REG - Bowleven plc - Interim Results
27/03/2024 07:00
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RNS Number : 4074I Bowleven plc 27 March 2024
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
27 March 2024
Bowleven plc
('Bowleven' or 'the Group' or 'the Company')
Interim Results
Bowleven, the Africa focused oil and gas, Exploration and Production Company
with key interests in Cameroon, today announces its unaudited interim results
for the six months ended 31 December 2023.
HIGHLIGHTS
Operational
Etinde
· In January 2024, Perenco wrote to New Age formally withdrawing its
interest in acquiring New Age's stake and operatorship in the Etinde licence
and cancelled their sale and purchase agreement. New Age wrote to the
Government of Cameroon to withdraw their request to approve the transfer of
ownership. Perenco gave no specific reasons for its withdrawal.
· Etinde operations are currently in a "care and maintenance" mode with
limited ongoing activity other than New Age's maintenance of the Cameroon
project office. The JV partners are now jointly re-energising efforts and have
held an initial meeting to discuss the next steps. The JV partners have agreed
an outline for a way forward and New Age has been tasked to prepare to hold a
meeting with SNH as soon as possible to present a development proposal and
discuss the potential for the Etinde development project going forward.
Corporate
· The loss for the 6-month period was $1.1 million compared to $1.0
million for the same period in the prior year. The slightly increased loss is
primarily due to a combination of lower recharges from Etinde, as project
development activities have been reduced, and further expenditure reduction
measures imposed by Bowleven's Board, offset by a $0.2 million inventory
impairment charge at Etinde. The Group cash balance at 31 December 2023 was
$0.57 million with no financial investments. The Group has no debt or material
financial commitments. As at 29 February 2024, the Group's cash and cash
equivalents balance was $0.37 million.
· Bowleven's expenditure run rate has been temporarily reduced to
between $125,000 and $200,000 per month (with actual monthly expenditure
depending on Etinde cash call amounts) to extend Bowleven's current cash
resources.
· On 14 March 2024 the Company announced a proposed open offer to all
qualifying existing shareholders at an offer price of 0.1 pence per new share
with a view to raising a c£1.38 million (net of issue costs). Crown Ocean
Capital, the company's largest shareholder has agreed to subscribe for all
shares not otherwise taken up in the open offer. The completion of the open
offer is conditional on, inter alia, the passing of all resolutions to be put
to a general meeting of shareholders to be held on 2 April 2024. Further
details can be found in the circular and announcement published by the Company
on 14 March 2024.
Eli Chahin, Chief Executive Officer of Bowleven plc, said:
"We are disappointed that the proposed New Age/Perenco transaction did not
receive formal approval from SNH and the Government of Cameroon. However, we
are satisfied that the JV partnership all agree that Etinde has significant
value and excellent prospects so long as we can reach agreement with SNH and
the Government of Cameroon on the lowest risk, economically optimum
development option as soon as possible. As we continue to keep extremely close
control over our finances, the completion of our proposed open offer will give
us the necessary capital to continue operating and work towards FID at
Etinde."
ENQUIRIES
For further information, please contact:
Bowleven plc
Eli Chahin, Chief Executive 00 44 203 327 0150
Shore Capital (Nominated Adviser and Broker) 00 44 207 7408 4090
Daniel Bush
Rachel Goldstein
A copy of this announcement is available on the Bowleven website
www.bowleven.com
(https://url.avanan.click/v2/___http:/www.bowleven.com___.YXAxZTpzaG9yZWNhcDphOm86Y2EyOGRmZmI4MDAwZGYzZWU1ZTBiZDU1ZmZkNjQ3OWU6NjpmNjIyOjNiYzUxNTRjN2JkMGRkMzYxNDBjYTYzOTkzZTFlYWUxOWRkNmZkNWNiYzM1ZDE1YWNiMGE3YzE2ZjVhODdhNTg6cDpG)
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 Etinde asset in Cameroon, whilst maintaining capital discipline and
employing a rigorously selective approach to other value-enhancing
opportunities. Bowleven holds a strategic equity interest in the offshore,
shallow water Etinde permit (operated by New Age) in Cameroon.
Notes to Announcement:
The information in this release reflects the views and opinions of Bowleven
and has not been reviewed in advance by its joint venture partners. Terms not
otherwise defined have the meanings given to them in the definitions section
at the foot of this announcement.
This announcement is not intended to, and does not constitute, an offer to
sell or the solicitation of an offer to subscribe for or buy, or an invitation
to subscribe for or to purchase any securities, or an offer to acquire via
tender offer or otherwise any securities, or the solicitation of any vote, in
any jurisdiction.
