TIDMBLVN
RNS Number : 8655T
Bowleven plc
30 March 2021
30 March 2021
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
2020.
HIGHLIGHTS
-- The Operating Committee through its resolution dated 11
December 2020 has given the JV partners permission to negotiate a
new Etinde Exclusive Exploitation Authorisation ('EEA' or 'EEEA').
The current EEA will continue until replaced.
-- Group cash balance at 31 December 2020 was circa $6.4 million
with a further $2.1 million held in financial investments, with no
debt and material financial commitments.
-- Front End Engineering Design ('FEED') completed in January
2021 marking a very significant milestone in progressing Etinde
towards FID and development approval.
-- Ongoing market volatility caused by the COVID-19 global
pandemic in 2020, and the associated fall in global oil prices, has
continued to slow down and impact negatively on progressing Etinde
development overall. This has particularly impacted various
commercial and legal/regulatory approval negotiation processes. As
a result, FID is likely to slip into 2022.
-- The recent oil price recovery significantly helps project economics.
-- The JV partners continue to place a high priority on
maximising project NPV and minimising capital development costs as
we conclude Etinde development and commercial options.
Operational
Etinde
-- In December 2020 the Operating Committee gave the JV partners
permission to apply for and negotiate a replacement EEA. The
current licence continues to be in force until replaced. The new
agreement would reflect a change in the development plan, focussing
on the Cameroon gas thermal power generation sector as the base
level use of Etinde gas.
-- During 2020, the JV partners completed:
o FEED on the development facilities and associated pipeline
infrastructure combined with Health, Safety, Security and
Environment ('HSSE'), pipeline route surveys, reservoir risk
analysis and mitigation and the preparation of the initial
sub-surface drilling plan
o FEED builds on previously completed extensive pre-FEED studies
undertaken in 2019
o Reprocessed the Seismic data for the entire licence area.
-- The JV partners have also undertaken to continue commercial
activities focused around a liquids-based development alongside
discussion of sales terms with potential gas, condensate and LPG
off-takers.
-- New Age and Bowleven jointly appointed Cofarco (a Paris based
financial advisory business) as lead advisor in relation to raising
debt finance to fund Etinde development.
Corporate
-- Group cash balance at 31 December 2020 was circa $6.4 million
with a further $2.1 million held in financial investments, with no
debt and material financial commitments.
-- Bowleven considers the value of cash and investment of $8.5
million to be sufficient to meet the Group's financial requirements
for at least the next 12 months.
-- The loss for the 6 month period was $0.9 million compared to
$1.4 million in the equivalent period last year.
-- Management continues to diligently manage costs and minimise
cash burn to support G&A up to FID, focused on continuing to
work alongside the Etinde JV partners during the rest of 2021 to
explore both commercial opportunities and related development
engineering designs and costs, with a view to having a sufficiently
detailed, costed development plan to reach FID before end of Q1
2022.
Eli Chahin, Chief Executive Officer of Bowleven plc, said:
"During 2020, we were pleased with the progress made towards
achieving FID at Etinde. We have completed a significant number of
the most important technical work streams and made strong progress
on a number of other important project development related work
streams. Certain hurdles persist, predominantly around agreeing the
many commercial aspects of the development with SNH, the Government
of Cameroon and other interested parties. The principal outstanding
requirements to achieving FID are now almost entirely commercial
and regulatory approvals relating to the development concept we
will propose.
Currently, the facilities development cost, relative to the
production levels we can achieve due to commercial and regulatory
approval issues relating to the sale or utilisation of methane gas
production, can be improved upon. Whilst the proposed 'Base Case'
development concept tested by FEED provides a positive outcome, the
economic value is lower than the minimum level the JV partners
consider desirable. The JV Partners are confident that further
discussions with the Government of Cameroon, represented by SNH,
can progress to a stage whereby a development concept with
significantly increased economics for all parties can be agreed
upon.
At a time of considerable market turbulence, we are fortunate to
benefit from a robust financial position, with in excess of $8
million of cash and investments on the balance sheet and no debt.
Coupled with our low-cost base, we remain well funded to reach FID,
after which we will be in a position to receive the $25 million
contingent consideration from the JV partners, instantly giving the
Company a significant cash injection.
