BOWLEVEN has won a multi-million dollar vote of confidence in its East African exploration ambitions from one of Scotland's most successful oil and gas entrepreneurs.
The Edinburgh-based company has secured up to $15 million (£10m) backing for its work in the area from the First Oil operation owned by Ian Suttie, who sold the Orwell oil services business for around $250m in 2001.
After deciding to invest in oil and gas fields directly, Mr Suttie has built First Oil into a business that calls itself "the largest private, UK owned company producing oil and gas in the UK North Sea".
First Oil has interests in 14 producing developments. It generated £48m cash from operations in the year to April 2012.
As the portfolio on First Oil's website only includes investments in the North Sea, the decision to invest in Bowleven's East African focused new ventures subsidiary looks like a notable move.
First Oil has acquired a 30% holding in the subsidiary of Aim-listed Bowleven, in return for contributing up to $14.6m towards the costs of work in East Africa.
Managing director Steve Bowyer said: "We are pleased to announce our entry into developing East African Rift System and look forward to working in partnership with Bowleven."
The investment comes nine months after West Africa-focused Bowleven announced it was spreading its bets to the east side of the continent. It is working on plans to bring finds made off Cameroon into production.
Bowleven agreed to acquire a 50% stake in a sprawling block in north-west Kenya from privately owned Adamantine Energy, in return for funding around $10m exploration costs.
Chief executive Kevin Hart said at the time the new acreage gave Bowleven exposure to an exciting new hydrocarbon province for a minimal capital commitment.
The relatively under-explored area of onshore Kenya has been attracting interest from oil and gas firms partially due to the success enjoyed by Tullow, which has found oil in the country.
Yesterday, Mr Hart said Bowleven was delighted to welcome First Oil as a strategic partner in its early stage exploration activities in East Africa.
He added: "We look forward to working with the team going forward in this exciting emerging area."
Under the arrangement with Bowleven, First Oil has committed to fund up to $9 million of an initial work programme, carrying up to $6m costs net. It has made a further commitment to carry up to $5m costs in respect of a $12.5m additional contingent work programme.
Separately, the parties have also agreed to co-operate in investigating early entry exploration opportunities across the East African Rift System. As part of this agreement First Oil may contribute up to $3.6m towards Bowleven's share of funding in any resulting new investments.
Bowleven previously agreed to fund an initial two-year work programme on the block it farmed in to in Kenya. This will include an airborne geophysical survey and the acquisition of 2D seismic data.
It hopes to achieve first oil from the Etinde block off Cameroon in 2016. Last year the company secured up to $500m funding from Petrofac, which will effectively cover its share of the cost of installing production infrastructure for the first phase of the Etinde development.
In December 2008 an analyst said the company faced such a big funding challenge at that time it was effectively "dead in the water".
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article