The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons into whose possession this announcement comes should inform themselves
about and observe any applicable restrictions or requirements. No action has
been taken by the Company that would permit possession or distribution of this
announcement in any jurisdiction where action for that purpose is required.
Any failure to comply with such restrictions or requirements may constitute a
violation of the securities laws of any such jurisdiction.
This announcement includes 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", "forecasts", "plans", "prepares", "targets",
"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 appear in a number of places throughout
this announcement and include statements regarding the Company's and the
Directors' intentions, beliefs or current expectations concerning, amongst
other things, the Company's prospects, growth and strategy. No statement in
this announcement is intended to be a profit forecast and no statement in this
document should be interpreted to mean the Company's performance in future
would necessarily match or exceed the historical published performance of the
Company. By their nature, forward-looking statements involve risks and
uncertainties because they relate to future events and depend on circumstances
that may or may not occur in the future. Forward-looking statements are not
guarantees of future performance. The Company's actual performance,
achievements and financial condition may differ materially from those
expressed or implied by the forward-looking statements in this document. In
addition, even if the Company's results of operations, performance,
achievements and financial condition are consistent with the forward-looking
statements in this document, those results or developments may not be
indicative of results or developments in subsequent periods. Any
forward-looking statements that the Company makes in this announcement speak
only as of the date of such statement, and none of the Company or the
Directors undertake any obligation to update such statements unless required
to do so by applicable law. Comparisons of results for current and any prior
periods are not intended to express any future trends or indications of future
performance, unless expressed as such, and should only be viewed as historical
data.
CEO's REVIEW
The 6 month period ending 31 December 2023, has been another frustrating
period with little in the way of positive developments to report on regarding
our stake in the Etinde development project. The situation was exacerbated by
the failure of the proposed agreement for the conditional sale of the
Operator's stake to Perenco, signed in June 2022, not receiving either SNH or
Governmental (Ministry of Mines) approval and subsequently being terminated by
Perenco.
Our understanding is that both SNH and the Government remain enthusiastic
about the potential for the Etinde development and would like development to
proceed as rapidly as possible. Although we have not been informed of the
reasons for the Government's decision not to approve the transfer of New Age's
investment and Operatorship to Perenco, we have been assured that the
reason(s) did not relate to the Etinde project itself.
During this 18+ month period, the Etinde development project, and indeed both
New Age and Bowleven's project activities, have been placed in hiatus with
little other than "care and maintenance" based operations.
The JV partners are now jointly reenergising its efforts and intend to meet
with SNH as soon as possible. Prior to that meeting, we have agreed to update
our 2022 development proposals, including updating outline economic models,
with a view to making a joint presentation to SNH regarding our development
preference for an Equatorial Guinea based concept, in order to seek SNH's
agreement to moving forward to FID as soon as practicable.
Although it is too soon to make any firm commitments, the partners all agree
that an Equatorial Guinea focused development option remains the most
economically and technically viable development concept although there is some
debate over what form this may take in practice. In our view, the recent
bi-lateral treaty between the Governments of Cameroon and Equatorial Guinea,
signed by both Presidents in 2023, to move forward by joint co-operation on
cross border oil and gas development is a very positive development. The
agreement to move forward with the joint development of the Yo-Yo/Yolanda
discoveries is a very significant development and sets a precedent and
framework for the Etinde project.
Bowleven has a need to raise additional funds in the first half of calendar
year 2024 in order to fund its overheads and its share of Etinde expenditure
as the project progresses towards FID, although the timing of FID and the
level of future expenditure required of Bowleven is an area of considerable
uncertainty, as discussed later in this interim report.
The Board has spent considerable time and effort considering its options
regarding a future debt and/or equity raise to help the Company fund its
corporate overheads and the likely expenditure required of Bowleven going
forward. Alongside this, the Directors have reduced UK staff costs and sought
to minimise all other expenditure by the Bowleven Group.
Proposed equity raise
As set out in the Company's announcement dated 14 March 2024 and the circular
sent to shareholders on that date, an Open Offer to all qualifying
shareholders has been proposed to raise c£1.38 million (net of issue costs).
Under the terms of the Open Offer, all qualifying shareholders have an
opportunity to subscribe for new ordinary shares at the issue price of 0.1
pence by subscribing for their respective Open Offer entitlements which have
been calculated on a pro rata basis to their holding of existing ordinary
shares in the Company. The Company's largest shareholder, Crown Ocean
Capital, has agreed to subscribe for all shares not otherwise taken up under
the Open Offer. As part of its underwriting of the Open Offer, subject to the
passing of all of the resolutions at a general meeting of shareholders to be
held on 2 April 2024 and subject to the take-up of the Open Offer, Crown
Ocean's percentage interest in the Company's voting share capital following
the Open Offer may increase above 50 per cent and could reach a maximum of
87.44 per cent.
