2nd Nov 2006 07:01
BowLeven Plc02 November 2006 2 November 2006 BowLeven Plc ('BowLeven' or 'the Company') Preliminary results for the year to 30 June 2006 BowLeven, the Cameroon-focused oil & gas company listed on AIM, today announcesits preliminary results for the year ended 30 June 2006. Highlights of the year include: • Continuing progress with commercialisation of existing hydrocarbon resources in block MHLP-7; • Acquisition of 3D seismic over blocks MHLP-5 and 6; • Rig secured for four well drilling programme in early 2007; • Strategic alliance with Suntera Resources; and • Strengthened board composition and management team. Commenting, Terry Heneaghan, Executive Chairman, said: "BowLeven's business plans are back on track. Progress has been made on allfronts. The new management team, to be led by Kevin Hart, has the capability todrive the Company forward and attain considerable success in terms ofshareholder value." For further information contact: Terry Heneaghan, Executive Chairman, BowLeven plc 0131 260 5100 Kevin Hart, CEO Designate, BowLeven plc 0131 260 5100 Mark Froggatt, Noble & Company 020 7763 2200 Neil Bennett, Maitland 020 7379 5151 Chairman's Statement 2 November 2006 Following the disappointing drilling results of 2005, the Company hasconcentrated on its stated plans and objectives at the time of listing itsshares on the AIM market, which are to: • implement a Gas to Electricity ("GTE") business plan for block MLHP-7, to produce gas/condensate reserves, with the support of the Cameroon authorities; • establish a plan to monetise additional existing recoverable hydrocarbon reserves and contingent resources within block MLHP-7; • acquire and interpret 3D seismic over blocks MLHP-5 and MLHP-6, and identify attractive drilling prospects; • secure one or more industry joint venture partners; • assess the additional exploration potential of the Etinde Permit; • prepare to drill four wells in early 2007; and • strengthen the Board composition and management team. Progress has been made on all fronts. Our 100% owned subsidiary, EurOil Limited ("EurOil"), is actively engaged withthe Cameroon authorities in negotiating a production-sharing contract ("PSC")for block MLHP-7, as a prelude to development of its recoverable hydrocarbonreserves. EurOil is also in active discussions with Societe Nationale des Hydrocarbures ("SNH") and other operators on the subject of establishing a Cameroon nationalgas-gathering system, with a hub at Limbe, which is onshore at block MLHP-7. The acquisition and processing of 3D seismic over blocks MLHP-5 and 6 has beencompleted, and interpretation of the data is at an advanced stage. Several leadsand plays have been identified and drilling prospects are being worked up. Early in 2006, we conducted a preliminary exercise to farm out some of ourequity in blocks MLHP-5 and 6. Although there was significant industry interest,we decided, for a variety of reasons, not to farm out at that time. We continueto evaluate our farm-out needs and opportunities. A rig has been secured for a four-well drilling programme in early 2007, anddrilling locations are currently being finalised. BOARD CHANGES The main Board has been strengthened by the appointment of our new CEO, KevinHart, the former Finance Director of Cairn Energy PLC, who joins the Companywith effect from 17 November. This is a key appointment for BowLeven and I amcertain that Kevin's professional and entrepreneurial skills, plus hisdetermination to succeed, will drive the Company forward towards the attainmentof significant shareholder value. In addition, I am pleased to announce that a new Non-Executive Chairman has beenselected to succeed me immediately after our AGM on 6 December 2006. Your newChairman will be Ronnie Hanna, a man with a proven management track record invarious fields and considerable main Board experience. Most recently, until2003, Ronnie was for 11 years the Chief Executive of the successfulhouse-building firm, Bett Brothers plc. He is currently a Non-Executive Directorof several companies, including two investment trusts, and has considerableexperience in dealing with the City. This is another excellent appointment forBowLeven and I have no doubt that Ronnie's broad experience will prove to be ofgreat value to the Company. Caroline Cook, formerly Managing Director and Co-Head of Equity Research (Oiland Gas) for Deutsche Bank, will join the Board of BowLeven immediately afterthe AGM as a non-executive director. I have been a founder of BowLeven, and its Executive Chairman, since March 1998.I had always intended to give up full-time executive life once I had reachedthe age of 60 and the time has now come for me to step down as ExecutiveChairman immediately after the AGM. Dr. A. Easton Wren has also been with BowLeven since 1998. His contribution tothe Company is most highly regarded, and it is with some regret to the Directorsthat that he has decided to retire, at the age of 68, immediately after the AGM. I welcome the new Board members and am very pleased to leave behind such astrong and able team to run the Company. This Board of Directors, which willdetermine the future direction of the Company, is backed by a solid managementteam with the talent and experience to build