Although the ongoing macro-economic conditions seen in 2020 and
beyond have negatively impacted the timing of the Etinde project,
we welcome the recent oil price strength and we continue to work
towards achieving FID as quickly as possible. We look forward to
keeping all of our stakeholders appraised on progress 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
Oliver Head 00 44 203 757 4980
Shore Capital (NOMAD and Broker)
Antonio Bossi 00 44 207 601 6100
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.
CEO's REVIEW
Calendar year 2020 has been one of mixed fortunes for the Etinde
development project. The current COVID-19 pandemic environment,
with its global reduction in economic activity and, widespread
lockdown measures has left us and the wider industry facing a
difficult operational environment. When this is combined with the
reduction in global hydrocarbon demand and pricing and the
increasing political and commercial priority to seek a faster
global transition to a greener energy generation future,
circumstances have created challenging economic conditions. In many
ways, this has actually acted to clarify much of our thinking, as
our development work has factored in the tough market conditions
seen in 2020; when taking into account recent oil price strength,
this puts the Etinde project in a stronger position.
We have seen significant technical progress made during the
year, which has brought the commencement of development closer.
Although there has also been limited movement on many of the
critical commercial issues, along with disruptions on the economic
front, we are confident of the Company's ability to progress during
2021 and progress Etinde towards FID.
The technical aspects of the surface and sub-surface development
and facilities aspects of the Etinde development concept have
progressed well during 2020. FEED has been completed on the gas
processing facilities alongside related environmental and pipeline
route studies, where the sea floor was surveyed for potential
geo-hazards along the planned routes for the sea floor surface
pipeline infrastructure. Combined with this, we have made further
advances on de-risking the geotechnical aspects of the development,
which we expect to further enhance during 2021 by the application
of the newly reprocessed seismic data.
With FEED completed, the financial, engineering and construction
aspects of the gas, LPG and condensate processing and storage
facilities are now very well understood from a planning and
budgetary cost point of view. Indeed, the JV partners stand ready
to proceed to the next stage of the process, which would be to seek
pre-qualification from potential EPCI providers and the
identification of construction and engineering partners. In
addition, we now have a very clear understanding of the likely cost
of the initial and subsequent capital investment demand, how these
may be financed and the likely ongoing operating cost of the
facilities.
Although significant advancements were seen from a technical
aspect in the period, much less progress has been made than we had
expected regarding the various open commercial issues. In part,
this is due to the impact of COVID-19 related measures adversely
impacting on the JV partners and other Government and interested
commercial parties due to the difficulty of arranging face to face
meetings and international travel. It also reflects the large
number of different Cameroon and international partners involved in
different aspects of the Cameroon domestic environment for
utilising natural gas. Progress has continued nonetheless, and we
look forward to making further progress during 2021 as COVID-19
restrictions abate.
The Etinde JV partners, SNH and the Government of Cameroon have
agreed that the first priority for Etinde gas will be given to
supplying the domestic marketplace and that 'surplus' gas can be
exported. However, limited progress has been made on filling out
the commercial details around this broad understanding during 2020.
For the Etinde JV partners, we require firm long-term gas demand
projections and supporting commercial agreements with minimal
technical or commercial uncertainty before FID. Moving from
conceptual understanding to commercial agreements remains a slow
and exacting process. The JV Partners remain committed to advancing
these during the year.
As a result of the challenging conditions the hydrocarbon sector
experienced during the period, we are re-evaluating our existing
development concepts with a view to seeking to further de-risk the
economic and financial aspects of the development. This can be
achieved by seeking to further reduce the initial capital
investment cost and/or increasing the initial and long-term
production levels and lower corporate taxation payments.
All JV partners agree that higher than previously expected
initial production levels are now necessary and that generating
this increase has become an immediate priority. There are several
different options, which could be used to accommodate our
requirements, but they will be subject to regulatory approval and
commercial agreements, which remain the subject of much multi-party
discussion. With positive, ongoing discussions between the JV
Partners, SNH and the Government of Cameroon, we are encouraged
that a commercially beneficial development plan can be agreed upon
for all stakeholders in the coming months.
Final Investment Decision for Etinde
We continue to make significant progress towards this very
important milestone. For the issues which the JV partners are
solely responsible, progress has been steady and significant. The
ongoing global COVID-19 response is likely to continue to impede
faster process on resolving commercial issues than we would prefer,
however we are monitoring the situation closely.
In addition, many of the most important considerations relating
to the domestic gas marketplace involve a wide range of different
national and international partners, of which we are not the most
significant in controlling the future timetable.
