Bowleven announce interim results
Bowleven, the Africa focused oil and gas exploration group traded on AIM, today announces its interim results for the six months ended 31 December 2013.
Building on the success of the IM-5 well and the upside potential of the Intra Isongo reservoir, the Group continues to progress the monetisation options:
o Progressing towards Etinde initial phase development Final Investment Decision (FID) integrated with fertiliser project FID
Etinde Exploitation Authorisation Application (EEAA) submitted; award anticipated shortly.
Exploitation Authorisation (EA) award provides access to funding sources through to FID.
Gas Sales Agreement (GSA) negotiations well advanced (extended to 20 year supply); GSA signature targeted by all parties H1 2014.
o Cameroon LNG (CLNG) initiative advancing towards FEED and first cargo targeted 2019/20
Creates additional potential offtake solution for Group’s discovered and potential resource base.
Capacity allocation discussions to supply GDF scheme proceeding constructively.
Resource audit for GDF scheme reinforces view of significant additional resource potential in the Intra Isongo.
Exploration activity on Bomono and Kenya ongoing.
INTERIM REPORT HIGHLIGHTS
(1) Continuing progress towards the monetisation of Etinde liquids and gas:
o Expanded EEAA submitted to Cameroon authorities; award anticipated shortly.
o Substantial increase in P50 net contingent resources announced in November 2013; 30% increase to 263 mmboe.
o Progress demonstrated on both state-supported gas offtake solutions:
(1) Fertiliser plant (Stage I of the Etinde development plan)
Ferrostaal GSA progressing towards agreement; now includes 20 year supply to fertiliser plant.
GSA is integral in the path to FID and will ensure aligned schedules for delivering first gas to the fertiliser plant, targeted H1 2017. 2
GSA signature targeted by all parties H1 2014.
(2) Cameroon LNG (CLNG)
Intra Isongo results substantially increased the low risk prospective resource volumes on Etinde and reinforced the potential for additional gas offtake solutions, including CLNG.
Momentum building on GDF operated CLNG project; advancing towards FEED with first cargo targeted for 2019/20.
Capacity allocation discussions commenced for supply of Etinde gas (allowing for future successful appraisal/development drilling).
(2) Exploration programme advancing:
o Rig negotiations advanced and preparation for second well site underway; two well exploration programme planned H2 2014.
o Several farm-out negotiations advancing.
o Processed airborne geophysical survey (FTG) highlights several basins on the block.
o 2D seismic tender process at an advanced stage and award imminent.
o Awarded three exploration blocks with applications for two blocks pending.
Group cash balance at end December 2013 circa $38 million (end February 2014 circa $34 million), no debt.
Financing flexibility maintained:
o Petrofac provides up to $500 million development funding for Etinde with up to $60 million IM-5 well costs reimbursed at FID.
o Actively engaged with a range of potential industry and finance sources to provide funding for operations, both before and after FID.
o Discussions ongoing with a number of parties regarding the potential farm-out of interests in Etinde and Bomono.
o Strategic partnership with First Oil provides funding towards Kenya exploration activities.
Kevin Hart, Chief Executive of Bowleven plc, said:
“We continue to make progress towards sanction of the initial phase of the Etinde development. Whilst the granting of the EA has taken longer than expected to pass through the Cameroon authorities, all indications are that this process is almost complete with an EA award anticipated shortly. The EA award gives development rights for an initial 20 year period and provides access to sources of capital to fund the company through to FID.
Also more positively, the contemporaneous workstreams around resources, engineering and gas sales have increased our overall confidence level around the delivery of the combined fertiliser and upstream projects considerably. Integration with the planned fertiliser project is essential and while joint project FID is more likely around the year-end, the GSA, the driver for building aligned schedules for both the fertiliser and Etinde projects to deliver first gas in H1 2017, is well advanced. Beyond the 20 year gas supply to the fertiliser plant, the Intra Isongo reservoir interval encountered at IM-5, has significantly increased the potential for other offtake solutions to be considered. Momentum is building behind the proposed Cameroon LNG scheme and this represents a significant opportunity to monetise the considerable upside potential identified on Etinde, both in Block MLHP-7 and into our Sapele discoveries in Block MLHP-5. As part of this initiative we will continue to integrate the Intra Isongo results into a potential future appraisal/development drilling campaign to support our wider basin development plans. Elsewhere, we continue to focus on exploiting our exploration portfolio and look forward to seismic activity in Kenya and exploration drilling on Bomono in the coming period.”