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Oil firm unveils new farm-out deal in Africa

BOWLEVEN has unveiled a second farm-out arrangement in Cameroon, days after coming under fire from a major shareholder for allegedly destroying value in a major farm-out deal.

The Africa-focused oil and gas exploration group, based in Edinburgh and traded on the Alternative Investment Market, said it was pleased to announce a conditional drill-to-earn arrangement with privately-held Africa Fortesa Corp (AFC), subject to approval by the Cameroon government.

AFC will gain a 20 per cent interest in the Bomono Permit in return for drilling two exploration wells at a cost estimated at $13m to $15m (£4.3m to £5m).

Bowleven said AFC, through its subsidiary Africa Onshore Drilling, had drilled numerous successful wells onshore West Africa and in Senegal, a number of which were currently producing for gas-to-power.

It went on: "In addition to the above arrangement, Bowleven is continuing discussions in relation to a further farm-out of part of its interest in the Bomono Permit in advance of drilling."

Earlier this week Bowleven came under fire for ceding operational control of its prize Etinde permit in Cameroon, selling 50 per cent to New Age, an African firm with which Bowleven has been in legal dispute over the territory, and Russian oil giant LUKOIL, for $250m (£150m).

That prompted shareholder Waseem Shakoor to say he was "shocked by the value destruction that has been crystallised by the deal" and to warn that he might move to get chief executive Kevin Hart voted off the board. Mr Shakoor said an outright sale of the company "would provide a cleaner exit for shareholders and would not leave a failed management team in charge of a large cash pile, where they could further destroy value".

Mr Hart however hailed the Etinde deal as an endorsement of the value of the permit on which the company had been working for around 10 years, and the company later responded that it was "a good deal for shareholders".

Mr Hart, who owns more than 2.7 million shares or 0.9 per cent of Bowleven, yesterday acquired a further 50,000 shares at 37.7p. The shares, which were at 316p three years ago and 61p one year ago, rose 0.75p to 39p, valuing Bowleven at £126.5m.

Meanwhile Ithaca Energy announced completion of flow test operations on the third development well at the North Sea Stella field, with the well achieving a flow rate of 12,492 barrels of oil equivalent per day ("boepd"). It said the sample was of high quality, and the test results from the first three Stella development wells had served to de-risk the initial annualised production forecast for the Greater Stella Area hub of approximately 30,000 boepd , or 16,000 boepd net to Ithaca. Les Thomas, chief executive, said: "We are delighted with the results of the flow test on the third Stella development well, which underline the high quality and deliverability of the reservoir." Ithaca shares were up 4p at 151.75p.

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