REG - Bowleven plc - Full Year Results
10/11/2021 07:00
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RNS Number : 8590R Bowleven plc 10 November 2021
10 November 2021
Bowleven plc ('Bowleven' or 'the Company')
Full Year Results
Bowleven, the Africa focused oil and gas exploration group traded on AIM,
today announces its audited results for the year ended 30 June 2021. Terms not
otherwise defined have the meanings given to them in the Glossary at the foot
of this announcement.
HIGHLIGHTS
Operational
Etinde, offshore Cameroon
§ The Front End Engineering Design (FEED) project completed in December 2020
with follow-up evaluation completed during Q1 2021.
§ FEED highlighted that an IM field only development based on domestic gas
sales only, with reinjection and recycling of surplus gas would not deliver
sufficient return on investment for the JV partners under current market
conditions. The Board of Bowleven believes that the addition of IE reserves
and higher domestic and/or export gas production is critical for the Limbe
facility based development option.
§ Processing Etinde wet gas production at the Marathon Oil-operated Bioko
Island facilities in Equatorial Guinea has become a potential alternative and
Société Nationale des Hydrocarbures (SNH) has given the JV partners approval
to investigate this option.
§ Work is progressing on re-evaluation of the IE reservoirs with the aim of
adding this option to the Field Development Plan.
§ The economic investment case for Etinde remains strong, with the Company's
interest in the Etinde project continuing to hold an estimated value of $150
million, well above the Group's current market capitalisation.
Financial
§ The loss for the financial year was $2 million.
§ Bowleven closed the year with $4.1 million of cash and a financial
investment of $2.5 million giving a total value of funds of $6.6 million. Cash
balances at 30 October 2021 were $3.0 million.
§ There are commercial and regulatory issues which have
yet to be resolved in conjunction with the uncertainty regarding the optimum
development concept. Resolving these issues to permit FID to be reached in
2022 will be a challenge for the JV partners and any delays in reaching final
resolutions will create a high financial risk for Bowleven.
§ The timing of resolving these issues impacts the
Directors considerations relating to their assessment of the going concern
status of the group. It was therefore considered appropriate that a number of
different scenarios were considered by the Directors. In addition to these
scenarios, a number of further sensitivities were modelled which considered
the impact of increases in opex and capex and changes in FID timing. Each of
the scenarios and sensitivities demonstrated positive cash balances twelve
months from the date of approval of the financial statements and the Directors
are therefore satisfied that the Group has adequate resources to continue in
operational existence for 12 months from the date of the approval of the
financial statements. However, timing of progress towards FID is not within
the control of the Group. Should these commercial and regulatory issues not be
resolved as anticipated, it is likely that Bowleven would be required to raise
additional short-term funding to bridge expenditure to FID and the receipt of
$25 million due from the JV partners at that milestone.
Corporate
§ The Etinde JV partners are in continued discussion with SNH and various
other commercial parties in respect of the domestic sale of gas, Liquefied
Petroleum Gas (LPG) and condensate.
§ The Group has entered initial discussions with Marathon Oil regarding using
the Bioko Island facilities subject to approval from SNH.
§ Appointment of Jack Arnoff as NED and Chairman.
Outlook
The Company's key objective is to deliver on a revised strategy in FY2022
which includes:
§ Working with JV partners on Commercial and Finance matters in respect of
the Etinde development options with the aim of reaching an Etinde project FID
in 2022.
§ The JV partners propose to renew the Etinde Exclusive Exploitation
Agreement (EEEA) licence as part of the regulatory process associated with FID
in 2022. The risk of the Etinde licence potentially being removed following
its expiry in January 2021is considered low at the current time.
§ Maintaining disciplined capital management to secure progress towards
FID whilst maintaining financial resources, the Company thereafter exploring
funding options regarding development capital.
Eli Chahin, Chief Executive Officer of Bowleven plc, said:
"We continue to focus on maximising the economic return to our shareholders.
Throughout the course of 2021, we have seen global gas prices return to high
levels and trend towards higher long term prices. With the expected timing of
our first gas condensate production, we uphold a strong economic case for our
asset with capital returns anticipated by the Board to be favourable.
Our focus for 2022 is to reach an agreement within the JV partnership and our
wider stakeholders on the optimum development concept for Etinde and reach FID
during the year. The Board and the executive team are continually discussing
ways to mitigate project and financing risk and will continue to seek ways to
deliver significant long-term value to investors whilst securing the
sustainability of the Company."
