TIDMBLVN
RNS Number : 6941U
Bowleven plc
30 March 2023
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.
30 March 2023
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
2022.
HIGHLIGHTS
Operational
Etinde
-- 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. This activity level is expected to
continue until the conditions precedent to the completion of the
disposal of New Age's Etinde operating interest to Perenco are
satisfied and regulatory approval is provided. As such Bowleven
expects minimal capital outlay related to the Etinde asset until
the completion of New Age's disposal.
Corporate
-- The loss for the 6-month period was $1.0 million compared to
$1.3 million for the same period in the prior year. The decreased
loss is primarily due to lower recharges from Etinde, as project
development activities have been reduced, and further expenditure
reduction measures imposed by Bowleven's Board.
-- The Group cash balance as at 31 December 2022 was
approximately $0.25 million with a further $2.2 million held in a
financial investment, with no debt or material financial
commitments. As at the end of March 2023 the financial investment
has been partly converted to cash to be used to fund ongoing
operations, with the net financial investment now at $1.4 million.
As at 29 March 2022 the Group cash balance is circa $0.9
million.
-- The Directors have temporarily reduced UK staffing and
overhead costs from January 2023 until Perenco become the operator
at Etinde and further financing is secured. As a result, the
current Bowleven 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.
-- As set out in the Group's final results statement on 1
November 2022, whilst expenditure on the Etinde project is
currently low, Bowleven anticipates a higher expenditure later in
2023 on the basis that, once Perenco's Etinde interest acquisition
has been completed, it may seek to take a fresh look at Etinde
development options and put in place a full development team.
Assuming Perenco and New Age's transaction completes in June 2023,
Bowleven estimates that FID could be in late 2024, subject to
Perenco's initial review of the Etinde development options. Based
upon this potential timing, when combined with Bowleven's current
cash and liquid resources, the Directors' cash flow forecasts and
projections indicate a material risk that Bowleven will fully
utilise its existing cash resources by the end of 2023. This gives
rise to a material uncertainty regarding the going concern status
of the Group.
-- The Board has therefore been considering its fundraising
options and expects to seek to raise additional equity capital in
2023 to help to finance the Group's ongoing corporate activities
and to assist financing its share of the future expenditure as the
Etinde project progresses towards FID. Planning for an equity
fundraising remains at an early stage and there can be no certainty
that a fundraising will be concluded, nor as to the structure or
terms of any such fundraising. To the extent possible, the Board
will seek to respect shareholders' pre-emption rights. Bowleven
will make further announcements as appropriate.
Eli Chahin, Chief Executive Officer of Bowleven plc, said:
"We remain on the verge of what we believe to be a major turning
point in the business with the expected upcoming change of the
Etinde operatorship once Perenco secures regulatory approval.
This is expected to be a key milestone in progressing what is
hoped to be a transformational energy project for Cameroon ,
accelerating what has to date been a challenging timetable towards
hydrocarbon production at Etinde for the benefit of all the JV
Partners. As demonstrated by the recent signing of a bilateral
co-operation agreement on hydrocarbon monetization with neighboring
Equatorial Guinea, we are on the cusp of a new energy horizon for
Cameroon that will impact the lives of many. We look forward to
keeping our shareholders abreast of the anticipated positive
developments over the coming months."
ENQUIRIES
For further information, please contact:
Bowleven plc
Eli Chahin, Chief Executive 00 44 203 327 0150
Camarco (Financial PR)
Owen Roberts
Charlotte Hollinshead
Hugo Liddy 00 44 203 757 4980
Shore Capital (NOMAD and Broker)
Robert Finlay 00 44 207 601 6100
Daniel Bush
Angus Murphy
A copy of this announcement is available on the Bowleven website
www.bowleven.com
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.
CEO's REVIEW
The 6 month period ending 31 December 2022, has been another
frustrating period with little in the way of positive developments
to report on regarding our stake in the Etinde development project
following the agreement of the conditional sale of the Operator's
stake to Perenco in June 2022.
Whilst New Age and Perenco seek governmental approval and the
resolution of a number of other conditions precedent to completion,
New Age has placed the project on hiatus with little other than
"care and maintenance" based operations.