In order for the Company to lawfully allot the Open Offer shares, the Company
is proposing a subdivision of each existing ordinary share of 10 pence in the
capital of the Company (an "Existing Ordinary Share") into one new ordinary
share of 0.1 pence (a "New Ordinary Share") and one deferred share of 9.9
pence (a "Deferred Share"). It is also proposed that the New Articles of
Association be adopted so as to include the rights and restrictions relating
to the Deferred Shares. The Deferred Shares will not be listed or admitted to
trading on AIM or any other stock exchange and will not be transferable
without the prior written consent of the Company.
The funds will be used to allow Bowleven Group to meet its anticipated
financial obligations until mid-2025 subject to the level of activity and
expenditure relating to the Etinde licence. This expenditure cannot be
forecasted accurately at the current time, as it is contingent on the
agreement of the JV partners and the approval of SNH and the Government of
Cameroon to a development plan and the timing of an increase in project
activities to reach future FID. Further consideration in relation to the
Etinde project activity and future expenditure and funding requirements are
set out below.
Further details of the Open Offer, the share subdivision, the new articles of
association and the general meeting can be found in the circular and
announcement published by the Company on 14 March 2024, which is available on
the Company's website.
OPERATIONS REVIEW
Etinde Exploitation, Offshore Cameroon (25% equity interest)
During the 6 month period to 31 December 2023, New Age has continued to
maintain a low level of operational activity consistent with the "care and
maintenance" approach adopted while waiting for the SNH and the Government of
Cameroon to approve the proposed Perenco transaction and the resolution of
certain conditions precedent related to Perenco's offer to acquire New Age's
interest in Etinde.
In January 2024, Perenco wrote to New Age, terminating their transaction and
New Age has written to SNH and the Government to withdraw their request for
approval of this transaction. After over 18 months of hiatus, we consider this
result to be a disappointing conclusion for Bowleven and our shareholders,
given the extended delay and the need to expend significant sums to fund our
activities during this, now wasted, period of time.
However, we now have operational clarity and in many ways, the development
environment in Cameroon has changed for the better. The JV partners have held
an initial meeting and agreed that we all consider an EG focused development
plan to remain the most economically viable way forward. We have agreed that
the next steps are likely to be:
· To finalise the 2023 expenditure to obtain sign-off by SNH;
· To update outline economic modelling for what we consider to be the
two potential economically viable development schemes based around utilisation
of the Bioko Island facilities in Equatorial Guinea, for discussion with SNH;
· Hold an urgent meeting with SNH to agree an outline way forward; and
· Subject to that discussion, develop a draft 2024 work plan and budget
for approval by SNH.
During 2023, the Presidents of Cameroon and Equatorial Guinea signed a
bilateral treaty, setting on the basis of a joint cooperation agreement
relating to cross border (oil and) gas development and monetisation. This
agreement represents a change of approach and outlook between both Governments
and provides a framework under which a cross border Etinde development could
proceed. Whilst this agreement alone will not in itself unlock the stalled
Etinde development project, it makes the way forward significantly easier than
previously.
Final Investment Decision for Etinde
The JV partners will recommend to the regulator, SNH, that we move forward
based on an EG development option, as previously proposed. If outline
"pre-agreement" is reached, the JV partnership is likely to undertake further
concept select and FEED activity based around specifying the infrastructure
needed in both Cameroon and Equatorial Guinea to utilise the Bioko Island
facilities to process and sell Etinde hydrocarbon production, for use in
Cameroon and for export purposes.
Alongside this, it will be necessary to open commercial discussions with
Marathon Oil, as operator of the various Bioko Island facilities, with a view
to reaching an MOU setting out the commercial and outline technical
requirements, before entering a joint FEED process and reaching full
commercial and technical agreement.
We are not currently able to make any firm forecast as to when the JV partners
will be able to reach a final investment decision for Etinde, although we
continue to see the development of Etinde to be financially compelling,
especially in the current global environment, with the increasing reduction of
Russian sourced oil and gas on global markets.
One of our JV partners, Lukoil PJSC, has been impacted by the imposition of
Russian sanctions, following the invasion of Ukraine. However, their
day-to-day participation in the Etinde PSC as a non-operating minority partner
has not been affected to date.