ENQUIRIES
For further information, please contact:
Bowleven plc
Eli Chahin, Chief Executive 00 44 20 3327 0150
Capital Markets Communications Ltd (Camarco)
Owen Roberts 00 44 20 3757 4980
Charlotte Hollinshead
Shore Capital Ltd (NOMAD and Broker)
Robert Finlay 00 44 20 7601 6100
Daniel Bush
This announcement may include statements that are, or may be deemed to be
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "projects", "expects", "intends",
"may", "will", "seeks" or "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. They include
statements regarding the Company's intentions, beliefs or current expectations
concerning, amongst other things, the results of operations, financial
conditions, liquidity, prospects, growth and strategies of the Company and its
direct and indirect subsidiaries (the "Group") and the industry in which the
Group operates. By their nature, forward-looking statements involve risks
and uncertainties because they relate to events and depend on circumstances
that may or may not occur in the future. Forward-looking statements are not
guarantees of future performance. The Group's actual results of operations,
financial conditions and liquidity, and the development of the industry in
which the Group operates, may differ materially from those suggested by the
forward-looking statements contained in the announcement. In addition, even
if the Group's results of operations, financial conditions and liquidity, and
the development of the industry in which the Group operates, are consistent
with the forward-looking statements contained in the announcement, those
results or developments may not be indicative of results or developments in
subsequent periods. In light of those risks, uncertainties and assumptions,
the events described in the forward-looking statements in the announcement may
not occur. Other than in accordance with the Company's obligations under the
AIM Rules for Companies and the Market Abuse Regulations, the Company
undertakes no obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise. All written and oral forward-looking statements attributable to
the Company or to persons acting on the Company's behalf are expressly
qualified in their entirety by the cautionary statements referred to above and
contained elsewhere in the announcement.
Notes to Editors:
Bowleven plc is an African focused oil and gas group, based in London and
traded on AIM. It is dedicated to realising material shareholder value from
its 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 NewAge) in Cameroon.
CEO & CHAIRMAN STATEMENT
A STRATEGIC FOCUS ON ETINDE FID
Dear Shareholders,
Last year, we considered 2020 to have been a milestone year, both for society
and for our industry. Following the onset of COVID-19 we saw a growing
intensity around the need for the global economy to increasingly focus on the
Green Transition to a lower carbon future. In many ways, 2021 has surpassed
2020, as the global economy has returned to something more akin to the 2018
and 2019 environment. Natural gas prices have reached extraordinary highs in
Southeast Asia during the summer and early autumn, with Liquefied Natural Gas
(LNG) loads selling at more than $17 per MMBtu. Indeed, global natural gas
prices, outside the USA domestic market, have also seen similar large price
increases this year. Whilst there are significant current year factors at
play, there appears to be a trend towards higher price developments. Oil
prices have also recovered and recently we have seen Brent reaching highs of
$80 or more per barrel.
At the petroleum industry level, the short-term environment remains as
uncertain and turbulent as in 2020, but with increased volatility as the
global market returns to a new market equilibrium. Both demand and supply are
rapidly returning to 2019 levels, even though the impact of new variants of
the COVID-19 virus has maintained a negative economic and social impact.
In our view, many different difficult-to-judge demand and supply catalysts
remain poised to contribute to continued market volatility in the near term.
In the medium term, we expect there to be a complex interaction between the
effect of several years' cumulative delays in new project investment
decisions, especially to higher-cost projects, and the return to previous
'business as usual' demand. This, in combination with further global economic
growth, expected short-term inflation and the increasing impact of
decarbonisation measures, will impact global demand in uncertain ways.
There is no current consensus on how this dynamic equilibrium will evolve,
although we remain confident that shareholders' patience will be rewarded. It
appears likely that petroleum prices will continue to rise in the medium term
and we continue to see a strong investment case for developing the Etinde
asset at the current time.
At an operational level, the COVID-19 protective remote working practices
commenced in 2020 have continued to be applied. Whilst these have been very
successful at protecting the welfare of our employees, as we noted in our
interim results, travel bans have seen a growing impact on commercial
negotiations. The absence of face-to-face negotiations was always going to
give rise to delays of the sort we have seen in 2021.
OPERATIONS
On the Operations front, we have seen two major developments in the year.