On the regulatory side, New Age has assisted SNH in completing
an audit of expenditure at Etinde covering the period from 2015 to
2020 and they are in negotiations regarding the 2023 work plan and
budget.
Perenco has not, to date, sought to directly discuss its plans
for the future of Etinde development with Bowleven or LUKOIL,
although we have been made aware of some of their potential ideas
indirectly. We consider the financial and strategic acquisition
merits of Perenco's purchase to be compelling and there are options
we think are currently being assessed that would lead to
commencement of production at Etinde in a cost effective and
profitable way for the benefit of all Etinde JV Partners.
The Board believes that Bowleven will need to raise additional
funds in 2023 in order to fund its corporate overheads and the
likely expenditure required of Bowleven from the point that Perenco
becomes Etinde operator, which we currently anticipate by June
2023, towards a potential FID date in late 2024. It should be noted
however that 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. Alongside this, the
Directors have reduced UK staff costs. The Board sees this as a
temporary measure, which will be in place during 2023 until Perenco
become operator and the Company has sufficient cash resources after
additional finance is secured.
New Age's transaction with Perenco
New Age agreed to sell its 37.5% stake and Operatorship in
Etinde to Perenco for an undisclosed amount in June 2022. Under the
terms of the deal, a number of conditions precedent remain
outstanding. Completion of this transaction is notably dependent on
Perenco reaching both governmental agreement with SNH as well as
commercial agreement with LUKOIL relating to some logistical
matters.
We understand from New Age that regulatory approval is expected
to be issued by SNH and the Government of Cameroon in mid-2023, and
that discussions are ongoing between LUKOIL and Perenco. Bowleven
has no involvement in these discussions. Under the terms of the
June 2022 transaction, unless completed beforehand, the transaction
termination date ('long stop date') is 12 months after signature
(June 2023).
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 2023, the Company had (unaudited) liquid
resources (comprising cash and a financial investment) of
approximately $2.3 million.
The Group needs to secure funding to underpin the reduced cost
base we have implemented during 2023, to fund our share of current
and future joint venture spend as aligned with the preferred
development plan, and the necessary cash buffer to meet cost
contingencies.
As set out above, the Board is currently working on plans to
raise additional equity capital in 2023 to help 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. However, planning for an equity fundraising remains at
an early stage and there can be no certainty that an equity
fundraising will be concluded, nor as to the terms of any such
fundraising.
Since December 2022, the business has made further cost
reductions, through a combination of redundancy and moving all
remaining staff onto a part time basis to reduce the Group's
controllable cash burn as far as possible. This is a temporary
measure which Bowleven anticipates to change once it has sufficient
cash resources after a fundraising occurs and Perenco completes its
acquisition.
Monthly expenditure at Etinde remains low as New Age continues
to operate the business on a largely suspended, care and
maintenance basis. However, we expect that, on transfer of
ownership to the new operator, Perenco will rapidly put a new
project team in place and commence development planning activity
over a short period of time. As previously discussed, the timing
and financial impact of this remains uncertain, but its impact on
Bowleven's current expenditure levels will likely be substantial.
Without a further cash injection to fund the period to FID, there
is a material uncertainty around the Group's ability to operate as
a going concern.
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 2023,
the Directors have concluded that Bowleven is highly likely to need
to complete a fundraising in 2023 in order to continue to fund the
Group's operations as the Etinde project progresses towards FID,
although the timing of FID and the level of future expenditure
required of Bowleven is an area of considerable uncertainty.
Final Investment Decision for Etinde
The current JV partners have recommended to the regulator, SNH,
that we move forward on the basis of the EG development option,
which leaves essential commercial and large-scale governmental
approval issues to resolve. There would also be a significant
number of commercial and technical details that require further
analysis and commercial negotiation with Marathon Oil, the Bioko
Island facility operator. In addition, the EG option would need
formal regulatory approval from both SNH and the Government of
Cameroon and the signature of an intergovernmental agreement
between Cameroon and Equatorial Guinea. In our opinion, the
landmark signing during March 2023 of a bilateral cooperation
agreement between Cameroon and Equatorial Guinea to jointly develop
and monetise oil and gas projects along their respective borders
bodes well for the monetisation of hydrocarbons and energy
sovereignty. Currently the agreement is focused on two
Chevron-operated fields and could serve as a template for the
Etinde field optionality.
