OIL and gas company Bowleven, which moved its headquarters from Edinburgh to London after a boardroom coup, has received a boost in its long-running campaign to prove the commercial potential of its acreage off Cameroon.

Bowleven spent years working on plans to develop finds made on the Etinde permit without bringing any onstream under the leadership of Kevin Hart who was ousted in 2017 following a campaign by a rebel investor.

The new management team closed Bowleven’s former Edinburgh head office under a plan to cut costs while increasing the company’s focus on Etinde.

However, it slashed the value of the company’s stake in the Etinde licence by $62 million last year. The move reflected continued uncertainty about the prospects for bringing finds on the acreage concerned into production.

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The planning process has been complicated by doubts about whether there would be a market for any gas that would be produced along with more valuable liquids.

But chief executive Eli Chahin said yesterday that Bowleven and partners had taken a positive step towards “reconconfirming the commerciality of the licence”.

This has come in the form of an agreement in principle to sell output from Etinde for use in Cameroon to Victoria Oil & Gas. The London-based firm has signed a non-binding Letter of Intent covering the supply of gas from Etinde.

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Bowleven faces a potential race against the clock to gain the certainty required to be able to sanction the spending that development of Etinde would require, through a Final Investment Decision.The company’s licence for Etinde is due to expire in January 2021.

While a gas sale agreement has still to be confirmed, Mr Chahin said the signing of the Letter of Intent demonstrated the high demand for natural gas in the region.

“As we work towards making a final investment decision on Etinde this year, today’s announcement by VOG is a positive step towards reconfirming the commerciality of the licence,” said Mr Chahin.

The chairman of Victoria Oil & Gas, Roger Kennedy, said: "The opportunity to secure the long-term supply of gas from the Etinde license will be a major step for our Company."

Shares in Bowleven rose six per cent, 0.32p yesterday, to close at 6.12p.

They closed at 33.25p on the day Mr Hart and four other former Bowleven directors were voted off the board in March 2017 after a campaign for change led by the Crown Ocean Capital investment firm.

After leaving Bowleven, Mr Hart defended the performance of the company in his 10 years in charge, noting it found a lot of oil and gas off Cameroon but was frustrated by geopolitical factors.

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Bowleven paid around £50 million out to investors through a 15p per share special dividend in February last year. Crown Ocean’s 29% stake in Bowleven put it in line to receive £15m.

The signing of a FID in respect of Etinde would trigger a $25m payment to Bowleven, under a deal negotiated by Mr Hart in 2014.

Bowleven agreed then to sell stakes in Etinde to Africa-focused New Age and Russia’s Lukoil in a deal worth $250m in total. It retains a 25% interest in Etinde.

New Age took over operatorship of the licence.

The Letter of Intent signed by Victoria Oil & Gas and New Age envisages that the firms will agree a 20 year gas sales agreement covering output from Etinde.

“Finalisation of the proposed GSA terms and conditions is directly linked to the Final Investment Decision in relation to the Etinde field development project,” said Bowleven.

Describing Etinde as a potentially very valuable asset for Bowleven, analysts at the Arden Partners brokerage said of the Letter of Intent: “In our view this looks like good progress towards Etinde FID.”

Mr Hart became chief executive of Bowleven in 2006 after working as finance director of Edinburgh-based Cairn Energy, which achieved renown after making bumper finds in India. Cairn last month approved a plan to develop the giant Sangomar find it made off Senegal in 2014.