The first and most important was the completion of the Technip FEED project in
December 2020 and our own ancillary processes largely by March 2021, although
elements of the project continued at a lower level throughout the year. At a
practical level, we now have a very detailed technical and financial
understanding of the proposed Limbe-based gas processing facility and the
wider surface and subsurface development project focused on the IM fields and
their reserves. Practically, we identified the major suppliers we would like
to tender as part of an actual development project and were actually ready to
move to a pre-tender competitive proposal process in early 2021, before we
agreed to pause this aspect of the programme.
Based on the combination of FEED cost projections and the 2020 economic
environment, the JV partners agreed to temporarily pause matters to allow a
re-evaluation of the existing development concepts with a view to seeking to
further de-risk the economic and financial aspects of the development. The
estimated facility cost from FEED was materially higher than that identified
during the Concept Select phase and pre-FEED technical studies undertaken in
2019 and 2020. We examined this combined with the proposed IM-only development
base case' limited to one train processing facility at Limbe with a production
cap of 90 mmscf/d, extensive gas reinjection and recycling with a 20 mmscf/d
domestic gas demand. Financial projections based on 2020 economic parameters
concluded that this development scenario had a sub-optimal project NPV and too
low a rate of return on investment for the given level of risk. During this
temporary pause, the JV partners undertook an individual and collective
reassessment of the development plan.
For Bowleven, FEED output confirmed what we have long considered to be
necessary for a successful development, namely that obtaining a full economic
return requires maximising initial production rates and generating a monetary
value for all output, including all dry gas production.
Following FEED, the JV partners concluded that a Limbe facility-based
development would require much better clarity on the availability of both the
domestic and export gas markets and would likely require a combined IM and IE
development basis under the current economic environment.
Throughout this reassessment process, the JV partners considered what had
previously been seen to be a politically time consuming option, namely
processing Etinde wet gas directly at the existing Marathon-operated gas
condensate processing facilities on Bioko Island, Equatorial Guinea. This
option would remove the need for the majority of processing facilities at
Limbe and enable a development with materially lower initial investment cost
and probably a shorter timetable. Whilst this option would most likely
generate a higher tax income for the Government of Cameroon, it would mean
less development phase employment opportunities in Cameroon.
This leads us to the second major development in 2021.
An initial desktop technical and commercial study based on the above
alternative development strategy was prepared and presented to the JV partners
in spring 2021 which clearly demonstrated favourable development economics.
This concept was informally presented to the Government of Cameroon and SNH by
a senior delegation of LUKOIL executives with the desktop study being formally
presented with a JV partner endorsement to SNH.
After much discussion, SNH accepted the inclusion of this option as part of
the JV 2021 work plan and budget and gave the JV partners permission to
discuss this proposal with Marathon Oil with a view to presenting a more
formal paper to SNH detailing the benefits to the people of Cameroon in Q4
2021. We believe this to be a very welcome development as it signals a wider
recognition that other options may be possible in practice.
The Operator is currently working up a series of technical, economic and
risk-based scenarios around the Limbe facility and Equatorial Guinea
development options for presentation to the JV partners later this year. The
JV partners have agreed to choose a preferred development scenario based on
these options and formerly present this to SNH in due course.
At the current time, we cannot anticipate the outcome of this ongoing process.
Whilst we agree with the concept of choosing a preference, given the
significant commercial and political decisions that will be involved, we are
inclined to keep all options on the table for the foreseeable future. We
believe that the JV partners will need to remain flexible in our response to
future considerations until the JV partners and all our stakeholders are able
to reach a mutually acceptable development solution. This will then be put
forward for FID approval, most likely in 2022.
Throughout 2021, the Operator's geotechnical team has led an ongoing process
to completely re-evaluate the potential reserves in the IM and especially the
IE area following the completion of the seismic reprocessing project at the
end of 2020.
Following FEED, the re-evaluation of IE discoveries has taken on a high
priority and technical work is progressing quickly on a collaborative basis.
The Operator's in-house reserves assessment is close to completion and should
be presented for JV evaluation shortly. This will be followed by the
completion of reservoir engineering models and the Operator's proposal for the
optimal sub-surface IE development concept shortly afterwards, if possible.
The full re-evaluation of the IE area and the reassessment of reserves and
development plan should be completed before the end of 2021. This will likely
be subject to a formal external reserves assessment, alongside the earlier
completed IM update during 2022.