Whilst a late 2021 FID decision remains a plausible outcome, we
consider that the relatively slow progress resolving commercial
issues that lie outside the JV partners' immediate remit, but upon
which we are dependent, will impact on the eventual date.
Accordingly, we consider 2022 to be more likely. It is also
important to remember that once these decisions are finalised,
dealing with the likely impact of the financial aspects of the
Etinde development as well as agreeing all of the necessary
regulatory permissions and approvals we require, will still take
some months to resolve.
OPERATIONS REVIEW
Etinde Exploitation, Offshore Cameroon (25% equity interest)
Etinde Exclusive Exploitation Authorisation ( ' EEA ' or ' EEEA
' )
SNH, acting as regulator, has supported the JV partners'
application to negotiate a new EEA to replace the existing
Authorisation, which came into legal force in January 2015. We
expect the terms of the new agreement to largely follow those set
out in the existing agreement, but with a change in the authorised
basis of development from 2015's Fertiliser project based
development to one focused on supplying gas to domestic power
generation projects once the necessary infrastructure is available.
SNH's support is set out in the Operating Committee Resolution
stipulation:
"Authorise the Operator to apply for a new EEA for the
production of hydrocarbons including the delivery of gas to thermal
power plants, or any other projects confirmed by the State."
We also hope that we will receive permission to export 'surplus'
gas production. It is likely that the new EEA agreement will be
agreed alongside a revised field development plan and the Final
Investment Decision. SNH have reiterated that they have no
intention of taking steps to use the clauses in the existing EEA to
terminate the Etinde EEA. The current EEA remains in force until
replaced.
FEED
The JV partners appointed Technip after a competitive tender in
Spring 2020. FEED proper commenced in July 2020 and was completed
in early December 2020 except for some further work commissioned
under contract variation orders. This work was largely completed in
January 2021.
FEED was managed by the Operator using a joint project team
comprising a mixture of New Age and LUKOIL staff and individual
specialist consultants hired by New Age for the project. New Age's
geological and reservoir engineering specialists and New Age's
existing Drilling advisors supported FEED activity. FEED focused on
detailed design and development implementation planning of the
proposed Limbe gas processing facility concept. Earlier pre-FEED
studies concluded that this development concept was the optimum
solution based on our economic and technical assumptions.
The facilities concept is designed around either 1 or 2 wet gas
processing lines within a common support infrastructure. The design
is intended to be modular to allow a phased development based,
initially, on a single gas processing train. The two-train facility
is designed to have a name plate capacity to process c150 mmscf/d
of wet gas. However, the modular design allows a single processing
train, when fully optimised, to process up to 90 mmscf/d of wet
gas. Allowing for shrinkage and the different condensate/gas ratios
of the reservoir fluids (which also vary over time with production)
a single train facility will produce around 75 mmscf/d of dry
gas.
The initial 'base case' field development concept studied during
FEED comprised an IM only development with a single well head
platform, field gathering system and a high pressure pipeline to
transport wet gas to the Limbe processing facility. The Limbe
facility is designed to process wet gas into dry natural gas
(mostly comprising Methane), LPG, Propane and Condensate as well as
handling water and other by-products arising from processing. The
facility also includes storage capacity for condensate. The design
assumes that any storage for LPGs and methane gas will be the
responsibility of the end users. The initial design concept would
use a small amount of produced gas to self-generate electricity and
to utilise an Etinde specific Conventional Buoy Mooring ('CBM')
facility to load condensate onto Tankers. The Limbe facilities
condensate storage capacity would be flexed based on the likely
condensate offtake schedule and tanker capacity. We have placed an
illustrative video representation of the Limbe facility and
associated design, prepared by Technip as part of FEED, on our
website.
FEED is based around specific commercial assumptions provided by
SNH. The most important of these is that 20 to 25 mmscf/d of gas
production would initially be supplied to the domestic Cameroon
market to provide gas for the proposed thermal power station to be
designed and run by Aksa at Bekoko near to the city of Douala, some
60 km from Limbe depending on pipeline route. In addition, SNH has
indicated their intention to acquire all LPG production to supply
to the domestic market to reduce current LPG imports. The domestic
requirement would require SNH or others to build further facilities
to store and transport LPG and gas from our Limbe facility. Whilst
there will be a certain level of Etinde owned facilities (such as
metering and connectivity), FEED assumed the point of sale would be
at the Limbe facility itself. SNH has further indicated that they
see Etinde gas being provided to the proposed Limbe 350 MW thermal
power generation project, which was subject to an Expression of
Interest process initiated by the Government in Spring 2020.