We do not know what, if any, alternative development scenario
Perenco may propose to the JV partners nor whether these plans will
meet with JV partner's collective approval. But we draw comfort
that a precedent has now been established to mitigate the
associated intergovernmental issues that previously challenged such
bilateral developments.
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.
OPERATIONS REVIEW
Etinde Exploitation, Offshore Cameroon (25% equity interest)
During this 6 month operations period, New Age's technical staff
completed the SNH agreed FY2022 technical work plan making several
additional internal reports available to the JV partners. These
built upon and finalised various outstanding economic and technical
modelling issues as well as presenting a geo-technical risk and
resources assessment of the IC discovery and several exploration
targets to the west of the IM discovery. These were detailed in
Bowleven's 30 June 2022 Operations Review, included within the
previous annual report.
Since October/November 2022, New Age has scaled back its
remaining operations to the maintenance of the Etinde project
office in Cameroon and a small scale watching and management brief
for a handful of its London based staff.
A draft FY 2023 Work Plan and Budget has been prepared on the
basis of minimal technical activity, however this has yet to be
approved. Expenditure is being approved on a quarter by quarter
basis by the JV partners. All parties, including SNH, are aware
that this interim budget will be replaced by Perenco once their
transaction with New Age completes, unless terminated if it reaches
its June 2023 long stop date.
During the second half of 2022, SNH completed a cost recovery
expenditure audit of Etinde covering the periods from 2015 to 2020.
As can be expected, SNH disallowed a percentage of the expenditure
across that period, which moves from recoverable to non-recoverable
under the PSC terms. This has been the subject of ongoing
discussion with SNH by New Age, as Operator. At the current time,
the JV partners and SNH remain in dispute regarding the PSC
recoverability of $10 million of expenditure covering the period
2014 to 2020.
Volumetric Update
P50 (C2) net contingent resources to Bowleven on the current 25%
licence interest are 61 mmboe following the 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.
FINANCE REVIEW
The Group reports a loss of $1.0 million (H1 2021: loss of $1.2
million) for the six months ended 31 December 2022.
The Group's current period G&A expense charge was $1.1
million (H1 2021: $1.3 million) which was somewhat lower than the
equivalent period in the prior year, reflecting the impact of
further cost saving measures. This includes $0.3 million of Etinde
G&A costs (H1 2021: $0.3 million) charged by the Operator.
Finance income comprises interest and dividend income of $0.1
million (H1 2021: $0.1 million), foreign exchange loss of $0
million (H1 2021: loss $0.03 million) and a mark to market loss of
$0.06 million (H1 2021: gain $0.02 million) arising from the
revaluation of the Group's financial investment.
Capital expenditure cash flows during the 6 month period were
$0.2 million (H1 2021: $0.3 million) all of which relates to
Bowleven's share of the Etinde pe-development phase project
expenditure recharged by the Operator.
At 31 December 2022, Bowleven had $0.2 million of cash and cash
equivalents and no debt (H1 2021: $2.5 million and no debt).
Bowleven owned $2.2 million of financial investments in preference
shares (H1 2021: $2.5 million), which generates a reasonable
financial return at relatively low investment risk. This investment
is being liquidated in an orderly manner during 2023 and converted
to cash to fund the Group's on-going operations. There will be a
corresponding reduction in dividend income during 2023.
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.
At the completion of the 2021/22 financial reporting cycle,
Bowleven's auditors (BDO LLP) raised the question of the likely
audit fees for the FY 2022/23 cycle and the subsequent period. BDO
proposed to charge a substantial increase in the base fee plus a
significant additional sum to cover the expected cost of a change
in audit process driven by changes to UK audit regulation. Whilst
we fully understand the current dynamics in the regulated UK audit
marketplace, we considered the overall proposed fee increase to be
unwarranted. On this basis, Bowleven and BDO have agreed to part
company and BDO has tendered its resignation. We are currently in
discussions with a number of other major UK audit firms to replace
BDO for the audit of the Group financial statements for the year
ending 30 June 2023.