FINANCIAL AND OTHER MATTERS
The Group continues to benefit from a robust balance sheet, with a cash
balance of $4.1 million as of 30 June 2021 and a liquid financial investment
valued at $2.5 million giving available funds of $6.6 million. Cash balances
at 30 October 2021 were $3.0 million.
Whilst the Company continues to operate in a lean fashion, with a very low
G&A spend compared with its peers in the space, liquid funds continue to
decline. At the current time, the Board considers that existing funds should
be sufficient to take the business to FID in 2022, so long as the JV partners
are not required to make further material investments in development planning
prior to FID. At FID, we will receive a payment of $25 million from the JV
partners. However, there are considerable commercial and regulatory issues
which have yet to be resolved in conjunction with the uncertainty regarding
the optimum development concept. Resolving these issues to permit FID to be
reached in 2022 will be a challenge for the JV partners and any delays in
reaching final resolutions will create a high financial risk for Bowleven. The
Company may need to raise additional short-term finance to bridge the gap to
attaining FID and the receipt of the $25 million payment.
In mid-2020, a Paris-based financial advisory firm, Cofarco, was appointed by
Bowleven and New Age to support the process of obtaining financing for the
project. Work in this area was put on hold in early 2021, whilst the
development concept evaluation took place. Discussions with a range of
potential senior debt providers will likely advance alongside completion of
the post FEED work, in early 2022.
Engagement continues with the Government of Cameroon on a range of
environmental, fiscal, and regulatory matters with a view to obtaining the
consents and agreements necessary to be in a position to reach a final
investment decision in 2022 at the latest. Delays have been on account of
several factors, most notably ensuring the economic plan achieves stakeholder
consensus, and the impact of the COVID-19 pandemic on the various workstreams
(both in and outside Cameroon and the Etinde JV). Our efforts have been
continuing to accelerate what is feasible in practice with a view to ensuring
the selected field development plan delivers the best value return for all
stakeholders.
ESG FOCUS
Alongside our corporate social responsibilities (CSR), Environmental, Social,
and Health Impact Assessment (ESHIA) remains critical to the JV and
particularly for a project of this size for the country of Cameroon. The JV
partners have continued to provide support to the local community with the
focus being on public health facilities and equipment in consideration of the
COVID-19 crisis during the past year. We made a donation to two approved
COVID-19 centres that enabled medical equipment to be purchased and
distributed to be used in an effort to mitigate the impact of the virus
amongst the people.
Ongoing stakeholder engagement remains encouraging and formed an important
part of our and our JV partners' activities throughout 2021. The integration
of these factors into project decision-making remains a critical aspect of the
key success factors to the delivery of long-term project value.
In December 2020, Matt McDonald, Chairman, stepped down from the Board and was
replaced by Jack Arnoff as a Non-Executive member and now Chairman of the
Board. Given our continued focus on corporate costs in the context of our
activities, we are content with the size of the reduced Board, since, at this
juncture, we do not feel further Board expansion is needed to secure FID.
OUTLOOK
The vast majority of the technical engineering phases of the wider Etinde
development activity should largely be completed by the end of 2021. Some
technical evaluation activity will no doubt continue, and we may need to
refresh the capital investment cost elements of FEED for the preferred
development option prior to FID. However, we do not expect a materially
significant additional financial investment this side of FID.
With current spot prices for Brent crude hovering around $80 per barrel in
summer/autumn 2021, and correspondingly high global gas natural prices, the
economics of Etinde are such that the capital returns appear to have improved
during 2021. These should remain suitably robust to be sanctioned in the
current environment, assuming the required capital investment can be secured.
The medium to long-term hydrocarbon pricing forecasts indicates that the
market will remain volatile and uncertain for some months yet. The stabilised
position remains uncertain, but the current trends suggest that COVID-19-based
economic uncertainty is likely to have a temporary effect. Long-term
hydrocarbon pricing looks very likely to return to 2019 levels or higher. We
continue to believe the likely timing of Etinde first gas and condensate
production in 2024/25 offers a favourable point in the investment cycle. The
economic investment case for Etinde remains strong in our view, with the
Company's interest in the Etinde project continuing to demonstrate a value in
excess of $150 million based on management's modelling. This is well above the
Group's current market capitalisation and remains the key investment
opportunity in the Company.
