REG - BowLeven Plc - Notice of General Meeting <Origin Href="QuoteRef">BLVN.L</Origin> - Part 2

BowlevenAnnouncement

15/02/2017 07:06

- Part 2: For the preceding part double click  ID:nRSO8950Wa 

accordance with the procedures set
out in the CREST Manual. 
 
Please support your Board by VOTING AGAINST all of the Resolutions. 
 
6.          Unanimous recommendation to VOTE AGAINST all of the Resolutions 
 
For the reasons set out in this letter, the Directors consider that the
Resolutions are not in the best interests of the Company and its Shareholders
as a whole. Accordingly, the Directors unanimously recommend that you VOTE
AGAINST all of the Resolutions, as they intend to do in respect of their
entire beneficial holdings of Ordinary Shares (representing approximately
1.50% of the current issued share capital of the Company, excluding shares
held in treasury). 
 
The Board of Directors of Bowleven plc unanimously recommends that
Shareholders VOTE AGAINST all of the Resolutions at the General Meeting. 
 
Yours sincerely 
 
Billy Allan 
 
Chairman 
 
RESPONSE TO, AND REBUTTAL OF, THE CROWN OCEAN STATEMENT 
 
(EXTRACTED FROM PAGES 25 TO 31 OF THE CIRCULAR) 
 
The Chairman's Letter sets out in detail why the Board recommend unanimously
that Shareholders VOTE AGAINST all Resolutions proposed at the General
Meeting. 
 
Notwithstanding this, the Board considers it important to respond specifically
to some of the statements, claims and allegations made in the Crown Ocean
Statement. The responses below are intended to provide a more complete,
accurate and balanced picture of the circumstances and, in some cases, to
rebut directly claims included in the Crown Ocean Statement. 
 
Crown Ocean's Proposed Strategy for the Company 
 
The Crown Ocean Statement includes an introductory section setting out Crown
Ocean's strategy for value realisation, assuming the changes it seeks to the
Board are implemented. This section contains several statements of opinion or
belief on the part of Crown Ocean that should be considered in a wider
context. 
 
·           Crown Ocean's claim that the Board requires to "cut Bowleven's
spending of cash on general and administrative expenses" 
 
The Board has overseen a significant reduction in Group G&A costs since
reaching agreement with Lukoil and NewAge for the farmout of Etinde. Following
the transfer of operatorship of Etinde to NewAge, staff levels were reduced
dramatically in Cameroon. Administrative expenses for the three preceding
years, as disclosed in the Group's audited financial statements have declined
from US$12.0 million for the financial year to 30 June 2014 to US$9.1 million
for the financial year to 30 June 2016. 
 
Since 30 June 2016 the Board's cost cutting measures have continued,
including: 
 
-           a redundancy programme in late 2016 reducing the number of
Edinburgh-based staff by approximately one third; 
 
-           a move to cheaper and smaller office premises in early 2017; 
 
-           reduction in other non-essential expenditure; 
 
-           further reduction of the number of executive Directors from four
to three, having been six in 2015; and 
 
-           agreement by the Chairman and Chief Executive Officer to
reductions in their remuneration packages. 
 
In addition, Etinde remains the key asset of the Group, despite the Group no
longer holding an operated interest. Ensuring Etinde progresses to development
is an important value consideration, and the current management's technical
and operational familiarity with the asset allows it to maintain a level of
influence and expertise in the joint venture for the benefit of all
Shareholders. 
 
The Board has also stated to Shareholders that, in the absence of achieving
its strategic objectives in 2017, the Group's resource requirement will be
further reviewed. In the meantime staffing levels continue to be assessed, but
the Board views it as unwise and short sighted to pursue further immediate
staffing reductions that could result in the business losing valuable skills,
experience and regional relationships. The Board intends to maintain an
optimal and fit-for-purpose team to manage, protect and monitor the Group's
interests on both existing assets and future opportunities. 
 
·          Crown Ocean's erroneous belief that it is possible to "cease
further spending on the Bomono project" and that this is in the best interests
of Shareholders 
 
As noted in the Chairman's Letter, Crown Ocean's strategy to cease activity
and expenditure on Bomono immediately is fundamentally flawed for two
important reasons: 
 
-           Lost value 
 
The Board recognises that the results of the Bomono exploration wells did not
meet pre-drill expectations, and that Bowleven is unlikely to recover the full
amount spent on the asset to date from those discoveries. It is the nature of
oil and gas exploration that there is an element of risk involved, and that
investment in exploration is risk capital that can take many years from outlay
to return. 
 