Volumetric Update
P50 (2C) net contingent resources to Bowleven on the current 25% licence
interest are 61 mmboe following the external Resource reassessment undertaken
in late 2019. The next resource update is likely to be undertaken as part of
the field development plan process to formerly re-categorise Etinde IM field
Contingent Resources to Reserves in accordance with any field development plan
produced at that point. In practice, Contingent resources are subject to the
remaining geological uncertainty, order of production of individual
reservoirs, overall economic project life and the processing technology and
methodology used amongst other factors.
Going concern
The Directors' singular focus is to accelerate the path to FID and sanction a
project that maximises the potential economics of Etinde's significant
hydrocarbon resources. As at 28th February 2024, the Company had (unaudited)
liquid resources (comprising cash and a financial investment) of approximately
$0.37 million (28 February 2023: $2.3 million).
The Group needs additional funding to support the reduced cost base we have
implemented during 2023 going forward and to fund current and future joint
venture spend to align with the preferred development plan, together with a
cash buffer to meet cost contingencies. As outlined above, the Company has
proposed the Open Offer to secure additional funding. Subject to completion,
the Open Offer, underwritten by Crown Ocean Capital, will provide around
£1.38 million (net of issue costs) in April 2024, to finance the Group's
ongoing corporate activities and to assist to finance its share of the future
expenditure as the Etinde project progresses towards FID for the remainder of
the current year and through to mid-2025 assuming that Bowleven's 25 per cent
share contribution to Etinde project expenditure costs remains consistent with
the previous 12 months. However, there is uncertainty over the length of the
Company's cash runway as the JV partners are unable to forecast how rapidly
progress will be made over the next few months; quicker progress, which would
increase Bowleven's contribution towards Etinde project costs, could mean that
the Company's cash resources are expended more quickly.
Currently, monthly expenditure at Etinde remains low as New Age continues to
operate the business on a largely suspended "care and maintenance" operations
basis but we do expect a small increase in expenditure in April/May 2024 as we
prepare for, and attend, the proposed meeting with SNH.
The Company expects that Etinde project expenditure levels could increase in
future to facilitate a realignment of the Joint Venture Partners' development
priorities in order to reach FID. The timing of, and requirement for, a
further capital raise will depend, amongst other things, on the timing of the
increase in project expenditure levels which in turn will be influenced in
part by what, if any, additional Front End Engineering Development work needed
to progress to FID is required. This is dependent on SNH approving the 2024
work plan and budget and at this point, Bowleven will know its estimated
project expenditure contributions going forward and therefore how long the net
proceeds of the Open Offer will provide funding for the Company. Bowleven
expects to have further clarity on these costs as and when the next
development steps to progress to FID, and the related resourcing requirements
for those steps have been sufficiently advanced amongst stakeholders over the
coming months.
At the current time, we cannot quantify either the amount of any additional
funding required or the likely timing, as this is subject to significant
uncertainty due to the need for both JV partner and Government discussion and
approval. However, it remains likely that the cost of a further round of FEED
activity may be substantial enough to warrant a further cash injection to fund
the period to FID. This may give rise to a continuation of the ongoing
material uncertainty around the Group's ability to operate as a going concern.
Absent the completion of the Open Offer, the Board expects that Bowleven's
expenditure will exceed its current liquid funds during the second quarter of
2024.
As discussed in note 2 to the interim financial statements and the Outlook
section below, the Directors have considered a number of different cash flow
forecasts. On the basis of this modelling and Bowleven's current and forecast
cash expenditure for FY 2024, the Directors have concluded that Bowleven
should have sufficient funds to meet our immediate requirements for between 12
and 18 months subject to the Open Offer completing.
FINANCE REVIEW
The Group reports a loss of $1.1 million (H1 2022: loss of $1.0 million) for
the six months ended 31 December 2023.
The Group's current period G&A expense charge was $1.1 million (H1 2022:
$1.1 million) which was somewhat lower than the equivalent period in the prior
year, reflecting the impact of further cost saving measures, offset by a $0.2
million inventory impairment made in the period. This includes $0.2 million of
Etinde G&A costs (H1 2022: $0.3 million) charged by the Operator.
Finance income comprises interest and dividend income of $0.002 million (H1
2022: $0.1 million), foreign exchange loss of $0.006 million (H1 2022: loss $0
million) and a mark to market gain of $0.004 million (H1 2022: loss of $0.06
million) arising from the revaluation of the Group's financial investment.
No capital expenditure was incurred during the 6 month period (H1 2022: $0.2
million). In the prior period, all of the capital expenditure incurred related
to Bowleven's share of the Etinde pre-development phase project expenditure
recharged by the Operator.
At 31 December 2023, Bowleven had $0.57 million of cash and cash equivalents
and no debt (H1 2022: $0.2 million and no debt). Bowleven owned no financial
investments (H1 2022: $2.2 million). The prior investment in preference shares
was liquidated in an orderly manner during 2023 and converted to cash to fund
the Group's on-going operations.