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 transaction between New Age and Perenco; and
2. A fundraising to provide additional capital to allow the Group to continue its operations.
During the remainder of 2023, if the EG option is pursued, the
Group expects to continue to work alongside the other Etinde JV
partners to undertake commercial discussions with Marathon Oil as
operator of the Bioko Island facilities JV. Subject to obtaining
approval for the EG development option from SNH, we expect to
support bilateral discussions between the Governments of Cameroon
and Equatorial Guinea alongside SNH, Marathon Oil and other
interested parties of those countries. Once the legal and
commercial development framework is agreed, we expect the project
to proceed to FID and to raise investment finance from commercial
debt finance providers, our shareholders and other potential equity
investors to support the investment required in project
development.
As current cash and liquid investment resources continue to
decline through the combination of normal operating costs and
continued low level development planning-related capital investment
at Etinde, our safety margin is continuing to decrease. Having
reviewed a number of possible FID, opex and capex scenarios (which
are described further in note 2 to these interim financial
statements), the Directors' cash flow forecasts and projections
indicate a material risk that Bowleven will fully utilise its
existing cash resources by the end of 2023. The Directors are
therefore of the opinion that it is highly likely the Group will
need to complete a fundraising in order to meet its ongoing working
capital and committed capital expenditure requirements as the
Etinde project progresses towards FID.
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. Whilst we currently expect FID to
occur by late 2024, this is reliant on many of the above
considerations being resolved during 2023, including the
transaction between New Age and Perenco completing. Even with a
successful Bowleven fundraising taking place in 2023, there will
continue to be a high financial risk for Bowleven if FID slips to
2025 or if there is a requirement for the Group to contribute to
higher investment spending on Etinde than currently expected.
In addition, it remains possible that Bowleven will need to seek
additional short-term financing to allow the Group's cash
expenditure to bridge any gap to attaining FID and the receipt of
the $25 million FID payment (in addition to the proposed
fundraising plans discussed above). Additional funding requirements
will depend on the circumstances at the time and the time taken 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:
-- Oil price volatility,
-- Joint venture partner alignment,
-- Governmental approval of a revised field development plan,
-- 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,
-- Timing of the completion of the transaction between New Age and Perenco,
-- Raising finance for Bowleven to continue its operations and
to finance its share of project expenditure,
-- 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,
-- 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
29 March 2023 29 March 2023
GROUP INCOME STATEMENTS
6 months 6 months
ending ending
31 December 31 December Year ending
2022 2021
(unaudited) (unaudited) 30 June
$000 $000 2022
(audited)
$000
-------------------------------------- --- -------------- -------------- --------------
Revenue - -
Administrative expenses (1,055) (1,278) (2,376)
Impairment - - -
-------------------------------------- --- -------------- -------------- --------------
Operating loss before financing (1,055) (1,278) (2,803)
Finance and other income 45 58 (108)
------------------------------------------- -------------- -------------- --------------
Loss from operations before taxation (1,010) (1,220) (2,484)
Taxation - - -
Loss for the period/year from
continuing operations (1,010) (1,220) (2,484)
------------------------------------------- -------------- -------------- --------------
Basic and diluted loss per share
($/share) from continuing operations (0.00) (0.00) (0.01)
------------------------------------------- -------------- -------------- --------------
GROUP STATEMENTS OF COMPREHENSIVE INCOME
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
$000 $000 $000
---------------------------------------------- ---------------- -------------- ------------
Total comprehensive loss for the period/year (1,010) (1,220) (2,484)
---------------------------------------------- ---------------- -------------- ------------
GROUP BALANCE SHEETS
31 December 31 December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
$000 $000 $000
=============================== ============== ============== ============
Non-current assets
Intangible exploration assets 155,540 155,195 155,433
Property, plant and equipment 7 28 13
------------------------------- -------------- -------------- ------------
155,547 155,223 155,446
Current assets
Financial investments 2,193 2,481 2,251
Inventory 1,180 1,180 1,180