The exploration drilling on Bomono did encounter hydrocarbons, but further
drilling will be required to demonstrate long term sustainable production. It
does not however follow naturally that expenditure on Bomono should cease
immediately and permanently. The only outcome for Shareholders in that
situation would be loss of the Company's entire investment in Bomono with
further expenditure on plugging and abandoning the wells. 
 
The alternative approach to Bomono, preferred by the Board, is to seek to
realise near term value through commercial production with limited further
expenditure on the part of the Company. Bowleven has already secured an
extension to the exploration phase of the Bomono PSC, and is currently
pursuing a provisional exploitation authorisation to allow development and
production from the asset. The Board continues to believe that Bomono has
potential that could be realised with minimal further investment by Bowleven,
through the potential farmout under discussion. While this continues to be
pursued, current activity on Bomono is reduced to care and maintenance of the
well site since cessation of drilling in 2016. 
 
-           PSC, regulatory and HSSE obligations 
 
It is unrealistic and irresponsible to propose immediate departure from an
operated asset without abandoning the site in accordance with applicable PSC
and regulatory obligations and HSSE standards established by good
international petroleum industry practice. Bowleven believes in safe and
efficient operations and building and maintaining strong working relationships
in Cameroon. Seeking to relinquish Bomono without agreement on abandonment
operations would be irresponsible, reputationally damaging and in breach of
Bomono PSC obligations. The "walk away" option understood to be advocated by
Crown Ocean would involve additional cost. 
 
It should also be recognised that the "estimated over US$100 million spent on
Bomono to date" in the Crown Ocean document includes pre-drilling spend on
airborne surveys, seismic acquisition and processing, licence costs, etc. as
well as the drilling and extended testing of two exploration wells, Zingana-1
and Moambe-1. Bomono is frontier exploration acreage, with favourable fiscal
terms and a phased commitment work programme common in the industry. In assets
of this nature, there will inevitably be a significant initial capital
investment before any return is possible. 
 
In addition, and as previously stated, the non-performance of the rig
contractor during both the preparation and operational phases of the Bomono
drilling and testing programme is subject to ongoing arbitration. The Company
is seeking reimbursement of costs associated with making the rig fit for
purpose. Further updates on the progress of this arbitration will be provided
in due course. 
 
·          Crown Ocean's statement that it expects the Ordinary Shares to
"significantly appreciate upon the adoption of this strategy" 
 
The only rationale provided by Crown Ocean for the statement that Ordinary
Shares will "significantly appreciate" on the adoption of its strategy for
Bowleven is that "market price implied uncertainty over cash spending and
monetisation of assets is being removed with further material upside from
Etinde over time". 
 
The Board is unclear on the underlying basis for this statement in the context
of Crown Ocean's stated strategy of placing Board control in the hands of its
two unvetted nominees and extracting cash from the business with no credible
plan for the Group's oil and gas assets. In particular, it is unclear how
Crown Ocean plans to realise "material upside" from Etinde over time without
cash retained in the Company to fund its share of development expenditure. 
 
Although not explicitly stated in the Crown Ocean Statement, the Board
considers it reasonable to infer from those elements of Crown Ocean's strategy
disclosed in the Crown Ocean Statement that it would intend to seek a near
term buyer for Etinde rather than pursue longer term value from the asset. The
Board does not believe Crown Ocean's strategy would maximise value from Etinde
for Shareholders and, consequently, there is no reasonable basis for Crown
Ocean's claim that the Ordinary Shares will "significantly appreciate" on
adoption of the strategy. 
 
Crown Ocean's Proposed Changes to the Board 
 
The Crown Ocean Statement includes a section headed "The compelling need to
change the board". This section contains several statements that are
inaccurate, incomplete or should be considered in a wider context. 
 
·          Crown Ocean's claim that the Board retains "expensive execution
capacity": 
 
Amongst other claims in this section of the Crown Ocean Statement, Crown Ocean
states that the Board "holds on to expensive execution capacity although
Bowleven's most valuable asset is a 20% stake in Etinde for which Bowleven
ceded the crucial operator role". 
 
