Bowleven cashed-up for Bomono

Bowleven received an initial cash payment of $165m for the sale of two-thirds of its holding in the Etinde Permit to LUKOIL and NewAge (African Global Energy), which received additional stakes of 30 per cent and 10 per cent, respectively. A further $85m in contingent cash payments and covered appraisal costs is also pending. Operating duties at Etinde have been transferred to NewAge, with Bowleven retaining a 20 per cent interest. The sale of the interests resulted in a substantial reduction in Bowleven’s reserve base, although appraisal wells due to be drilled at Etinde could eventually help to replenish stocks.

The Edinburgh-based driller was forced to book a $76m impairment on its residual stake in Etinde to reflect lower oil price assumptions. The charge also reflected changes to the development plans for Etinde, which involve supplying a nearby fertiliser plant.

But the fall in crude oil prices also means that Bowleven’s funds from the farm-out will stretch even further, as exploration costs contract across the industry. The company now plans to explore an onshore licence in Cameroon called Bomono, which shouldn’t be too taxing on the cost front given its proximity to necessary infrastructure.

Westhouse gives a risked NAV of 84.7p per share.