The Board and executive team are focused on the development of Etinde and
maximising the economic return to our shareholders. We are in continual
discussion with all stakeholders to determine the optimal development concept,
mitigate the funding challenges and secure the earliest extraction of
molecules in the most capital efficient way to enable project sanction.
The Board continues to believe that the future production and cash flow from
the Etinde project, when combined with our existing unleveraged balance sheet,
will deliver significant long-term value for our investors whilst securing the
long-term sustainability of the Company.
Eli Chahin Jack Arnoff
Chief Executive Officer Chairman
9 November 2021 9 November 2021
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021
Audited Audited
2021 2020
$000 $000
Revenue - -
Administrative expenses (2,803) (3,260)
Impairment charges - -
Operating loss (2,803) (3,260)
Finance and other income 820 635
Loss from before taxation (1,983) (2,625)
Taxation - -
Loss for the year (1,983) (2,625)
Basic and diluted loss per share
($/share) from continuing operations (0.01) (0.01)
Statements of Comprehensive Income
for the year ended 30 June 2021
Audited Audited
2021 2020
$000 $000
Loss for the year (1,983) (2,625)
IFRS 16 adoption - (5)
Other comprehensive income:
Items that will be reclassified to profit and loss:
Currency translation differences - -
Total comprehensive loss for the year (1,983) (2,630)
Group Balance Sheet
AT 30 jUNE 2021
Audited Audited
2021 2020
$000 $000
Non-current assets
Intangible exploration assets 154,885 152,104
Property, plant and equipment 31 67
154,916 152,171
Current assets
Financial investments 2,499 2,010
Inventory 1,180 2,577
Trade and other receivables 1,838 1,272
Cash and cash equivalents 4,094 9,102
9,611 14,961
Total assets 164,527 167,132
Current liabilities
Trade and other payables (781) (1,478)
Lease liability (2) (34)
(783) (1,512)
Non-current liabilities
Lease liability - (2)
Total liabilities (783) (1,514)
Net assets 163,744 165,618
Equity
Share capital 56,517 56,517
Share premium 1,599 1,599
Foreign exchange reserve (69,857) (69,857)
Other reserves 2,687 2,927
Retained earnings 172,798 174,432
Total equity 163,744 165,618
Company Balance Sheet
AT 30 jUNE 2021
Audited Audited
2021 2020
$000 $000
Non-current assets
Property, plant and equipment 30 67
Investments in Group undertakings 145,099 145,099
145,129 145,166
Current assets
Financial investments 2,499 2,010
Trade and other receivables 11,730 8,090
Cash and cash equivalents 4,086 9,088
18,315 19,188
Total assets 163,444 164,354
Current liabilities
Trade and other payables (244) (230)
Lease liability (2) (34)
(246) (264)
Non-current liabilities
Lease liability - (2)
Total liabilities (246) (266)
Net assets 163,198 164,088
Equity
Share capital 56,517 56,517
Share premium 1,599 1,599
Foreign exchange reserve (147,715) (147,715)
Other reserves (2,550) (2,310)
Retained earnings 255,347 255,997
Total equity 163,198 164,088
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 to not present the individual parent undertaking income
statement. The result for the Company for the year was a loss of $999,000
(2020: loss of $1,184,000).
