12th Nov 2014 11:52
LONDON (Alliance News) - BowLeven PLC Wednesday said its pretax loss widened during the last financial year following increased costs as it focuses on finalising partial farm out deals in Cameroon to progress its projects and bulk up its balance sheet for further exploration.
For the year ended June 30, the company's pretax loss widened to USD13.6 million compared to a USD11.1 million loss in 2013. The company does not generate any revenue and the wider loss resulted from higher administrative and finance costs.
Administrative expenses rose to USD12.0 million from USD11.1 million and finance costs rose to USD1.7 million from USD509,000 a year earlier.
Capital expenditure cashflows in the year were USD18.0 million, down from USD109.4 million in 2013. Almost all of this expenditure was on exploration and appraisal activities, primarily pre-development spend on the Etinde permit and drilling preparation costs on the Bomono permit, both in Cameroon.
The company reported a cash balance of USD25.5 million and no debt as of the end of June, and as of the end of October, the company reported USD14 million in cash and an available but undrawn bridge facility of USD30 million from Australia's Macquarie Bank, which it secured in October.
"We have made steady progress during the year in delivering a number of key milestones as we work towards converting resources to reserves and creating new value through further exploration and appraisal activity," said Chief Executive Kevin Hart.
Over the year, BowLeven agreed to farm out two thirds of the Etinde development area in Cameroon to Russian oil company OAO Lukoil and African focused NewAge (African Global Energy) Ltd for a combined consideration of USD250 million, giving the company access to development expertise. The farm out is near completion, the company said in a statement.
On October 27, BowLeven said that the Cameroonian government had approved the proposed farm out and was awaiting for approval from the Cameroon president's office for the transaction to be completed.
Once the farm out has been completed, the company intends to cancel its USD30 million bridging facility, it added.
The company is also looking to farm out part of the Bomono permit in Cameroon to Africa Fortesa Corp Ltd and plans to drill two exploration wells on the acreage, with the first well expected to spud before the end of the year, said BowLeven.
"These transactions will enable the group to participate in four potentially significant exploration and appraisal wells over the next 12-18 months. On completion of the Etinde farm-out we will have a strong balance sheet capable of funding all expected exploration, appraisal and development activities, while demanding that the board remains focused on applying appropriate capital discipline and commercial rigour to all investment propositions," BowLeven said.
BowLeven also has been awarded the Etinde exploitation authorisation, which allows the company to develop block MLHP-7 for the next 20 years, and the opportunity for exclusive negotiations on a new production sharing contracts for two further blocks, with discussions due to commence shortly, it said.
"The licence award provides the green light for the joint venture to progress towards the development of existing discovered gas and liquid hydrocarbons," it said in a statement.
"There is no doubt that a combination of external events made the award of the Etinde exploitation authorisation and the progression of development planning much more difficult than we had anticipated," BowLeven added.
"When combined with the expected completion of the farm-out of two-thirds of our interest in Etinde to Lukoil and NewAge, the continuation of these core operational activities leaves BowLeven in an excellent position to take the business forward," it said.
The proceeds from the farm out of Etinde will allow the company to fund near-term exploration drilling on Bomono and Etinde, which both have the potential to add substantial value to the company.
"The group's objectives continue to be to create and realise value from the conversion of resources to reserves in Cameroon and the exploitation of our exploration portfolio in Africa. Although the macro environment continues to be challenging and we recognise the need to evolve alongside these market conditions, we are well positioned with an excellent team and a strong financial foundation post farm-out completion, ensuring strict capital discipline, to progress our existing asset base," BowLeven said.
BowLeven shares were down 2.8% to 31.59 pence per share late Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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