The IM well head platform has been designed to minimise
installation and logistics costs using suction piles and a 3-leg
jacket design with 6 well slots. Two further well slots would be
added by the combination of using splitter well technology and
36-inch diameter conductor fixed onto the external support
framework of the platform, giving a design capacity to drill 8 to 9
wells.
Sub-sea Pipeline route surveys and environmental studies were
initiated during 2020 as part of the wider FEED related development
activity. The route surveys and a significant proportion of the
environmental studies were completed during 2020. This information
will feed into the Field Development Plan and other regulatory
approval processes during 2021.
The Operator has proposed that c50 mmscf/d of dry gas produced
could be re-injected back into the Upper Isongo and Intra-Isongo
reservoirs in a dry gas reinjection and recycling scheme. Gas
reinjection has the advantage of increasing condensate recovery
rates but comes at a substantial additional capital cost. This
would include 2 gas reinjection wells, gas compression system and a
high-pressure dry gas pipeline from Limbe to the IM well head
platform. Reservoir engineering modelling suggests that gas
breakthrough is likely to be relatively quick for the Upper Isongo
reservoir (2 to 3 years). Whilst gas breakthrough is much less
likely for the Intra-Isongo reservoir, which has higher condensate
levels, the higher initial pressure would require the Intra-Isongo
reservoir to be produced for 1 to 2 years to reduce reservoir
pressure to enable gas reinjection to occur.
During FEED a number of potential design changes and other
design optimisation considerations were identified. The FEED team
has currently identified these potential optimisation changes to
potentially reduce capital costs.
Following an initial consideration, the JV partners have
collectively agreed that the capital cost of initial base case
development scenario, based on IM only and 1 processing train, is
too high for the given level of production resulting in a
sub-optimal project NPV and too low rate of return on investment in
the current economic environment.
Collectively, we agree that the initial investment cost must be
further reduced and ideally production and revenue increased
significantly to the benefit of the project and Bowleven's
shareholders. There are multiple options available to the JV
partners depending on commercial and regulatory approval
considerations. These include negotiating commercial and fiscal
terms with SNH, a different approach to the development of the
field, export of excess gas and bringing forward the development of
the IE field combined with higher volumes of dry gas reinjection
than currently proposed.
As we suggested in the 2020 annual report, we always envisaged a
significant and uncertain period post FEED completion due to the
number of different work streams and the need to complete
commercial negotiations with SNH and other potential offtakers. The
legal and regulatory steps alone comprised the replacement EEA, the
Field Development Plan documentation and regulatory approval, the
participation agreement with SNH and the Government to permit SNH
to take up its potential 20% share of the Etinde field ownership
amongst other steps. We now envisage this commercial and regulatory
approval process to take some additional months in respect of some
of the potential ways we might opt to mitigate development costs.
We consider FID is now more likely to occur during 2022 than 2021
with the final decision reliant on the unanimity of the Joint
Venture partners and the decisions reached by the Government of
Cameroon.
Seismic reprocessing project
The seismic reprocessing project was completed on budget in
December 2020. The COVID-19 pandemic slightly delayed completion
due to its delaying of project initialisation and additional
processing activities undertaken following better than expected
results from earlier data processing steps.
The reprocessed data has significantly reduced the noise and
other data artifacts (mostly arising from the presence of younger
volcanic deposits), which significantly reduced the quality of the
seismic data from an analysis standpoint. Removal of seismic
reflection multiples alongside much better imaging of faults and
stratigraphical structures should allow a significant enhancement
in the accuracy of the seismic and geological interpretation for
the various Etinde fields. The immediate priority for 2021 is to
revisit the IM field interpretation with an aim to using the
improved seismic data quality to enhance the analysis of the field
and hopefully provide new data that mitigates or eliminates the
known uncertainties that exist in the data. This will provide more
accurate reservoir analysis, improve the accuracy of reserve and
resource estimates and help de-risk the subsurface development
plan.
Later in 2021, we intend to use the improved data to re-analyse
the various ID/IE well discoveries. The improved data quality
should enable us to correlate wells more accurately and to identify
and trace the extent of uncertain reservoir horizons (especially in
the IE 3 and IE 4 wells where there are multiple discoveries). The
thin bed study completed in 2020 focused on the ID and IE wells,
has already provided strong evidence that there is higher
hydrocarbon content than previously estimated in certain
horizons.
