SHARES in Bowleven surged 20% after the company said some of the finds it made off West Africa could contain much more oil and gas than previously thought.
But the increase was not enough to help the shares recover the ground they have lost since a potential bidder for Bowleven walked away last month.
Edinburgh-based Bowleven said work completed in the six months to December 31 had underlined the potential of the discoveries it made with the three Sapele wells off Cameroon.
After analysing the results of the latest well, Bowleven believes the Sapele finds could contain 615 million barrels oil and 1.5 trillion cubic feet gas. That compares with previous estimates of 171m barrels oil and 425 billion cubic feet gas.
The company can not classify the oil and gas resources in Sapele as reserves until it has shown that they can be produced commercially.
However, Bowleven's chief executive, Kevin Hart, believes the company has been making good progress towards moving into the production phase in Cameroon.
He said the company had made "good strides" towards establishing there will be a market for any gas it produces. The company is close to confirming a Memorandum of Understanding with a German firm that will buy some of the gas for use in a fertiliser plant.
Mr Hart is confident that Bowleven will be able to raise the funding required to develop costly production facilities.
It is working with Vitol, the Swiss oil trading firm that has a stake in one of its licences, on raising debt. Mr Hart believes Bowleven could fill any funding shortfall by selling shares in its acreage to other investors.
The company has made finds on another block off Cameroon and expects to start exploring onshore the country this year. Asked when Bowleven will start production in Cameroon, Mr Hart said: "If you assume the end of 2015 or 2016 that would be a reasonable assumption."
Shares closed up 17.25p at 105.5p.
Shares traded at 134.25p on 28 February, before Dragon Oil walked away from a potential bid for Bowleven without getting into detailed takeover talks.
They had risen 60%, 46p, to close at 120p on February 17 when Turkmenistan-focused Dragon revealed it was in the early stages of exploring a possible offer.
Asked if he was disappointed about Dragon's speedy withdrawal, Mr Hart noted that the company did not complete any due diligence.
He said: "What was reassuring for us was that the share price moved but our share register remained rock solid... we didn't see any large insitutions trying to sell out into a higher share price which tells you something in terms of their belief in the underlying value of the business. I suspect that was one of the reasons Dragon may have walked away when it became clear that they weren't going to get it for a standard premium to the share price prior to the announcement."
Bowleven made a $5.5m interim loss before tax, compared with a $15.7m loss in the first half of the preceding financial year.
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