a very successful oil and gasbusiness. In the interests of best corporate practice, it is the Board's firm intention tohave a majority of non-executive directors on the Board. It is planned that theBoard will reduce to a more manageable size of around eight members in theforseeable future, comprising of three executive directors and fivenon-executive directors. Two other non-executive directors are being activelysought to add experience to the Board. It is expected that furtherannouncements of new Board appointments will be made in the near future. All aspects of Corporate Governance will be the responsibility of this Board. GROUP MANAGEMENT BOARD The former Executive Committee of the Company is disbanded. A Group board ofmanagement which will manage the day-to-day aspects of the business is nowestablished. This Group Management Board, which comprises all the ExecutiveDirectors of the Company, will focus on generating value from the existing assetbase and from new opportunities for corporate growth. The Group Management Board consists of: Chief Executive Officer: Kevin Hart*Exploration Director: Jerry AnthonyFinance Director: John BrownChief Operating Officer: John MorrowChairman of EurOil: Chief TabetandoCommercial Director: Peter Wilson** *Kevin Hart will chair the Group Management Board.**Peter Wilson also fulfils the roles of General Counsel and Company Secretaryto the main Board. This Group Management Board will follow all of the procedures and disciplinesthat have been established by the Board. The Group Management Board is the executive engine of the Company. It willadvise the Board on policy matters and implement declared policies as determinedfrom time to time. Apart from managing day-to-day business matters, the futuredirection of the business will be substantially determined by therecommendations of the Group Management Board. This is a strong and capable management team and I have every confidence in itsability to move the Company forward with success. I am also very pleased toannounce that Mr. Ed Willett, a senior explorationist at Cairn Energy PLC, hasagreed to join BowLeven in the New Year as Deputy Exploration Director. Ed is aproven finder of hydrocarbons and we are confident that he will be a valuablemember of the team. LONG-TERM INCENTIVE PLAN ("LTIP") AND SHARE OPTION SCHEME A LTIP has been designed to incentivise the Executive team. Details of thescheme are set out in a separate circular, which is intended to be posted toshareholders shortly for their consideration at an EGM to be held on 6 December2006, immediately prior to our AGM. Currently only Executive Directors are being offered LTIPs under this scheme;the previously approved share option scheme remains in place for all otheremployees. NOMINATED ADVISER AND BROKER With effect from 2 November 2006, the broker to BowLeven is Hoare Govett (asubsidiary of the ABN-AMRO Group) and, with effect from 6 December 2006, theposition of Nominated Adviser to the Company will also change to Hoare Govett. Whilst I am pleased to announce the appointment of Hoare Govett, it is with somesadness that we are changing the advisory and broking relationship. Noble &Company ("Noble") were appointed financial advisers to BowLeven in 1998 and,despite several difficult years, when they were not being fully rewarded fortheir efforts, they persevered with BowLeven and sponsored the Company to listits shares on the AIM market in December 2004. Noble's broking arm also raised in excess of £87 million of new funds for theCompany in 2004/05, and shareholders should be very grateful for the loyalty,commitment and dedication that Noble gave to the Company over the past severalyears. STRATEGIC ALLIANCE, SUNTERA On 3 July 2006, Suntera Resources Limited ("Suntera"), a joint venture owned 50per cent. by SUN Energy Limited and 50 per cent. by ITERA Oil & Gas LLC,acquired a 13% interest in the Company, through a placing of 4,438,000 NewOrdinary Shares at approximately 245 pence each, for a cost of £10.9 million.This investment by Suntera is the basis of an important strategic alliance forBowLeven. Suntera, which has considerable experience in monetising gas assets,has built up a strong knowledge base and solid relationships in West Africa, andaims to help the BowLeven Group to secure new opportunities in the region. Thestrategic alliance with Suntera can help BowLeven to deliver its longer-termstrategic objectives. FINANCIAL RESULTS The Group reported a loss of £1.7 million for the 12 months ended 30 June 2006.The main contributor to the loss was administrative expenses, as the Groupexpanded operations to properly carry out its work programme and exploit thepotential of the Etinde Permit. The Company, which had £42.5 million of cash at bank at year end, as furthersupplemented by the £10.9 million share placing to Suntera, has the financialresources to fulfil its 2007 capital investment plans and drilling programme.Some £5 million has been spent since 30 June, on 3D seismic acquisition,processing and interpretation, which should prove to be a significant asset tothe Group. OUTLOOK Despite the drilling of two unsuccessful wells in 2005, the stated hydrocarbonasset base of the Group has not materially changed since the listing ofBowLeven's