It is also hoped that further analysis of the higher quality
data will permit water and hydrocarbon bearing reservoirs to be
better identified using the seismic data itself.
Commercial developments
Domestic Gas sales
The Government of Cameroon has stated its preference for a mixed
hydroelectricity/gas power thermal electricity generation system
with roughly 70% of electricity generation supply coming from the
hydrothermal sector. To this end the Government launched an
expression of interest in early 2020 for a contract under which a
third party would build and operate a 350 MW power plant close to
Limbe. Whilst we understand several bids were submitted by the end
of August 2020, there has not been any further public comment.
Encouragingly, SNH informed us in mid-2020 that they and the
Government seek to utilise Etinde gas to supply this facility.
On the previously approved Aksa 150 MW thermal power plant based
at Bekoko, close to the city of Douala, we understand there have
been detailed discussions between Aksa, SNH, ENEO and Victoria Oil
and Gas plc ('VOG'). We understand that an electricity price may
have been agreed and that some commercial discussions have been
undertaken on matters such as gas demand and pipeline tariffs. As
part of the Gas Master Plan for the country, SNH have confirmed
they will build a pipeline between Limbe and Bekoko to transport
gas purchased from Etinde to supply to the Aksa power plant in
Bekoko and other potential customers in the Port of Douala
vicinity. There have been no discussions on gas supply agreements
between us, SNH, Aksa and VOG. We expect these to progress in
2021.
SNH has also indicated that they consider there may be some
further supply opportunities that they are discussing. We believe
these may relate to conversion of existing heavy oil fuelled power
stations to gas and other industrial developments. Whilst supply
logistics infrastructure, pricing and demand considerations are
likely to be significant in assessing whether these projects can be
supplied by Etinde gas at a commercially viable domestic gas price,
we are encouraged by this development. SNH anticipates the Bekoko
and Limbe projects to ultimately require about 70 mmscf/d with each
contract likely to be 20 years in duration.
COVID-19 and its associated delays have hampered progress during
the year, along with the complex and multi-faceted set of
commercial negotiations between different commercial organisations,
various parties in the Government of Cameroon and SNH.
Whilst we anticipate significant further progress in 2021, it is
clear that New Age and Bowleven need to raise external finance to
fund the Etinde development. Factors, which must be agreed before
FID, include the timetable for implementation and development, all
Governmental approvals, agreed commercial terms for gas supply and
certainty over project financing.
In respect of LPG supply, we have had preliminary discussions
with SNH who have set out their key parameters on pricing (in
general terms) and their requirement to be the sole customer for
Etinde LPG, to substitute some existing LPG imports. Whilst we have
pressed for more substantive commercial discussions, these have yet
to happen.
Bowleven and New Age jointly appointed Cofarco to act as lead
advisor in respect of potential debt financing requirements. They
have undertaken some preliminary economic modelling for valuation
purposes and had some 'no name' discussions with several potential
finance sources regarding the general position. One strong theme
was the importance of environmental and social issues as part of
our development, up to and including the need for any development
to be Carbon neutral in the long-term. These discussions were
preliminary in nature and there is an ongoing Operator led work
stream looking to appoint an advisor to support the environmental
development aspect of our field development plan.
Bomono, Onshore Cameroon (100% equity interest)
The Government of Cameroon has formally withdrawn the Bomono
licence. Legally, we may continue to have some potential
liabilities until we have had a formal licence closeout meeting
with SNH. This was expected to occur during 2020 but has not been
scheduled as yet due to COVID-19 and other time constraints.
Updates will be provided as and when appropriate.
Volumetric Update
P50 (C2) net contingent resources to Bowleven on the current 25%
licence interest are 61 mmboe following the Resource reassessment
undertaken by D&M 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. Following completion of the seismic
reprocessing of the IC and IE areas, later in 2021 or thereafter,
there may be an associated update to the contingent resources of
those fields as well.
FINANCE REVIEW
The Group reports a loss of $0.9 million (H1 2019: loss $1.4
million) for the six months ended 31 December 2020.
The Group's current G&A charge was $1.3 million compared to
$2.3 million for the equivalent period last year. This includes
$0.4 million of G&A costs relating to the Etinde project (H1
2019: $0.5 million) charged by the Operator. This represents a
decrease of $0.9 million on Bowleven controllable G&A
expenditure in the first half of FY2020/21 compared to the
equivalent period last year in line with our strong focus on cost
control.