Bowleven expects to receive c£1.38 million of cash (net of issue costs) in
April 2024 contingent on shareholder approval of the Open Offer to Bowleven
shareholders announced on 14 March 2024.
Under the terms of the Etinde farm-out transaction in March 2015, the Group is
entitled to a $25 million payment from the JV partners, which is contingent on
achieving Etinde FID. This is held as a contingent asset pending further
clarity around Etinde FID project sanction.
OUTLOOK
There are two significant short term events that will significantly influence
the future of Bowleven and its participation in the Etinde development. These
are as follows:
1. The completion of the Open Offer of c£1.38 million; and
2. An agreement in principle within and between the JV partners, SNH and
the Government of Cameroon regarding the proposed Equatorial Guinea based
Etinde development plan
The Open Offer will raise an additional £1.38 million (net of issue costs),
which we forecast should provide Bowleven Group with sufficient funding
through to mid-2025 based on current expenditure levels within the Group and
our expectation of that likely to be incurred at Etinde JV. At the current
time, New Age based on the outline agreement of the JV partners, is preparing
for an initial meeting with SNH to be held as soon as possible.
In preparation for this meeting, the Operator is refreshing the Equatorial
Guinea development plans and preparing a draft work plan and budget for FY
2024 based on the assumption that SNH and JV partners reach an agreement to
proceed on this basis. We expect expenditure to increase slightly from the
current "care and maintenance" basis over the next few months in preparation
for the meeting.
The next steps after that are likely to be extensive commercial and technical
discussions with Marathon Oil, the operator of the Bioko Island facilities
with the view to reaching an MOU covering commercial and technical
requirements alongside an additional element of FEED activity. This will focus
on the Bioko Island aspects of the development project, probably in
conjunction with Marathon Oil and refreshing previous FEED output relating to
the Etinde field infrastructure that would be required. Once completed, the JV
partners should move to FID preparation and the FID decision itself. This is
likely to be in late 2025 at the earliest.
There remains a considerable number of regulatory and commercial uncertainties
regarding aspects of the Etinde development together with reaching
multi-stakeholder approval of the JV partners' preferred development option.
It is very likely that Bowleven will need to seek additional financing in the
future to allow the Group's cash expenditure to bridge the likely time gap to
attaining FID and the receipt of the $25 million FID payment. Additional
funding requirements will depend on the circumstances at the time and the time
taken and level of additional work required to attain FID. Further details are
provided in note 2 to these interim accounts.
PRINCIPAL RISKS AND UNCERTAINTIES
The ultimate development of the Etinde wet gas and light oil discoveries is
likely to be technically and commercially dependent on the extent to which the
JV will be able to fully utilise the volume of gas potentially produced by the
onshore processing of the production of gas and liquids. This is the most
significant controlling factor, which governs the project's NPV. The
substantial associated risks include:
· Governmental approval of the development plan,
· Oil price volatility,
· Joint venture partner alignment,
· The timing between SNH and the Government of Cameroon approving the
field development plan, commercial and technical discussions in relation to
the field development plan, the JV partners giving FID approval and the
exhaustion of our current working capital funds,
· Raising finance for Bowleven to continue its operations and to
finance its share of project expenditure to FID,
· Raising sufficient debt and equity finance by both Bowleven and our
JV partners, following FID, to finance the initial cost of the development,
· Receipt of the FID success payment from both of the JV partners,
Lukoil and New Age, when it falls due,
· Domestic market demand for natural gas and the ability to monetise
this demand,
· Access to project capital, and
· Commercial terms and government permission to export gas.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge, the interim
management report includes a fair review of the important events during the
first six months and description of principal risks and uncertainties for the
remaining six months of the year.