In the Board's opinion this is a misleading statement that does not accurately
reflect the factual background. The Group requires an adequate level of
resource in order to run the business in both the UK and Cameroon and
stripping this back excessively would, in the view of the Board, be
detrimental to the future value of Bowleven and would compromise its
commitment to good corporate governance. The current Board is fit for purpose
and, unlike the Board composition proposed by Crown Ocean, structured to meet
the standards of corporate governance applicable to UK small cap companies,
further details of which are set out in the Chairman's Letter. 
 
In addition to retaining operatorship of Bomono, Bowleven plays an active role
as a non-operating partner in the Etinde joint venture where the value of its
technical expertise and knowledge of the asset is recognised by co-venturers
and the Cameroon authorities. This role in turn ensures that Bowleven is in a
position to represent the interest of Shareholders and influence the strategic
direction of the Etinde joint venture to their advantage. The Board also
retains the strategic aim of enhancing the existing resource base and the
pursuit of future exploration opportunities with the aim of adding further
value for shareholders. The Group will require appropriately experienced and
skilled staff to deliver on this strategy. 
 
In addition, and as set out in detail above, the Board has overseen a
significant reduction in Group administrative expenses over the last three
years, and this process continues. 
 
·          Crown Ocean's inaccurate claim that US$44 million was paid to
Directors over the last ten years 
 
The Crown Ocean Statement contains a claim that US$44 million was paid to
Directors over the last 10 years. This is overstated by 25%, as the figure
includes employer's national insurance costs and accounting adjustments for
share based payments (the latter of which resulted in no cash outflow from the
Company). In addition, the gross amount disclosed is before deduction of any
taxes and employees' national insurance contributions and consequently, the
net cash received by Directors was significantly lower. 
 
For the avoidance of doubt, the combined total current annual salary of the
three remaining executive Directors, including pension contributions or
payments made in lieu of pension contributions, is approximately US$1.08
million gross, before deduction of taxes and employees' national insurance
contributions. 
 
For the majority of the 10 year period quoted, and whilst the Group operated
Etinde, the Company had six executive directors. Following reviews of the
composition of the Board the number of executive directors has been reduced to
three in phases, commensurate with the requirements of the business. 
 
In 2016, the remuneration of the executive Directors was the subject of a
benchmarking exercise by an independent third party consultant, considering
comparator companies in the oil and gas industry and to ensure alignment with
market practice. The benchmarking showed that the executive Directors' current
remuneration is in line with similarly sized industry peers. 
 
·          Crown Ocean's suggestion that the Board's stated strategy of
acquiring production alongside value adding opportunities is not in the best
interests of Shareholders 
 
As outlined in more detail in the Chairman's Letter, the Board aims to expand
the Bowleven business to bring in cash generating assets with upside to fund
ongoing G&A, already significantly reduced by the Board. The Board continues
to seek opportunities but is applying rigorous screening to those that are
considered in order to avoid erosion of cash balances. Part of the screening
process involves assessing potential exploration upside where there is an
opportunity to add value for Shareholders. The fact that the Company screened
and evaluated over 50 potential asset or corporate transactions in 2016,
undertaking detailed due diligence on a number of opportunities, without
concluding a transaction, is further evidence that the Board is highly
selective in assessing potential projects and will only pursue these when it
has full confidence that they can create value for shareholders whilst
protecting its balance sheet strength. 
 
It is neither reasonable nor accurate for the Crown Ocean Statement to imply
that the Board would pursue producing assets, or any other opportunities, that
were not in the best interest of Shareholders. 
 
Crown Ocean's Proposed Board Appointees 
 
The Crown Ocean Statement includes a section headed "Proposed Board
appointments" incorporating brief biographies of the two nominees proposed as
Directors by Crown Ocean, Christopher Ashworth and Eli Chahin. This
introduction to this section states that "Strong, independent directors of
sound reputation and experience have been identified in whom all shareholders
can trust to undertake the strategic review and to provide the skills for
Bowleven's future". The Board note a number of important observations on this
statement and the remainder of the section: 
 
·          Concerns over independence of the Crown Ocean nominees 
 
The Crown Ocean Statement states that the two Crown Ocean nominees are " … 
strong, independent directors … in whom all shareholders can trust  … " but
then offers no evidence to support this statement. Given that: 
 
-           the Board and the Nomination Committee have not been provided with
any opportunity to review the suitability of the Crown Ocean nominees for
appointment to the Board or to consider alternative candidates; 
 
-           both individuals have been identified and nominated by Crown Ocean
specifically despite having little or no direct relevant experience for the
role; 
 