The reduction in the Etinde Opex cost recharge from the Operator
is principally due to lower corporate activity combined with cost
reductions due to office closures following COVID-19 lockdown
measures in Cameroon and the UK. In addition, Expat staff based in
Cameroon were repatriated throughout the period.
Bowleven is likely to incur slightly higher costs going forward
reflecting both our in-house activity and the Etinde Operators
G&A relating to the pre-FID Etinde development project.
Finance income comprises interest and dividend income of $0.1
million (H1 2019: $0.2 million), foreign exchange gain of $0.2
million (H1 2019: gain $0.2 million) and a mark to market gain of
$0.1 million (H1 2019: gain $0.6 million) arising from the
revaluation of the Group's financial investment.
Capital expenditure cash flows during the 6 month period were
$1.8 million (H1 2019: $0 million) all of which relates to
Bowleven's share of the Etinde geological and FEED related project
expenditure recharged by the Operator.
The main elements of FEED expenditure incurred during the
calendar year 2020 after allowing for the forecast costs to
complete in early 2021 was around $12.5 million in total, which is
less than budgeted and broadly in agreement with the approved
project AFEs. Bowleven's total share of the main FEED elements will
be around $3.1 million in total. Environmental and pipeline route
studies alongside reservoir engineering and geological risk
mitigation studies and development of the field drilling plan
concepts added a further c$4 million of FEED related capital
expenditure during this calendar year.
At 31 December 2020, Bowleven had $6.4 million of cash and cash
equivalents and no debt (H1 2019: $10.9 million and no debt) plus
$nil (H1 2019: $0.5 million) of bank deposits relating to security
for bank guarantees issued in respect of the Bomono licence.
Bowleven continues to own $2.1 million of financial investment in
preference shares (H1 2019: $2.2 million), which generates a
reasonable financial return at relatively low investment risk.
Under the terms of the Etinde farm-out transaction in March
2015, the Group also has access to a further $25 million, which is
receivable on achieving Etinde FID. This is held as a contingent
asset pending further clarity around the sanctioning of the Etinde
project.
OUTLOOK
During the remainder of 2021, the Group expects to continue to
work alongside the other Etinde JV partners, exploring both
commercial opportunities and related development engineering
designs and costs, with a view to having a sufficiently detailed,
costed development plan to reach FID. The level of capital
expenditure is expected to remain at a relatively low level during
2021, although it may well increase later in the year as we
approach FID. Such costs will be associated with the preparation of
legal agreements, the revised field development plan and project
finance documentation.
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 onshore processing of the
production gas and liquids as this is the most significant
controlling factor, which governs project NPV. The most significant
associated risks are:
-- Raising sufficient debt and equity finance by both Bowleven
and our JV partners, to finance the initial cost of the
development,
-- Sufficiency of gas reinjection and recycling,
-- Domestic market demand for natural gas and the ability to monetise this demand,
-- Commercial terms and government permission to export gas, and
-- Governmental approval of a revised field development plan.
Finalising the Bomono licence hand back may give rise to a
potential charge(s) being levied by SNH.