Group Cash Flow Statement
FOR THE YEAR ENDED 30 JUNE 2021
Audited Audited
2021 2020
$000 $000
Cash flows from operating activities
Loss before tax (1,983) (2,625)
Adjustments to reconcile Group loss before tax to net cash used in operating
activities:
Depreciation of property, plant and equipment 57 50
Finance (income) (820) (635)
Equity-settled share based payment transactions 109 112
Loss on disposal of financial investments - (7)
Loss on sale of property, plant and equipment 31 (3)
Adjusted loss before tax prior to changes in working capital (2,606) (3,108)
(Increase)/decrease in trade and other receivables (491) 58
Decrease in trade and other payables (624) (23)
Net cash (used in) operating activities (3,721) (3,073)
Cash flows (used in)/from investing activities
Purchase of property, plant and equipment (21) (11)
Purchase of intangible exploration assets (1,446) (1,602)
Receipts from sale of financial investments - 2,500
Transfer from bank deposits - 500
Dividends received 220 259
Interest received - 87
Net cash from investing activities (1,247) 1,733
Cash flows used in financing activities
Lease repayments (40) (40)
Net cash flows used in financing activities (40) (40)
Net decrease in cash and cash equivalents (5,008) (1,380)
9,102 10,482
Cash and cash equivalents at the beginning of the year
Net decrease in cash and cash equivalents (5,008) (1,380)
Cash and cash equivalents at the year end 4,094 9,102
Company Cash Flow Statement
FOR THE YEAR ENDED 30 JUNE 2021
Audited Audited
2021 2020
$000 $000
Cash flows from operating activities
Loss before tax (999) (1,184)
Adjustments to reconcile Company loss before tax to net cash used in operating
activities:
Depreciation of property, plant and equipment 56 49
Finance (income) (813) (645)
Equity-settled share based payment transactions 109 112
Loss on disposal of fixed assets 31 (7)
Adjusted loss before tax prior to changes in working capital (1,616) (1,675)
(Increase)/decrease in trade and other receivables (25) 15
Increase in trade and other payables 16 10
Net (cash used) in operating activities (1,625) (1,650)
Cash flows (used in)/from investing activities
Receipt from sale of financial investments - 2,500
Purchase of property, plant and equipment (20) (11)
Increase in inter-company funding (3,537) (3,033)
Transfer from bank deposits - 500
Dividends received from financial investments 220 259
Interest received - 87
Net cash (used in)/from investing activities (3,337) 302
Cash flows used in financing activities
Lease payments (40) (40)
Net cash flows used in financing activities (40) (40)
Net decrease in cash and cash equivalents (5,002) (1,388)
9,088 10,476
Cash and cash equivalents at the beginning of the year
Net decrease in cash and cash equivalents (5,002) (1,388)
Cash and cash equivalents at the year end 4,086 9,088
Group Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2021
Audited Share Share Foreign exchange reserve Other Retained earnings Total equity
capital
premium
reserves
$000
$000 $000
$000 $000 $000
At 1 July 2019 56,517 1,599 (69,857) 2,354 177,523 168,136
- - - - (2,625) (2,625)
Loss for the year
IFRS 16 adoption - - - - (5) (5)
Other comprehensive income for the year - - - - - -
Total comprehensive loss for the year - - - - (2,630) (2,630)
Share based payments - - - 112 - 112
Transfer between reserves - - - 461 (461) -
At 30 June 2020 56,517 1,599 (69,857) 2,927 174,432 165,618
- - - - (1,983) (1,983)
Loss for the year
Other comprehensive income for the year - - - - - -
Total comprehensive loss for the year - - - - (1,983) (1,983)
Share based payments - - - 109 - 109
Revaluation of EBT shares - - - (315) 315 -
Transfer between reserves - - - (34) 34 -
At 30 June 2021 56,517 1,599 (69,857) 2,687 172,798 163,744
Company Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2021
Audited Share Share Foreign exchange reserve Other reserves Retained earnings Total
capital
premium
Attributable to owners of Parent Company
$000 $000 $000 equity
$000 $000
$000
At 1 July 2019 56,517 1,599 (147,715) (2,883) 257,647 165,165
- - - - (1,184) (1,184)
Loss for the year
IFRS 16 adoption - - - - (5) (5)
Other comprehensive income for the year - - - - - -
Total comprehensive loss for the year - - - - (1,189) (1,189)
Share based payments: transfer from subsidiary undertaking - - - 112 - 112
Share based payments - - - 461 (461) -
Transfer between reserves - - - 1,071 (1,071) -
At 30 June 2020 56,517 1,599 (147,715) (2,310) 255,997 164,088
- - - - (999) (999)
Loss for the year
Other comprehensive income for the year - - - - - -
Total comprehensive loss for the year - - - - (999) (999)
Share based payments - - - 109 - 109
Revaluation of EBT shares - - - (315) 315 -
Transfer between reserves - - - (34) 34 -
At 30 June 2021 56,517 1,599 (147,715) (2,550) 255,347 163,198
NOTES TO THE FULL YEAR FINANCIAL STATEMENTS
For the year ended 30 June 2021
(1) Accounting Policies
Basis of preparation
The financial information in the financial statements has been extracted from
the statutory accounts which have been prepared in accordance with
International Financial Reporting Standards (IFRS) and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost convention as modified
by the revaluation of certain financial assets and liabilities (including
derivative instruments).
