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Wednesday, June 25, 2014
The development of Cameroon’s Etinde Permit just took a big step forward for Bowleven, at least in the financial department as it has entered into a conditional agreement with two firms. Under the conditional deal Bowleven will reduce its 75% stake down to 25%, with Lukoil joining the company in Cameroon with 37.5% stake and New Age increasing its stake by 12.5% bringing its holding from 25% to 37.5%.
For reducing its stake, Bowleven will receive an aggregate consideration of approximately $250 million which will be comprised of a $170-million cash payment upon completion, a $40-milllion staged deferred cash payment due at the FID of the Etinde development project and on completion of appraisal drilling; as well as another $40 million (net) carry for two appraisal wells.
Camop, a wholly-owned subsidiary of NewAge, will become operator of the Etinde Permit following completion of the deal, allowing Bowleven to focus on its proven exploration skillset. Bowleven will retain a 25% interest in the Etinde Permit, ensuring continued exposure to the considerable resource and future development potential of the acreage. Bowleven says the significant cash consideration strengthens the group’s balance sheet providing funding flexibility for Bowleven’s pre-production share of Etinde development expenditure and the progression of exploration activities.
The two acquisitions are interconditional and the principal conditions precedent to completion of the transaction are normal regulatory approval by the Cameroon government and approval by Bowleven shareholders to be sought at a general meeting.
Kevin Hart, Bowleven CEO, said: “We are extremely proud of the substantial progress that we have made with Etinde in discovering resource and creating markets. With the Exploitation Authorization approved and nearing formal award, gas sales discussions well advanced, and significantly increased scope for expansion to additional gas offtake solutions, in particular CLNG, we believe now is the right time to bring in a new partner and transfer operatorship.
I am delighted that Lukoil are joining us as a value-adding partner in Cameroon, alongside our existing co-venturer NewAge. Lukoil is a major international integrated oil and gas group with extensive operating and marketing expertise globally and a track record of delivering world class oil and gas developments. The expanded JV will work together to realize the considerable potential of this world class asset.
Bowleven’s strategy is to focus on our core strengths of exploration and appraisal and enable the conversion of resources to reserves, ensuring that we realize value for shareholders at the appropriate time. This transaction endorses the value of Etinde while allowing us ongoing participation in its significant remaining potential.
Going forward, having transferred the operatorship of Etinde and significantly strengthened our balance sheet, we are well-positioned to both fund our share of Etinde’s ongoing appraisal and development program and also to progress the potential of our exciting African exploration portfolio in Cameroon, Kenya and Zambia.”
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