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
Chief Executive Officer
29 March 2021
GROUP INCOME STATEMENTS
6 months 6 months
ending
31 December ending Year ending
2020
(unaudited) 31 December 30 June
2019
$000 (unaudited) 2020
$000 (audited)
$000
-------------------------------------- ---- ------------- ------------- -------------
Revenue - - -
Administrative expenses (1,284) (2,399) (3,260)
Impairment - - -
-------------------------------------- ---- ------------- ------------- -------------
Operating loss before financing (1,284) (2,399) (3,260)
Finance and other income 350 1,022 635
-------------------------------------------- ------------- ------------- -------------
Loss from operations before taxation (934) (1,377) (2,625)
Taxation - - -
Loss for the period/year from
continuing operations (934) (1,377) (2,625)
-------------------------------------------- ------------- ------------- -------------
Basic and diluted loss per share
($/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
2020 2019 2020
(unaudited) (unaudited) (audited)
$000 $000 $000
---------------------------------------------- ------------- ------------- -----------
Loss for the year (934) (1,377) (2,625)
---------------------------------------------- ------------- ------------- -----------
Prior year adjustment - IFRS 16 adoption - - (5)
Total comprehensive loss for the period/year (934) (1,377) (2,630)
---------------------------------------------- ------------- ------------- -----------
GROUP BALANCE SHEETS
31 December 31 December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
$000 $000 $000
=============================== ============= ============= ===========
Non-current assets
Intangible exploration assets 153,749 150,646 152,104
Property, plant and equipment 58 18 67
------------------------------- ------------- ------------- -----------
153,807 150,664 152,171
Current assets
Financial investments 2,133 2,284 2,010
Inventory 2,577 1,545 2,577
Trade and other receivables 1,165 1,253 1,272
Bank deposits - 500 -
Cash and cash equivalents 6,409 10,927 9,102
------------------------------- ------------- ------------- -----------
12,284 16,509 14,961
Total assets 166,091 167,173 167,132
------------------------------- ------------- ------------- -----------
Current liabilities
Trade and other payables (1,339) (365) (1,478)
Lease liabilities (13) - (34)
------------------------------- ------------- ------------- -----------
Total current liabilities (1,352) (365) (1,512)
Long-term Liabilities
Lease liabilities (2) - (2)
------------------------------- ------------- ------------- -----------
Total liabilities (1,354) (365) (1,514)
------------------------------- ------------- ------------- -----------
Net assets 164,737 166,808 165,618
------------------------------- ------------- ------------- -----------
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 2,631 2,706 2,927
Retained earnings 173,847 175,843 174,432
------------------------------- ------------- ------------- -----------
Total equity 164,737 166,808 165,618
------------------------------- ------------- ------------- -----------
GROUP CASH FLOW STATEMENT
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
$000 $000 $000
============================================== ============= ============= ===========
Cash Flows from Operating Activities
Loss before tax (934) (1,377) (2,625)
---------------------------------------------- ------------- ------------- -----------
Adjustments to reconcile Company loss before tax to net cash used
in operating activities:
Depreciation of property, plant and
equipment 27 5 50
Non-cash operating costs 20 216 -
Finance (income) (350) (1,015) (635)
Equity-settled share-based payment
transactions 53 62 112
Profit on disposal of financial investments - (7) (7)
Loss on disposal of fixed assets - (3) (3)
---------------------------------------------- ------------- ------------- -----------
Adjusted loss before tax prior to
changes in working capital (1,184) (2,119) (3,108)
Decrease/(increase) in trade and other
receivables 13 (48) 58
Decrease/(increase) in trade and other
payables 224 (105) (23)
Net (Cash used) in operating activities (947) (2,272) (3,073)
Cash flows used in investing activities
Proceeds from sale of Financial investments - 2,500 2,500
Proceeds from the sale of fixed assets - 3 -
Transfer from bank deposits - - 500
Purchase of intangible exploration
assets (1,824) - (1,602)
Purchase of property, plant and equipment - - (11)
Dividends received from financial
investments 110 149 259
Interest received 8 65 87
---------------------------------------------- ------------- ------------- -----------
Net Cash from/(used in) investing
activities (1,706) 2,717 1,733
---------------------------------------------- ------------- ------------- -----------
Cash flows used in/from financing
activities
Proceeds from issue of share capital - - -
Lease payments (40) - (40)
Net cash flows from financing activities (40) - 40
Net (decrease)/increase in cash and
cash equivalents (2,693) 445 (1,380)
---------------------------------------------- ------------- ------------- -----------
Cash and cash equivalents at the beginning
of the period/year 9,102 10,482 10,482
Net (decrease)/increase in cash and
cash equivalents (2,693) 445 (1,380)
---------------------------------------------- ------------- ------------- -----------
Cash and cash equivalents at the period/year
end 6,409 10,927 9,102
---------------------------------------------- ------------- ------------- -----------
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 30 June 2019 56,517 1,599 (69,857) 2,354 177,510 168,123
Loss for the period - - - - (1,377) (1,377)
Other comprehensive income for - - - - - -
the period
Total comprehensive income for
the period - - - - (1,377) (1,377)
Proceeds from issue of share - - - - - -
capital
Share based payments - - - 62 - 62
Transfer between reserves - - - 290 (290) -
------------------------------------ --------------- ---------------- ---------- ---------- ---------- ---------
At 31 December 2019 56,517 1,599 (69,857) 2,706 175,843 166,808
------------------------------------ --------------- ---------------- ---------- ---------- ---------- ---------
Loss for the period - - - - (1,248) (1,248)
Other comprehensive income for
the period - - - - 8 8
------------------------------------ --------------- ---------------- ---------- ---------- ---------- ---------
Total comprehensive income for
the period - - - - (1,240) (1,240)
Special dividend - - - - - -
Share based payments - - - 50 50
Transfer between reserves - - - 171 (171) -
At 30 June 2020 56,517 1,599 (69,857) 2,927 174,432 165,618
------------------------------------ --------------- ---------------- ---------- ---------- ---------- ---------
Loss for the period - - - - (934) (934)
Other comprehensive income for - - - - - -
the period
------------------------------------ --------------- ---------------- ---------- ---------- ---------- ---------
Total comprehensive income for
the period - - - - (934) (934)
Share based payments - - - 53 53
Transfer between reserves - - - (349) 349 -
------------------------------------ --------------- ---------------- ---------- ---------- ---------- ---------
At 31 December 2020 56,517 1,599 (69,857) 2,631 173,847 164,737
------------------------------------ --------------- ---------------- ---------- ---------- ---------- ---------
NOTES TO THE INTERIM STATEMENTS
For the 6 months ended 31 December 2020
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 2020, on which the auditors gave an unqualified
opinion and no statements under section 498 (2) or (3), have been
filed with the Registrar of Companies.