Eli
Chahin
Jack Arnoff
Chief Executive Officer Chairman
26 March
2024 26
March 2024
GROUP INCOME STATEMENTS
6 months ending 6 months ending
31 December 2023 31 December 2022 Year ending
(unaudited) (unaudited) 30 June
$000 $000 2023
(audited)
$000
Revenue - - -
Administrative expenses (1,146) (1,055) (2,156)
Impairment - - -
Operating loss before financing (1,146) (1,055) (2,156)
Finance and other income 4 45 136
Loss from operations before taxation (1,142) (1,010) (2,020)
Taxation - - -
Loss for the period/year from continuing operations (1,142) (1,010) (2,020)
Basic and diluted loss per share
($/share) from continuing operations (0.00) (0.00) (0.01)
GROUP STATEMENTS OF COMPREHENSIVE INCOME
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2023 2022 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Total comprehensive loss for the period/year (1,142) (1,010) (2,020)
GROUP BALANCE SHEETS
31 December 31 December 30 June
2023 2022 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Non-current assets
Intangible exploration assets 155,543 155,540 155,543
Property, plant and equipment - 7 3
155,543 155,547 155,546
Current assets
Financial investments - 2,193 644
Inventory 936 1,180 1,180
Trade and other receivables 1,688 1,665 1,739
Cash and cash equivalents 567 247 906
3,191 5,285 4,469
Total assets 158,734 160,832 160,015
Current liabilities
Trade and other payables (556) (502) (695)
Total current liabilities (556) (502) (695)
Net assets 158,178 160,330 159,320
Equity
Called-up share capital 56,517 56,517 56,517
Share premium 1,599 1,599 1,599
Foreign exchange reserve (69,857) (69,857) (69,857)
Other reserves 2,767 2,767 2,767
Retained earnings 167,152 169,304 168,294
Total equity 158,178 160,330 159,320
GROUP CASH FLOW STATEMENT
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2023 2022 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Cash Flows from Operating Activities
Loss before tax (1,142) (1,010) (2,020)
Adjustments to reconcile Company loss before tax to net cash used in operating
activities:
Depreciation of property, plant and equipment 3 5 10
Inventory impairment charge 244 - -
Finance costs/(income) 4 (45) (136)
Adjusted loss before tax prior to changes in working capital (891) (1,050) (2,146)
Decrease/(increase) in trade and other receivables 53 307 80
Decrease/(increase) in trade and other payables (164) (177) 34
Net (Cash used) in operating activities (1,002) (920) (2,032)
Cash flows used in investing activities
Purchase of intangible exploration assets - (216) (102)
Sale of financial investments 640 - 1,584
Interest received 23 - 9
Dividends received from financial investments - 110 174
Net Cash (used in) investing activities 663 (106) 1,665
Cash flows used in/from financing activities - - -
Net cash flows from financing activities - - -
Net decrease in cash and cash equivalents (339) (1,026) (367)
Cash and cash equivalents at the beginning of the period/year 906 1,273 1,273
Net decrease in cash and cash equivalents (339) (1,026) (367)
Cash and cash equivalents at the period/year end 567 247 906
GROUP STATEMENT OF CHANGES IN EQUITY
Called-up Foreign exchange reserve Other Retained earnings
share capital $000 reserves $000 Total
$000 $000 equity
Share Premium $000
$000
At 1 July 2022 56,517 1,599 (69,857) 2,687 170,314 161,340
Loss for the period - - - - (1,010) (1,101)
Other comprehensive income for the period - - - - - -
Total comprehensive income for the period - - - - (1,010) (1,010)
Share based payments - - -
At 31 December 2022 56,517 1,599 (69,857) 2,767 169,304 160,330
Loss for the period - - - - (1,010) (1,010)
Other comprehensive income for the period - - - - - -
Total comprehensive income for the period - - - - (1,010) (1,010)
At 30 June 2023 56,517 1,599 (69,857) 2,767 168,294 159,320
Loss for the period - - - - (1,142) (1,142)
Other comprehensive income for the period - - - - - -
Total comprehensive income for the period - - - - (1,142) (1,142)
At 31 December 2023 56,517 1,599 (69,857) 2,767 167,152 158,178
NOTES TO THE INTERIM STATEMENTS
For the 6 months ended 31 December 2023
1. Accounting Policies
Basis of Preparation
This Interim Report has been prepared on a basis consistent with the
accounting policies applied to all the periods presented in these consolidated
financial statements.
The disclosed figures are not statutory accounts in terms of section 435 of
the Companies Act 2006. Statutory accounts for the year ended 30 June 2023
have been filed with the Registrar of Companies. The auditor's report on the
annual report and accounts for the year ended 30 June 2023, which was
un-modified, included a Key Audit Matter disclosure identifying events or
conditions that create a material uncertainty which may cast significant doubt
on the Group's and Company's ability to continue as a going concern, noting
that the Group and Company may require additional funding during the 12 months
after approval of the financial statements in order to continue as a going
concern, depending on the timing of the final investment decision for the
Etinde project.
2. Going Concern
The current global market conditions remain highly uncertain, with continuing
high inflation, ongoing interest rate and taxation rises to fund current and
past Government expenditure, the ongoing war in Ukraine, and increasing
geopolitical tensions. Long term demand and pricing for hydrocarbons remains
the most significant factor that will permit the monetisation of Etinde
resources, as well as governmental approval for Etinde's development.