-           the experience that the Crown Ocean nominees do have in corporate
restructuring would suggest a close alignment with Crown Ocean's strategy for
Bowleven of extracting short term value from the Group through a break-up of
its assets; and 
 
-           the Resolutions proposed by Crown Ocean would also result in the
removal of all current members of the Board other than David Clarkson (who
unequivocally supports the Board's recommendation to vote against all
Resolutions), leaving a Board that fails to meet minimum expected standards of
corporate governance; 
 
the Board considers that the reasonable and prudent course of action, in the
interests of all Shareholders, is to assume that the two Crown Ocean nominees
are not fully independent of Crown Ocean. There can be no assurance that the
Crown Ocean nominees, having secured control of the Board, will represent the
interests of all Shareholders. 
 
·          Concerns over lack of relevant experience and lack of evidence that
the Crown Ocean nominees can "provide the skills for Bowleven's future" 
 
The Crown Ocean Statement provides very limited information on the backgrounds
and experience of either of Crown Ocean's proposed nominees to the Board.
Those details that have been provided offer no support to the statement that
the nominees can "provide the skills for Bowleven's future", unless that
future involves short term value extraction and asset sales. 
 
The biography of Christopher Ashworth in the Crown Ocean Statement is brief,
with all disclosed past experience in the legal profession and no reference to
any prior involvement in the upstream oil and gas industry or the wider energy
sector. His most recent position is stated to be General Counsel at Knight
Vinke, a private US-based investment management firm with a history of
institutional activism and corporate restructuring. The biography of Eli
Chahin in the Crown Ocean Statement is more expansive, but contains no direct
upstream oil and gas experience beyond an advisory role on a restructuring of
"a listed oil and gas company which required performing project analysis and
devising balance sheet strategies". He is also stated to serve on the board of
Al Jaber Group, a privately-owned services conglomerate based in Abu Dhabi,
although the Company has not been able to verify this statement. His principal
position is stated as "Senior Adviser at Alix Partners", a US-based corporate
restructuring firm specialising in selling off the assets of undervalued
businesses. This expertise appears to be consistent with the asset-stripping
strategy that the Board believe Crown Ocean intends to pursue. Alix Partners
were appointed administrators of Afren plc in 2015 and oversaw the sale of its
assets for the benefit of creditors. The Board wishes to stress that the
financial position of Bowleven, with strong cash reserves and no debt, bears
no relation to that of Afren plc prior to its administration. 
 
In summary, there is no evidence that either of the proposed Crown Ocean
nominees to the Board have any upstream oil and gas experience, whether as
operator or non-operator, or any experience of conducting business in
Cameroon. The lack of industry and regional experience does not suggest that
the future envisaged by Crown Ocean for Bowleven involves creating a long term
sustainable business for Shareholders. This impression is reinforced by the
background and experience of the two Crown Ocean nominees in corporate
restructuring. It is assumed that Crown Ocean's stated intention to retain
David Clarkson on the Board is a tacit acknowledgement of the lack of direct
and relevant experience of the two Crown Ocean nominees, but despite this
David has had no discussions or contact with Crown Ocean or their associates
with respect to a future strategy or his personal involvement in their future
business. 
 
In addition, it is worth noting that the nominees proposed by Crown Ocean are
not the same individuals that Crown Ocean sought to propose as Directors at
the AGM in December 2016 (being Breht McConville, Titus Gebel and Matthew
McDonald). This rapid change of proposed Board appointments suggests a
strategy with the underlying aim of acquiring control of the Company
irrespective of the means, rather than one that identifies the most
appropriate individuals for the role to act in the best interests of all
Shareholders. 
 
·          Concerns over maintenance of corporate governance standards 
 
For reasons already outlined in the Chairman's Letter, the structure of the
Board proposed by Crown Ocean immediately following the General Meeting falls
short of even minimum expected standards of corporate governance applicable to
small cap UK public companies. Crown Ocean has provided no information on how
it or its nominees on the Board intend to uphold standards of corporate
governance if the Resolutions are passed. 
 
·          Failure to consult with, and seek the agreement of, David Clarkson
to the proposed Board restructuring 
 
The Crown Ocean Statement also assumes that, if all Resolutions are passed at
the General Meeting, the resulting Board will consist of the two Crown Ocean
nominees, Christopher Ashworth and Eli Chahin, and Bowleven's current Chief
Operating Officer, David Clarkson. As stated in the Chairman's Letter, David
Clarkson unequivocally supports the Board's position on the Resolutions. He
has had no discussions or contact with Crown Ocean or its associates with
respect to a future strategy or his personal involvement in its future
business. David, together with all other Directors, will vote his entire
holding of Ordinary Shares against the Resolutions at the General Meeting. 
 