Trade and other receivables 1,665 1,789 1,858
Cash and cash equivalents 247 2,485 1,273
------------------------------- -------------- -------------- ------------
5,285 7,935 6,562
Total assets 160,832 163,158 162,008
------------------------------- -------------- -------------- ------------
Current liabilities
Trade and other payables (502) (571) (668)
Lease liabilities - (9) -
Total current liabilities (502) (580) (668)
Net assets 160,330 162,578 161,340
------------------------------- -------------- -------------- ------------
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 2,741 2,767
Retained earnings 169,304 171,578 170,314
------------------------------- -------------- -------------- ------------
Total equity 160,330 162,578 161,340
------------------------------- -------------- -------------- ------------
GROUP CASH FLOW STATEMENT
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
$000 $000 $000
============================================ ============== ============== ============
Cash Flows from Operating Activities
Loss before tax (1,010) (1,220) (2,484)
-------------------------------------------- -------------- -------------- ------------
Adjustments to reconcile Company loss before tax to net cash used
in operating activities:
Depreciation of property, plant and
equipment 5 12 18
Non-cash operating costs - - -
Finance costs/(income) (45) (58) 108
Equity-settled share-based payment
transactions - 54 80
Adjusted loss before tax prior to
changes in working capital (1,050) (1,212) (2,278)
Decrease/(increase) in trade and other
receivables 307 54 (18)
Decrease/(increase) in trade and other
payables (177) (242) (170)
Net (Cash used) in operating activities (920) (1,400) (2,466)
Cash flows used in investing activities
Purchase of intangible exploration
assets (216) (318) (572)
Dividends received from financial
investments 110 110 220
Net Cash (used in) investing activities (106) (208) (352)
-------------------------------------------- -------------- -------------- ------------
Cash flows used in/from financing
activities
Lease payments - (1) (3)
Net cash flows from financing activities - (1) (3)
Net decrease in cash and cash equivalents (1,026) (1,609) (2,821)
-------------------------------------------- -------------- -------------- ------------
Cash and cash equivalents at the beginning
of the period/year 1,273 4,094 4,094
Net decrease in cash and cash equivalents (1,026) (1,609) (2,821)
-------------------------------------------- -------------- -------------- ------------
Cash and cash equivalents at the
period/year end 247 2,485 1,273
-------------------------------------------- -------------- -------------- ------------
GROUP STATEMENT OF CHANGES IN EQUITY
Foreign
Called-up exchange Other Retained Total
share capital Share Premium reserve reserves earnings equity
$000 $000 $000 $000 $000 $000
-------------------------------- --------------- ---------------- ---------- ---------- ---------- ---------
At 1 July 2021 56,517 1,599 (69,857) 2,687 172,798 163,744
Loss for the period - - - - (1,220) (1,220)
Other comprehensive income for - - - - - -
the period
Total comprehensive income for
the period - - - - (1,220) (1,220)
Share based payments - - - 54 - 54
At 31 December 2021 56,517 1,599 (69,857) 2,741 171,578 162,578
-------------------------------- --------------- ---------------- ---------- ---------- ---------- ---------
Loss for the period - - - - (1,264) (1,264)
Other comprehensive income for - - - - - -
the period
-------------------------------- --------------- ---------------- ---------- ---------- ---------- ---------
Total comprehensive income for
the period - - - - (1,264) (1,264)
Share based payments - - - 26 - 26
At 30 June 2022 56,517 1,599 (69,857) 2,767 170,314 161,340
-------------------------------- --------------- ---------------- ---------- ---------- ---------- ---------
Loss for the period - - - - (1,010) (1,010)
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
-------------------------------- --------------- ---------------- ---------- ---------- ---------- ---------
NOTES TO THE INTERIM STATEMENTS
For the 6 months ended 31 December 22022
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 2022 have been filed with the Registrar of
Companies. The auditor's report on the annual report and accounts
for the year ended 30 June 2022, 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 (or Perenco in due course) and
2) the level of spending required under the 2023 Etinde work
plan and budget ('WPB'), which has been drafted but has yet to be
approved.
In the absence of the completion of the transaction between New
Age and Perenco, New Age have prepared an Etinde WPB for FY 2023,
which has currently not been formally approved by either the JV
partners nor SNH. This WPB was prepared on common understanding
that it would be supplemented/replaced once Perenco became
operator, reflecting the proposed change in project operator and
potential for changes to the operational plan. In the meantime, the
Etinde partners are approving Etinde expenditure on a quarter by
quarter basis.
