successful share placing in October 2005, the balance sheet is
healthy with £62 million of cash resources and no debt at the period end. Of
this amount, approximately £14 million is committed for the 3D seismic
acquisition programme over blocks MLHP-5 and 6 and it is planned that any
additional funds, which the Company may require in the foreseeable future, to
explore, appraise and develop its Cameroon asset base, will come from either a
successful farm-out or a corporate alliance or both.
Outlook
Despite the disappointing wells that were drilled in 2005 and the board changes
of earlier this year, your Company has the resources to implement its business
plan and deliver value for shareholders.
The previously assessed Reserves and Contingent Resources were not adversely
affected by the well results of last year and management is determined to
monetise these assets as rapidly as possible.
Exploration potential remains exciting and our farm-out strategy should unlock
value from our exploration acreage.
The business plan, as previously stated in our AIM Admission Document, is back
on track: the management team has the ability to capitalise on the potential of
the Etinde Permit.
The balance sheet is solid with £62 million of cash at 31st December 2005. We
anticipate that a successful farm-out of part of our acreage and/or a corporate
alliance should cover any foreseeable financing requirements beyond 2007.
GROUP PROFIT AND LOSS ACCOUNT
Six months ended Six months ended Year ended
31 December 31 December 30 June
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Turnover - - -
Administrative expenses (1,470) (303) (1,373)
Operating loss (1,470) (303) (1,373)
Interest receivable and similar income 746 78 512
Interest payable and similar charges - (1,277) (1,271)
Loss on ordinary activities before taxation (724) (1,502) (2,132)
Tax on loss on ordinary activities - - -
Loss for financial period (724) (1,502) (2,132)
There are no recognised gains or losses other than those included in the profit
and loss account.
GROUP BALANCE SHEET
At 31 December At 31 December At 30 June
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Fixed assets
Intangible assets 27,496 8,784 11,289
Tangible assets 356 - 336
27,852 8,784 11,625
Current assets
Stocks 841 238 853
Debtors 956 1,071 527
Cash at bank 62,355 25,763 20,518
64,152 27,072 21,898
Creditors: amounts falling due within one year (6,955) (2,533) (844)
Net current assets 57,197 24,539 21,054
Total assets less current liabilities 85,049 33,323 32,679
Capital and reserves
Called up equity share capital 2,961 2,111 2,111
Share premium 86,002 33,771 33,758
Other reserves 2,883 2,883 2,883
Profit and loss account (6,797) (5,442) (6,073)
Shareholders' funds 85,049 33,323 32,679
GROUP CASH FLOW STATEMENT
Six months ended Six months ended Year ended
31 December 31 December 30 June
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Net cash flow from operating activities (2,301) (1,227) (2,905)
Returns on investments and servicing of
finance 744 (1,192) (759)
Capital expenditure and financial investment (9,700) (1,961) (5,686)
Cash outflow before financing (11,257) (4,380) (9,350)
Financing
Issue of equity share capital 53,094 34,926 34,651
Advance of other loans - 2,100 2,100
Repayment of loans - (7,045) (7,045)
Net cash inflow from financing 53,094 29,981 29,706
Increase in cash in the period 41,837 25,601 20,356
Reconciliation of net cash flow to movement in net funds
Increase in cash in period 41,837 25,601 20,356
Net cash inflow from loan instruments - 4,944 4,944
Change in net funds 41,837 30,545 25,300
Opening net funds 20,518 (4,782) (4,782)
Closing net funds 62,355 25,763 20,518
NOTES FORMING PART OF THE INTERIM RESULTS
1. Basis of preparation
The financial information contained herein does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
unaudited interim financial information has been prepared on the basis of the
accounting policies set out in the Group's accounts for the year ended 30 June
2005. The figures for the year ended 30 June 2005 have been extracted from the
accounts. Those accounts have been filed with the Registrar of Companies and
contained an unqualified auditor's report.
2. Reconciliation of movement in shareholders' funds
Six months ended
31 December
2005
£'000
Loss for the period (724)
New shares issued 850
Premium on new share capital subscribed 52,244
Opening shareholders' equity funds 32,679
Closing shareholders' equity funds 85,049
3. Cash
Included within the Group cash balance of £62 million at 31 December 2005 is a
$3m non-refundable deposit received from Addax Petroleum NV as part of an
agreement under which a farm-in agreement was contemplated. Addax has sought
repayment of this amount. The Directors, having taken legal advice, intend to
defend the claim.
4. 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 68-70 George Street, Edinburgh,
EH2 2LT for a period of one month.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
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