Bowleven Track Record 
 
The Crown Ocean Statement includes a section headed "Bowleven's 10 year track
record as an operating company". This section contains inaccurate or
incomplete statements on the part of Crown Ocean that should be considered in
a wider context: 
 
·          Crown Ocean's claim that there has been "significant shareholder
value destruction" 
 
While the Board acknowledges that the share price performance of the Company
over the preceding ten years has been disappointing for long term
Shareholders, this needs to be considered in context. The Board does not
consider it reasonable or accurate for Crown Ocean to characterise the
previous ten years of operational activity as "value destruction". In
particular: 
 
a)         The last ten years have included a global financial crisis and two
significant oil price declines (in 2009 and 2014/15), the effects of which are
still being felt in the industry. Many upstream oil and gas businesses have
faced the same challenges during the period, and several have suffered severe
financial distress and, in some cases, insolvency. It is well documented in
financial and industry media that the economic landscape since 2008 has
resulted in institutional shareholders viewing upstream oil and gas
investments with caution, preferring investments considered to be lower risk. 
 
b)         The majority of cash outflow over the last ten years relates to
exploration drilling on Etinde, which has established a substantial resource
base that remains the primary source of value for Shareholders. The cash to
finance this expenditure was raised through a number of separate equity
fundraising rounds. 
 
c)          The members of the Board have invested significantly in the
Company over that ten year period at prices well above the current market
levels, with the Directors having personally invested over £2 million in the
Company and currently holding 4.8 million shares. Kevin Hart has invested over
85% of the net amount received by him in base salary during his employment at
Bowleven in Ordinary Shares, disregarding any Ordinary Shares awarded under
the LTIP. 
 
d)         Bowleven is primarily an exploration company, with the higher risk
and reward that entails. Not all exploration operations will achieve
expectations, but the Board believes that in the last ten years Bowleven's
exploration success rate - with 10 of 10 wells in Cameroon encountering
hydrocarbons - stands up to scrutiny and compares favourably to the great
majority of industry peers. 
 
e)         The announcement of the farmout of Etinde, just before the oil
price decline and related industry downturn in 2014, and the subsequent
completion of the transaction in March 2015, provided the Group with the
financial strength to weather this downturn and avoid the severe and prolonged
financial distress experienced by other upstream operators. The reduction in
equity interest has allowed access to both funding and the skilled development
expertise of Lukoil and NewAge in order to seek to progress the asset and
ultimately realise value for Shareholders. In addition, Bowleven is entitled
to a further US$65 million of deferred consideration from the Etinde farmout
through the carried appraisal wells and the bullet payment due on Etinde
development FID. 
 
·          Crown Ocean's statement that Bowleven has spent US$80 million over
the past two years on Bomono and administration 
 
The US$80 million figure quoted by Crown Ocean includes the cost of drilling
and extended well testing of two exploration wells on Bomono. In addition, and
as outlined in previous annual reports of the Company, purchases of intangible
exploration assets over the preceding two financial years also included
exploration expenditure on both Etinde and Block 11B Kenya (the latter of
which is offset by the First Oil funding disclosed separately on the cashflow
statement). 
 
In the same period, the Company received US$165 million of cash proceeds on
completion of the Etinde farmout transaction, together with an additional cash
payment of US$15 million in September 2016. A further US$65 million (net to
Bowleven) of deferred consideration remains outstanding under the Etinde
farmout agreement. 
 
Crown Ocean's statement also disregards the context that frontier exploration
acreage will inevitably involve significant initial capital investment before
any return is possible. 
 
·          Crown Ocean's statement that Bowleven has incurred US$219 million
of pre-tax losses over the last two financial years 
 
The pre-tax loss figure of US$219 million referred to in the Crown Ocean
Statement includes US$198 million of impairment charges relating to the
current assets of the Group. These impairment charges are purely accounting
adjustments, not cash outflows for the business, and can be reversed in future
on an increase in the value of the assets. Impairment charges are not unusual
in the industry in recent years, particularly following the prolonged downturn
in oil prices. This environment has resulted in Bowleven reducing its
long-term oil price assumption to US$65 per barrel, alongside the conservative
development case adopted for Etinde. Further details of this are provided in
the Company's 2016 annual report. 
 
