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Cameroon decision is big boost for Bowleven

SHARES in Bowleven have risen 10% after the company said it had achieved a significant milestone in its plan to develop oil and gas off West Africa.

full STEAM AHEAD: Bowleven has hitherto experienced substantial complications in Cameroon.
full STEAM AHEAD: Bowleven has hitherto experienced substantial complications in Cameroon.

Edinburgh-based Bowleven said the authorities in Cameroon have given long-awaited approval to its scheme to bring finds on the Etinde permit into production.

President Biya of Cameroon still has to give his consent.

However, Bowleven's chief executive, Kevin Hart, said: "We thank the state for signalling its support of the application and look forward to the support of the Head of State, H.E. President Paul Biya, via the official award."

When Bowleven announced interim results in March, Mr Hart said: "It is a common conversation that this project has got the personal backing of the presidency and the president wants it to happen as quickly as possible."

Gas from Etinde could power an important new fertiliser plant in Cameroon.

Confirmation of the official award would provide a big boost for Bowleven, which has hit major complications in Cameroon.

After delaying by one year making a final decision about whether to sanction the huge investment required to develop the finds off Cameroon, Bowleven has faced serious funding issues.

The company needs to get approvals for the scheme before it could make a Final Investment Decision.

It submitted a formal application for an exploitation authorisation in January and in March said the approval process was taking longer than expected.

The authorisation proposed by the authorities would give Bowleven rights over a block on Etinde for 20 years. This should make it easier for the company to secure funding.

Yesterday Bowleven said following a meeting between the Cameroon state, the company and its partner Cameroon Offshore Petroleum (CAMOP), "a formal resolution confirming the state's support and approval of the Etinde Exploitation Authorisation Application had been signed".

The authorisation has been approved by the ministry of mines.

Bowleven has become embroiled in a legal dispute with CAMOP, which has a 25% interest in the Etinde Permit.

In January the judge in a High Court action noted that privately-owned CAMOP had raised doubts about Bowleven's ability to deliver the Etinde scheme and the best development option.

In March Mr Hart said a dispute with CAMOP was subject to an arbitration process Bowleven was facing with confidence.

Yesterday a spokesman for Bowleven said it would not comment on an ongoing legal matter.

Shares in Bowleven closed up 3.25p at 37p.

In November Bowleven raised £13m at 45p per share.

Bowleven raised £55m at 650p per share in October 2005 under past management.

In the interim results in March Bowleven said its board believed additional funds could be raised from a number of sources. It added: "As this has not been secured at the date of this report it creates a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern."

Bowleven said then it was likely to make a Final Investment Decision around the end of this year. It had expected to decide by the end of last year. Petrofac has agreed to provide up to $500m funding towards the costs of developing Etinde and to reimburse $60m costs incurred by Bowleven at FID.

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