Notwithstanding the period of time it is taking for New Age's
transaction with Perenco to complete, progress towards FID has
remained slower than we expected for several years. It remains to
be seen what Perenco may propose as an alternative to the current
JV partner agreed development scenario. The current proposal
continues to have considerable commercial and regulatory issues
which require resolution before FID can be attained. The timing of
resolution of these formalities cannot be accurately predicted as
many of them are not within the Etinde JV partners' direct
control.
The Directors have considered a number of different operational
scenarios for 2023 onwards in order for us to prepare short and
medium cash flow forecasts and projections for the Etinde
development project and hence the Bowleven Group. The Directors
took the above issues into consideration when determining the
potential scenarios to use in their assessment of the going concern
status of the Group.
These scenarios ranged from no FID being achieved in 2023
through to modelling the impact of a number of different
development options on budgeted, forecasted and projected cash
flows until December 2025. As a 2023 WPB for Etinde project
spending hasn't to date been approved, with Perenco expected to
become operator in the future, we have prepared our own forecast
and projections based on various assumptions regarding the steps
and actions that Perenco may take and the speed at which they will
progress the development plan towards FID. We have assumed FID will
occur in late 2024 in our base case scenario. Our assumption is
that Perenco will most probably choose to conduct a new assessment
of Etinde development options and these steps will most likely
include a new FEED process. By their nature, our expenditure
projections for 2023 and later are highly uncertain at this point
in time. We believe that we have prudently adopted a more
conservative approach to costs and potentially a more rapid
implementation timetable than Perenco may adopt in practice.
In the scenarios modelled, the Directors' cash flow forecasts
and projections indicate a material risk that Bowleven will fully
utilise its existing cash resources by the end of 2023. This gives
rise to a material uncertainty regarding the going concern status
of the Group. The Directors have therefore concluded that it is
highly likely that the Group will need to raise additional finance
in 2023 in order to continue to fund the Group as the Etinde
project progresses towards FID.
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, the 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
2021;
-- The JO will request the Government eliminate this uncertainty
as part of the FID regulatory approval process; and
-- The expected addition of Perenco to the JO as operator, in
place of New Age, is likely to significantly reduce the practical
risk of the Government of Cameroon entering default
proceedings.
After taking the preceding funding risks into account, the
Directors believe that the Group should be able to secure
additional funding. Planning for an injection of new finance is
underway. However, it remains at an early stage and no formal
arrangements have been put in place and no agreements have been
reached at the current time. Therefore there is no certainty that
additional financing will be secured, nor as to the terms of any
such financing if it is secured.
Even with a successful Bowleven fundraising taking place in
2023, there will continue to be a high financial risk for Bowleven
if FID slips to 2025 or if there is a requirement for the Group to
contribute to higher investment spending on Etinde than currently
expected. In addition, it remains possible that Bowleven will need
to seek additional short-term financing to allow the Group's cash
expenditure to bridge any gap to attaining FID and the receipt of
the $25 million FID payment (in addition to the proposed
fundraising plans discussed above). 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. Whilst acknowledging
this material uncertainty, the Directors remain confident of
raising finance in 2023. Accordingly, 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.
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.
4. Other Notes
a) The basic earnings per ordinary share is calculated on a loss
of $1,010,000 (H1 2021: loss $1,220,000) 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 2022 the diluted
earnings per share is calculated on a loss of $1,010,000 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 website 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 Bowleven plc (LSE: BLVN) and/or its subsidiaries
plc as appropriate
CFA Central African Francs
Companies Act 2006 the United Kingdom Companies Act 2006 (as amended)
('the Act')
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
IFRS Intra-Isongo reservoirs horizons have been identified
as actual or potential oil and gas condensate 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
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
GBP, GB Pounds, GBP Great Britain Pounds Sterling
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END
IR MZGZFGLVGFZZ
(END) Dow Jones Newswires
March 30, 2023 02:00 ET (06:00 GMT)
Bowleven (AQSE:BLVN.GB)
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부터 5월(5) 2024 으로 6월(6) 2024
Bowleven (AQSE:BLVN.GB)
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부터 6월(6) 2023 으로 6월(6) 2024