The major sources of significant economic and financial uncertainty for
Bowleven Group, at the current time, relate to:
1) the timing of FID and the receipt of the $25 million FID payment from
LUKOIL and New Age;
2) the level of spending required under the 2024 Etinde work plan and
budget ('WPB'), which is currently being drafted but has yet to be approved;
and
3) The rate of progress on agreeing a firm commitment to an EG based
development during 2024 and the subsequent technical and commercial agreements
required to FID.
The Directors have considered a number of different operational scenarios for
2024 onwards in order for us to prepare short and medium-term cash flow
forecasts and projections for the Etinde development project and hence the
Bowleven Group alongside the receipt of c£1.38 million (net of issue costs)
in April 2024, subject to the Open Offer being approved by shareholders at the
general meeting on 2 April 2024.
The various scenarios modelled principally vary around the amount of time
between the present and the expected commencement of concept design and FEED
activity later in 2024 or 2025, following pre-approval by SNH. In addition, we
have also modelled the impact of further improvements in working capital
and/or further Bowleven cost reduction measures. By their nature, our
expenditure projections for 2024 and later are highly uncertain at this point
in time. We believe that we have prudently adopted a conservative approach to
costs and potentially a more rapid implementation timetable than the JV
partners may be able to achieve in practice.
In the scenarios modelled, the Directors' cash flow forecasts and projections
indicate a material risk that Bowleven will fully utilise its current and
future cash resources by the middle of 2025. This gives rise to a material
uncertainty regarding the going concern status of the Group across calendar
year 2024 and into 2025. The Directors have therefore concluded that it highly
likely that the Group will need to raise additional finance at some point in
2025 in order to continue to fund the Group as the Etinde project progresses
towards FID.
The Company's base case model assumes project expenditure contributions from
April 2024, driven by cash calls from the Operator in relation to the Etinde
Permit, will remain in a range approximately around recent low levels which
have been on a largely suspended 'care and maintenance' basis. The Company
expects that Etinde project expenditure levels will increase in future to
facilitate a realignment of the Joint Venture Partners' development priorities
in order to reach FID. The timing of, and requirement for, a further capital
raise will depend, amongst other things, on the timing of the increase in
project expenditure levels which in turn will be influenced in part by what,
if any, additional Front End Engineering Development work is required to
progress to FID. Only once agreement has been reached on a development plan
for the Etinde Permit, and after the approval of a future work plan and budget
for Etinde, will Bowleven know its estimated project expenditure contributions
going forward and therefore how long the net proceeds of the Open Offer will
provide funding for the Company.
The amount of additional finance required will depend on the status of the
Etinde development, the expenditure required of Bowleven to fund its share of
the Etinde development and the likely time period to FID, as well as any
anticipated risk to this being further delayed beyond our expectation. At FID,
Bowleven Group is due to receive $25 million from our JO partners under the
terms of the 2015 farm-in agreement. The Directors do not anticipate any
timing issue relating to receipt of these funds when they fall due, but note
that any failure to receive these funds promptly may also cause further
funding issues for the Bowleven Group.
The Directors consider the risk of the Government of Cameroon removing the
Etinde PSC contract from the Etinde JO partners is low at the current time,
for the following reasons:
· The issue of the January 2021 licence expiry date has not been raised
as a formal concern by SNH, and SNH has approved all annual WPB up to and
including the year ending 31 December 2022; and
• The JO will request the Government eliminate this uncertainty as
part of the FID regulatory approval process.
After taking the preceding funding risks into account, the Directors believe
that the Group should be able to secure additional funding in due course to
bridge any gap to attaining FID and the receipt of the $25 million FID
payment, which the company now expects to be in 2025 at the earliest. Any
additional funding requirements will depend on the circumstances at the time
and the time taken to attain FID.
The Directors are conscious that the Company's financial position and the
issues discussed above create a material uncertainty that may cast significant
doubt over the Group's ability to continue as a going concern and therefore,
that the Group may be unable to realise its assets and discharge its
liabilities in the normal course of business. The interim 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 at the current date.
The financial statements do not include any adjustments that might result if
the Group were unable to continue as a going concern.
3. Subsequent events
There have been no significant post balance sheet events other that the
announcement of the Open Offer to subscribe to new ordinary shares on 14 March
2024.
4. Other Notes
a) The basic earnings per ordinary share is calculated on a loss of
$1,142,000 (H1 2022: loss $1,010,000) on a weighted average of 327,465,652 (H1
2022: 327,465,652) ordinary shares.
b) In respect of the 6 months to 31 December 2023 the diluted earnings per
share is calculated on a loss of $1,142,000 on 327,465,652 ordinary shares.