shares on AIM two years ago. The potential to exploit theserecoverable reserves and contingent resources remains intact, and I am confidentthat the management team will do so. The exploration potential of the Etinde Permit remains; blocks MLHP-5 and 6 havethe potential for discovery of substantial hydrocarbon reserves and resources,with consequent benefits for shareholder value. The Board and management team have been strengthened and this team has theundoubted potential to drive the Company forward to success. Terry HeneaghanExecutive Chairman GROUP PROFIT AND LOSS ACCOUNTfor the year ended 30 June 2006 2006 2005 Notes £'000 £'000 TURNOVER - - Distribution costs - - Administrative expenses (3,429) 1,373) ---------------------------------- ----------------------------------OPERATING LOSS (3,429) (1,373) Interest receivable and similar income 1,687 512Interest payable and similar charges (2) (1,271) ---------------------------------- ----------------------------------LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,744) (2,132) Taxation - - ---------------------------------- ----------------------------------LOSS FOR THE FINANCIAL YEAR (1,744) (2,132) ================================= ================================= Basic and Diluted Earnings Per Share (£/share) 1 (0.06) (0.13) The operating loss for the year arises from the Group's continuing operations. GROUP BALANCE SHEET30 June 2006 2006 2005 £'000 £'000 FIXED ASSETS Intangible assets 40,953 11,289Tangible assets 381 336 ---------------------------------- ---------------------------------- 41,334 11,625 CURRENT ASSETSStocks 810 853Debtors 435 527Cash at bank 42,453 20,518 ---------------------------------- ---------------------------------- 43,698 21,898CREDITORSAmounts falling due within one year (1,003) (844) ---------------------------------- ----------------------------------NET CURRENT ASSETS 42,695 21,054 ---------------------------------- ----------------------------------TOTAL ASSETS LESS CURRENT LIABILITIES 84,029 32,679 ================================= ================================= CAPITAL AND RESERVESCalled up equity share capital 2,961 2,111Share premium account 86,002 33,758Other reserves 2,883 2,883Profit and loss account (7,817) (6,073) ---------------------------------- ----------------------------------SHAREHOLDERS' FUNDS 84,029 32,679 ================================= ================================= GROUP CASH FLOW STATEMENTfor the year ended 30 June 2006 2006 2005 £'000 £'000 Net cash flow from operating activities (3,411) (2,905) Returns on investments and servicing of finance 1,685 (759) Capital expenditure and financial investment (29,433) (5,686) ---------------------------------- ----------------------------------CASH OUTFLOW BEFORE FINANCING (31,159) (9,350) Financing 53,094 29,706 ---------------------------------- ----------------------------------INCREASE IN CASH IN THE PERIOD 21,935 20,356 ================================= ================================= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2006 2005 £'000 £'000 Increase in cash in the year 21,935 20,356 Net cash inflow from loan instruments - 4,944 ---------------------------------- ----------------------------------CHANGE IN NET DEBT 21,935 25,300 NET FUNDS AT 1 JULY 2005 20,518 (4,782) ----------------------------------- --------------------------------- NET FUNDS AT 30 JUNE 2006 42,453 20,518 ================================= ================================= NOTES FORMING PART OF THE FULL YEAR RESULTS BASIS OF ACCOUNTING The financial statements have been prepared under the historical costconvention, in accordance with the Statement of Recommended Practice forAccounting for Oil and Gas Exploration, Development, Production andDecommissioning Activities and with applicable accounting standards. 1 BASIC AND DILUTED EARNINGS PER SHARE 2006 2005 £ £Basic and diluted EPS - Ordinary shares of £0.10 each (0.06) (0.13) ============= ============= Basic and diluted calculation based on:Loss for the financial year 1,743,517 2,132,145 ============= ============= Weighted average number of ordinary shares in the period 27,138,432 16,788,012 ============= ============= Basic and diluted loss per share are identical as there is no dilution. 3 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2006 2005 £'000 £'000 Loss for the financial year (1,744) (2,132)New equity share capital subscribed 850 1,081Premium on new share capital subscribed 52,244 33,569 ---------------------------------- ---------------------------------- 53,094 34,650 ---------------------------------- ----------------------------------Net increase to funds 51,350 32,518Opening shareholders' equity funds 32,679 161 ---------------------------------- ----------------------------------Closing shareholders' equity funds 84,029 32,679 ================================= ================================= This document provides details of the full year results of BowLeven Plc. Copiesof the Annual Report will be sent to shareholders and can be obtained, free ofcharge, from the Company at 68-70 George Street, Edinburgh, EH2 2LT for a periodof one month. - END - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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