OIL and gas firm Bowleven, which quit Scotland after a boardroom coup, has seen its shares fall 25 per cent as it faces challenges on a key project.
Bowleven has spent years working on plans to develop finds made off Cameroon without bringing any into production so far.
It had hoped to make a final investment decision (FID) with partners this year to proceed with a development on the Etinde permit. The company is in line to get $25 million from its partners if an FID is made under a $250m deal struck by former chief executive Kevin Hart in 2014.
Mr Hart was voted off the board in March 2017 with four other former directors following a campaign for change led by a rebel investor. The company then moved its headquarters from Edinburgh to London under cost-cutting plans.
READ MORE: Hart hits back on leaving Bowleven
After posting a $2m (£m) loss for the year to June 30, Bowleven said yesterday: “The economic investment case for Etinde remains strong, with the Company’s interest in the Etinde project continuing to hold an estimated value of $150 million, well above the Group’s current market capitalisation.”
However, the company said there are commercial and regulatory issues which have yet to be resolved in conjunction with uncertainty regarding the optimum development concept.
It said: “Resolving these issues to permit FID to be reached in 2022 will be a challenge for the JV partners and any delays in reaching final resolutions will create a high financial risk for Bowleven.”
The company added: “Should these commercial and regulatory issues not be resolved as anticipated, it is likely that Bowleven would be required to raise additional short-term funding to bridge expenditure to FID and the receipt of $25 million due from the JV partners at that milestone.”
Mr Hart’s successor, Eli Chahin, said the Bowleven board and executive team are continually discussing ways to mitigate project and financing risk. They will continue to seek ways to deliver significant long-term value to investors whilst securing the sustainability of the Company.
Shares in Bowleven closed down 1p at 3p on the Aim market, leaving it with a stock market capitalisation of around £10m.
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