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Bowleven boosted by drilling results

SHARES in Bowleven went up by as much as 9% in the hours after it announced positive drilling results from its operations off the coast of Cameroon.

WELL PLEASED: The discovery of liquids-rich hydrocarbon off the coast of Cameroon has delighted investors.
WELL PLEASED: The discovery of liquids-rich hydrocarbon off the coast of Cameroon has delighted investors.

Although the share price later fell back the stock still ended the day 6% or 4.5p ahead at 80.5p.

It was the second time this year Bowleven has enjoyed a bounce following promising news from the IM-5 well in its acreage off West Africa.

In January shares went up 7% after the company announced a "potentially significant" find in the well which forms part of its 900-square mile (2300 sq km) Etinde permit area.

The latest update on the well provided further good cheer for investors with "liquids-rich hydrocarbon" encountered and large enough gas volumes to supply an onshore fertiliser plant which the Cameroon government is considering building.

Mike van Dulken, head of research at Accendo Markets, said: "It's always good news to hear of liquid being found as opposed to gas, which is more expensive to get out of the ground and transport.

"The liquid/gas ratios look attractive, even more so when gas is sufficient enough to meet [the] proposed fertiliser plant's requirements and so can be used locally."

A memorandum of understanding between Bowleven subsidiary Euroil, German firm Ferrostaal and the Cameroon government has been signed for gas supply for the proposed $1 billion (£650 mil-lion) fertiliser facility at Limbe in Cameroon.

The latest data from the offshore drilling indicates there is enough gas for commercial production to be viable while the presence of hydrocarbons is also thought to have commercial possibilities.

Kevin Hart, Bowleven chief executive, said: "With the validation of sufficient gas volumes to meet the requirements of the proposed fertiliser plant, our efforts continue on finalising the gas sales heads of terms with Ferrostaal and obtaining the Exploitation Authorisation from the government."

Bowleven is now starting to test for potential flow rates and is likely to give a further update on the well within a month.

Mr Hart said: "We eagerly await the results of the testing."

The Edinburgh company will be hoping for further good news as it enters a crucial phase in its business development plan.

A decision on whether to sanction the hefty investment – likely to be more than $900m (£590m) – to bring the Etinde finds into production is expected in the second half of this year.

Petrofac has already committed to providing up to $500m (£328m) of the initial development costs in return for a share of cash generated from production.

Mr Hart said: "The group is focused on delivering the key requirements that will enable the final investment decision for the Etinde development to be made."

Bowleven raised £55m from investors at 650p per share in 2005 before suffering drilling setbacks under previous management.

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