The announcement has been prepared on a basis consistent with the accounting
policies applied to the statutory accounts for the year ended 30 June 2021
with the one exception. These financial statements are presented in US
Dollars, the Group's presentation and functional currency, rounded to the
nearest $000.
The disclosed figures are not statutory accounts in terms of section 434 of
the Companies Act 2006. The statutory accounts give full disclosure of the
Group accounting policies and will be published as soon as they are available.
The 30 June 2021 annual results presented here are audited and the auditor has
issued an un-modified opinion and containing no statement under section 498
(2) and (3) of the Companies Act 2006.
On the statutory accounts for the year ended 30 June 2021, the auditor gave an
unqualified opinion and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006. The statutory accounts for the year ended 30
June 2020 have been filed with the Registrar of Companies.
Going concern
Global market conditions combined with the ongoing COVID-19 (coronavirus)
pandemic have caused significant additional macroeconomic uncertainty during
the 2021 calendar year that have impacted the prices and global demand for
oil, gas and products. The scale and duration of these developments remain
uncertain but could impact our earnings, cash flow and financial condition in
future periods.
Progress towards FID has been slower than we expected and there remain
considerable commercial and regulatory issues which require resolution before
FID can be attained. We cannot accurately predict the timing of resolution of
these concerns at the current time. Many of these concerns lie outside the
Etinde JO partners direct control. The timing of resolving these issues
impacts the Directors considerations relating to the potential scenarios
considered in their assessment of the going concern status of the group.
It was therefore considered appropriate that a number of scenarios were
considered by the Directors. These ranged from no FID being achieved in the
going concern window through to a number of different development scenarios.
In each scenario, in the going concern period, the Group continues to retain
positive cash balances. In addition to these scenarios, a number of
sensitivities were modelled which considered the impact of increases in opex
and capex. As noted previously these scenarios also demonstrated positive cash
balances twelve months from the date of approval of these financial
statements.
As the timing of progress towards FID is not within the control of the Group
should the commercial and regulatory issues not be resolved as anticipated in
our modelling it is likely that Bowleven would be required to raise additional
short term funding to bridge expenditure to FID.
At FID Bowleven is due to receive $25 million from our Joint Venture
partners under the terms of the 2015 farm-in agreement. The Directors do not
anticipate 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
funding issues for the Bowleven Group.
The Directors consider that the risk of the Government of Cameroon removing
the Etinde PSC contract from the Etinde JO partners is low to medium at the
current time, for the following reasons:
· the issue of the January 2021 date has not been raised as a formal
concern by SNH and SNH has approved all annual work programmes and budgets up
to and including the year ending 31 December 2021; and
· we will request the Government eliminate this uncertainty as part of
the FID regulatory approval process.
Looking to the future, the Directors are satisfied that the Group would be
able to secure additional debt and equity funding in order to finance its
share of the Etinde development.
Having taken the preceding funding risks into due account and after making
enquiries, the Directors are satisfied that the Group has adequate resources
to continue in operational existence for the foreseeable future and for at
least 12 months from the date of signing this report. Accordingly, the
financial statements have been prepared on a going concern basis as the
Directors are of the opinion that the Group has sufficient funds to meet
ongoing working capital and committed capital expenditure requirements.
(2) Other Notes
a) The loss attributable to ordinary shares and the number of ordinary
shares for the purpose of calculating the diluted earnings per share are
identical to those used in the basic earnings per share. The exercise of share
options or warrants would have the effect of reducing the loss per share and
consequently are not taken into account. In the prior year, the loss
attributable to ordinary shares and the number of ordinary shares for the
purpose of calculating the diluted earnings per share were identical to those
used in the basic earnings per share.
b) Directors have not recommended a dividend (2020: nil).
c) As at 30 June 2021, a contingent asset of $25 million is disclosed for
the FID consideration relating to the Etinde farm-out and will be credited to
intangible exploration assets once further clarity around Etinde project
sanction/FID is obtained.
(3) 2021 Annual Report and Accounts
Full accounts are scheduled to be posted 15 November to shareholders who
elected to continue to receive a hard copy report and can be obtained free of
charge, at the Company's registered office, 50 Lothian Street, Edinburgh, EH3
9WJ for a period of one month after publication. For shareholders who opted to
receive the annual report electronically, notification will be provided when
the annual report is available to access from the company website
www.bowleven.com (http://www.bowleven.com) .
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 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
fields
International Financial Reporting Standards
IFRS
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
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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