The loss attributable to ordinary shareholders and the number of ordinary
shares for the purpose of calculating the diluted earnings per share are
identical to those used for the basic earnings per share.
c) No dividend has been declared.
5. Electronic Shareholder Communication
As per the prior year Interim Results, and recognising increased automation in
shareholder communications, the Group no longer produces hard copy Interim
Reports. The Annual Report is distributed electronically unless shareholders
specifically elect to receive a hard copy which can be obtained from the
Company on request.
6. Interim Report
This announcement represents the Interim Report and half yearly results of
Bowleven plc. The announcement will be available to download from the
Company's website www.bowleven.com
(https://url.avanan.click/v2/___http:/www.bowleven.com___.YXAxZTpzaG9yZWNhcDphOm86Y2EyOGRmZmI4MDAwZGYzZWU1ZTBiZDU1ZmZkNjQ3OWU6NjpmNjIyOjNiYzUxNTRjN2JkMGRkMzYxNDBjYTYzOTkzZTFlYWUxOWRkNmZkNWNiYzM1ZDE1YWNiMGE3YzE2ZjVhODdhNTg6cDpG)
.
GLOSSARY
AGM annual general meeting
AIM the market of that name operated by the London Stock Exchange
Articles of Association the internal rules by which a company is governed
BBL or bbl barrel of oil
bcf or bscf billion standard cubic feet of gas
Board of Directors the Directors of the Company
boe barrels of oil equivalent
Bomono Permit/Licence the production sharing contract between the Republic of Cameroon and EurOil,
dated 12 December 2007, in respect of the area of approximately 2,328 km2
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 or Bowleven plc Bowleven plc (LSE: BLVN) and/or its subsidiaries as appropriate
CFA Central African Francs
Companies Act 2006 ('the Act') the United Kingdom Companies Act 2006 (as amended)
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
EA Exploitation Authorisation
EBT employee benefit trust
EEA or EEEA Etinde Exclusive Exploitation Agreement
EG Equatorial Guinea
E & P exploration and production
Etinde Permit the Etinde Exclusive Exploitation Authorisation agreement or 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 with an initial
six-year period ending January 2021, by which time development must commence.
SNH have informed the JV of their intention to exercise their right to back
into this licence, but have not signed the Participation Agreement and funded
their share of cash calls in accordance with the requirements set out in the
PSC
EurOil EurOil Limited, an indirectly wholly owned subsidiary of Bowleven plc,
incorporated in Cameroon
FEED Front End Engineering Design
FID final investment decision
G&A general and administration
GIIP gas initially in place
Host Government Government of Cameroon
Group the Company and its direct and indirect subsidiaries
HSSE health, safety, security and environment
IAS International Accounting Standards
IE, IM Specific locations or areas where Miocene aged Intra-Isongo reservoirs
horizons have been identified as actual or potential oil and gas condensate
IFRS fields
International Financial Reporting Standards
Intra Isongo nomenclature used to describe a sequence of sedimentary rocks in the Etinde
licence area
JO, JV or JV partners an unincorporated joint operation. Joint Venture partners are the financial
investors who jointly own and operate the unincorporated joint operations
km kilometres
km2 square kilometres
LNG liquefied natural gas
LPG liquefied petroleum gas
LUKOIL LUKOIL Overseas West Project Limited, a subsidiary undertaking of OAO LUKOIL
mmbbls million barrels
mmboe million barrels of oil equivalent
MMBtu Metric Million British Thermal Unit
mmscf million standard cubic feet of gas
mscf thousand standard cubic feet of gas
New Age New Age (African Global Energy) Limited, a privately held oil and gas company
New Age Group New Age and its subsidiaries
NOMAD nominated advisor
Open Offer The underwritten Open Offer of 1,562,500,000 New Ordinary Shares of 0.1 pence
each, at a price of 0.1 pence per New Ordinary Share, as notified by the
Company on 14 March 2024
Operator New Age Group
ordinary shares ordinary shares of 10 pence each in the capital of the Company
P10 (3C) 10% probability that volumes will be equal to or greater than stated volumes
P50 (2C) 50% probability that volumes will be equal to or greater than stated volumes
P90 (1C) 90% probability that volumes will be equal to or greater than stated volumes
PSC production sharing contract
Q1, Q2 etc. first quarter, second quarter etc.
scf standard cubic feet.
shareholders means holders of ordinary shares and 'shareholder' means any one of them
SNH Société Nationale des Hydrocarbures, the national oil and gas company of
Cameroon
tcf trillion cubic feet
US United States of America
$, US Dollars, USD United States of America Dollars
£, GB Pounds, GBP Great Britain Pounds Sterling
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