The figure of US$219 million also includes unsuccessful exploration costs of
US$12 million relating to Kenya block 11B - the majority of which were funded
by First Oil. 
 
·          Crown Ocean has been a significant Shareholder for less than one
year, and in that time has experienced a significant appreciation in the value
of its original investment 
 
A relatively small proportion of Shareholders have continued to hold Ordinary
Shares for the ten year period cited by Crown Ocean to assess Shareholder
returns, and Crown Ocean is not among them. Crown Ocean has been a significant
Shareholder in the Company for less than one year, having first submitted a
TR-1 Notification to the Company on 3 June 2016 disclosing an interest in
3.51% of the total issued share capital of the Company. 
 
On 3 June 2016 the closing mid-market price of Ordinary Shares was 20.5p,
compared to a closing mid-market price of 31.75p on 13 February 2017 (the
latest practicable date prior to the date of this document), a rise of 54.9%
in a period slightly over eight months. 
 
When considering the Resolutions, Shareholders should therefore take into
account that Crown Ocean has experienced a significant appreciation in the
Company's share price since its original investment. 
 
GLOSSARY AND DEFINITIONS 
 
All references to time in this announcement are to UK time. 
 
Act                                                                     the
Companies Act 2006 
 
AGM                                                                 annual
general meeting 
 
AIM                                                                   the
market of that name operated by the London Stock Exchange 
 
bcf or bscf                                                       billions of
standard cubic feet of gas 
 
boepd                                                              barrels of
oil equivalent per day 
 
bpd                                                                    barrels
of liquids per day 
 
Board or Directors                                       the directors of the
Company 
 
Bomono or the Bomono Permit            the PSC between the Republic of
Cameroon and EurOil Limited, 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 PSC
relates 
 
Chairman's Letter                                       the letter from the
Chairman of the Board set out on pages 12 to 24 of the Circular 
 
Computershare                                            Computershare
Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY 
 
CREST                                                               the
relevant system (as defined in the CREST Regulations) in respect of which
Euroclear UK & Ireland Limited is the Operator (as defined in the CREST
Regulations) 
 
CREST Regulations                                      the Uncertificated
Securities Regulations 2001 (SI 2001 No. 3755), as amended, and any applicable
rules made under those regulations 
 
Crown Ocean Statement                          the statement from Crown Ocean
set out on pages 32 and 33 of the Circular 
 
EA                                                                     
exploitation authorisation 
 
Etinde or the Etinde Permit                    the Etinde EA area, covering an
area of approximately 461 km2 (formerly block MLHP-7) 
 
Euroil                                                                Euroil
Limited, Bowleven's wholly owned operating subsidiary incorporated in
Cameroon 
 
G&A or G&A costs                                      general and
administrative costs 
 
FID                                                                     final
investment decision 
 
First Oil                                                            First Oil
Expro Limited, incorporated in England and Wales with registered number
01021486 (currently in administration) 
 
FLNG                                                                 floating
liquefied natural gas 
 
Form of Proxy                                               the form of proxy
for use in connection with the General Meeting accompanying the Circular 
 
FTG                                                                    full
tensor gravity gradiometry 
 
GIIP                                                                   gas
initially in place 
 
Group                                                               the
Company and its direct and indirect subsidiaries 
 
HSSE                                                                  health,
safety, security and the environment 
 
LTIP                                                                   Long
Term Incentive Plan 
 
Lukoil                                                               LUKOIL
Overseas West Project Ltd, a subsidiary undertaking of OAO LUKOIL 
 
OCM                                                                 operating
committee meeting 
 
Ordinary Shares                                           ordinary shares of
10 pence each in the capital of the Company 
 
mmscfd                                                           million
standard cubic feet per day 
 
NewAge                                                          NewAge
(African Global Energy) Limited, a privately owned oil and gas company 
 
PEA                                                                   
provisional exploitation authorisation 
 
PSC                                                                   
production sharing contract 
 
Shareholder                                                  a holder of
Ordinary Shares 
 
tcf                                                                     
trillions of standard cubic feet of gas 
 
TR-1 Notification                                         TR-1 Notification of
Major Interest in Shares required under chapter 5 of the UK Disclosure and
Transparency Rules 
 
UK or United Kingdom                              the United Kingdom of Great
Britain and Northern Ireland 
 
US$                                                                    United
States dollars, the lawful currency of the United States of America 
 
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