2. Going Concern
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 their ongoing working capital and
committed capital expenditure requirements. In making this
assessment, the Directors considered the Group budgets, the cash
flow forecasts and associated risks.
3. Subsequent events
There have been no significant post balance sheet events other
than the appointment of a new Director and Chairman following the
retirement of the former Chairman.
4. Other Notes
a) The basic earnings per ordinary share is calculated on a loss
of $934,000 (H1 2019: loss $1,377,000) on a weighted average of
327,465,652 (H1 2020: 327,465,652) ordinary shares.
b) In respect of the 6 months to 31 December 2020 the diluted
earnings per share is calculated on a loss of $934,000 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 (January 2019: special dividend
$63.1 million).
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 will also be
distributed electronically unless shareholders specifically elect
to receive a hard copy. Copies 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
Board of Directors the Directors of the Company
boe barrels of oil equivalent
Bomono Permit the production sharing contract between the
Republic of Cameroon and EurOil Limited, dated
12 December 2007, in respect of the area of
approximately 2,328km(2) 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 Bowleven plc (LSE: BLVN) and/or its subsidiaries
as appropriate
Companies Act 2006 the United Kingdom Companies Act 2006 (as amended)
('the Act')
Company Bowleven plc
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
D&M DeGolyer and MacNaughton, International Petroleum
consultants
EBT employee benefit trust
Etinde Permit the Etinde Exploitation Authorisation (EA or
EEA). The Etinde EA, granted on 29 July 2014,
covers an area of approximately 461km(2) (formerly
block MLHP-7) and is valid for an initial period
of 20 years. Currently SNH have exercised their
right to back into this licence, but this is
subject to completion
FEED Front end engineering design processes. Basic
Engineering which is conducted after completion
of Conceptual Design or Feasibility Study.
At this stage, before start of EPC (Engineering,
Procurement and Construction), various studies
take place to figure out technical issues and
estimate rough investment cost.
FID final investment decision
FLNG floating liquefied natural gas
G&A general and administration
GIIP Gas initially in place, the volume of gas in
a reservoir before production
Group the Company and its direct and indirect subsidiaries
H1, H2 etc. first half of the financial year, second half
of the financial year etc.
IM, IE, etc Specific locations or areas where Miocene aged
Intra-Isongo reservoirs horizons have been
identified as actual or potential oil and gas
condensate fields
HSSE Health, Safety, Security and Environmental
matters
IFRS International Financial Reporting Standards
km(2) square kilometres
LNG liquefied natural gas
mmboe million barrels of oil equivalent
New Age NewAge (African Global Energy) Limited, a privately
owned oil and gas company
ordinary shares ordinary shares of 10p each in the capital
of the Company
PEA provisional exploitation authorisation
PSC production sharing contract
P50 50% probability that volumes will be equal
to or greater than stated volumes
P90 90% probability that volumes will be equal
to or greater than stated volumes
Q1, Q2 etc. First quarter, second quarter etc.
SNH Société Nationale des Hydrocarbures,
the national oil and gas company of the Republic
of Cameroon
tcf trillion cubic feet
US United States of America
$ or US Dollars United States of America Dollars
GBP or GB Pounds Great Britain Pounds Sterling
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END
IR ZZGZFVLFGMZM
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