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Bowleven faces Etinde test

Although their company is now a holding company, Bowleven's shareholders will eagerly await the results of an upcoming drilling programme
April 3, 2018

Nearly four months on from the resignation of Chris Ashworth, Bowleven (BLVN) is still without a non-executive chairman. In fact, the oil and gas group has just two directors, only one of whom (chief executive and restructuring veteran Eli Chahin) has management responsibilities.

IC TIP: Hold at 35.5p

Shareholders have hardly recoiled at this corporate governance deficit. If anything, they have welcomed recent developments, as underlined by Crown Ocean Capital’s purchase of a further 2.9m of shares in the last month. The activist investor successfully lobbied to turn Bowleven into a holding company a year ago, but has a fair amount of activity to look forward to in the coming weeks.

Principally, operations centre on a two-well drilling programme at Etinde, offshore Cameroon, which is targeting two trillion cubic feet (tcf) of gas. The appraisal wells are expected to consume most of Bowleven’s $39.6m (£28.2m) carry, but the potential prize is a big increase in the company’s 58m barrels of oil-equivalent resources – a 2tcf discovery could equate to a 56 per cent upgrade. Onshore, discussions with Victoria Oil & Gas are continuing in the hunt for a solution to a proposed farm-out transaction of the Bomono asset, although initial negotiations with the fellow Aim traveller stumbled on an inability to get regulatory approval.

On average, analysts expect a pre-tax loss of $4.3m and a 1.6¢ loss per share for the 12 months to June 2018, and losses of $3.8m and 1¢ in FY2019.

*This article was modified on 5 April to correct the amount of stock purchased by Crown Ocean Capital, which now owns 94.8m shares.

BOWLEVEN (BLVN)   
ORD PRICE:35.5pMARKET VALUE:£116m
TOUCH:35-35.8p12-MONTH HIGH:38pLOW: 24p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:91¢*NET CASH:$83.8m
Half-year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
2016nil3.41.0nil
2017nil-2.8-1.0nil
% change----
Ex-div:na   
Payment:na   
£1=$1.41  *Includes intangible assets of $173m, or 53¢ a share