22nd Mar 2007 07:01
BowLeven Plc22 March 2007 22 March 2007 BowLeven Plc ('BowLeven' or 'the Company') Interim results for the six months to 31 December 2006 BowLeven, the African focused oil & gas company listed on AIM, today announcesits interim results for the six months ended 31 December 2006 Highlights include: •Announced and completed a successful takeover of First Africa Oil plc. •Equity fundraisings of a total of £67 million net of expenses, including a £56 million placing in December 2006. •Commenced a potentially high impact drilling programme. •Successfully flow tested the first well as an appraisal of the E field at 30 mmcfd of gas and 3,800 bpd of condensate. •Strengthened its Board and technical team composition. •Commenced discussions regarding the possible future sale of gas and liquids from the Etinde permit in Cameroon. •Net cash of £89 million. Commenting, Kevin Hart, BowLeven's CEO, said: "I'm delighted with the progress we are making on numerous fronts at BowLeven.The high calibre team we are assembling has already helped increase the value ofour acreage, and has begun to identify further attractive opportunities whichhave the potential to create shareholder value." ENQUIRIES For further information contact: BowLeven plc +44 (0)131 260 5100Kevin Hart, Chief Executive Officer Maitland +44 (0)20 7379 5151Neil BennettAlastair CrabbeLiz Morley Chairman's Statement Dear Shareholder, As this is my first official communique may I start by expressing a very warmwelcome to each of you. I genuinely believe I have joined BowLeven at a veryexiting time in its evolution as the team strives to develop a business whichcan consistently deliver organic growth and value creation for its shareholders. In this regard, the last six months have heralded a period of significantpositive change and activity for BowLeven. During this period the Company has: •Announced and completed a successful takeover of First Africa Oil plc. •Equity fundraisings of a total of £67 million net of expenses, including a £56 million placing in December 2006. •Commenced a potentially high impact drilling programme. •Successfully flow tested the first well as an appraisal of the E field at 30 mmscfd of gas and 3,800 bpd of condensate. •Strengthened its Board and technical team composition. •Commenced discussions regarding the possible sale of gas and liquids from the Etinde permit in Cameroon. Vision and Strategy It is our vision to build an African focused, exploration and production companywhich becomes renowned for its ability to consistently create and realisematerial shareholder value through exploration led organic growth and nicheacquisitions. Operations CameroonOver the past few years the Company has built up an extensive database of 2D and3D seismic coverage over its Etinde Permit, which comprises Blocks MLHP 5,6 and7. Ongoing interpretation of the 3D seismic data on Block 7 has resulted in newopportunities on this acreage coming to light. In particular this work helpedidentify the potential for commercial volumes of condensate rich gas in theregion of the IE-1 discovery well, which was first drilled by Total in 1981.Consequently the first well in the drilling campaign, IE-2, was drilled toappraise this discovery As announced earlier this month the IE-2 well successfully tested gas andcondensate from the Isongo formation. The well flowed at a stabilised rate of 30mmscfd and 3800 bpd through a 60/64 inch choke with a flowing well head pressureof 2126 psi. The production test indicated excellent reservoir deliverabilitywith no evident depletion. Whilst further evaluation is required to determinethe extent of the E Field and associated reserves the result of the IE-2 wellhave been very encouraging, especially as the flow rates were constrained by thetest equipment. The well also encountered 50 feet of net pay in good quality gasbearing sandstone in the Biafra formation. The IE -2 well has been suspended asa possible future producer. A substantial amount of technical work has been carried out and is still ongoingto evaluate the recently acquired 3D seismic data over Blocks 5 and 6 in thesparsely explored Douala Basin. Whilst still at a relatively early stage, theinterpretation of this data has already generated a number of leads andprospects. One such prospect ("D") located in Block 5 is the target for thesecond well in the current drilling campaign. The Adriatic VI drilling rig hasnow been moved a short distance to Block 5 of the Etinde Permit to begindrilling the higher risk "D" exploration prospect. This well was spudded on 21March 2007 with the primary objective of exploring the Upper Miocene channelisedturbidite sands, which are believed to be similar to those that were found byNoble Energy to be hydrocarbon bearing 10km downslope in the O-1 Belindadiscovery in Equatorial Guinea.. Following this second well it is likely that the rig will return to Block 7 anddrill an exploration prospect which is located up dip from the adjacent E Field. The decision on where, and if, to drill a fourth well in this campaign is stillbeing evaluated. This will depend, in part, on the results of the prior wellsand the status of our extensive ongoing review of the recently acquired seismicdata in both Cameroon and Gabon. A key objective for the Company in the next 12 -18 months is to seek to monetiseour existing resource base in Block 7 in Cameroon together with any additionalgas/liquids discovered in Blocks 5&6. Of particular encouragement is theCameroon Government's announcement in early 2007 of a cooperation agreement withthe Government of Equatorial Guinea to investigate the possibilities of aproject to export gas from Cameroon to the gas liquefaction plant on BiokoIsland. It is proposed that Limbe in Cameroon would be the gathering hub for anysuch scheme. The close proximity (approximately 27 km) of the Company's resourcebase to Limbe combined with the high well deliverability and liquids contentexperienced at IE-2 should help ensure that Bowleven is ideally positioned toparticipate in any future gas export project. GabonThe purchase of FirstAfrica Oil plc ("FirstAfrica") (mentioned below) has givenus both a significant development opportunity and substantial explorationacreage. We have been busy on our newly acquired Gabonese operations. Havingreviewed FirstAfrica's plans we have changed the approach to production of theoffshore EOV field. Good progress has been made on preparing an amended fielddevelopment plan for the EOV which would involve evacuating the oil through apipeline to nearby existing onshore facilities. This should allow the oil to beproduced at lower operational costs than for the previously proposed developmentscheme based on an FPSO. First oil is targeted for 2H 2008. Work has also now commenced on reprocessing the vintage 2D seismic over theonshore Epaemeno Block. This work will be completed by mid year and the newdataset will form the basis for future drilling plans. Corporate I mentioned earlier that FirstAfrica now forms part of the BowLeven Group. Weare very happy to have completed this meaningful acquisition. There is a clearlogic in combining the asset portfolios of the two companies and using ourexisting financial resources and experience of the management team to developthe various projects that are available. FirstAfrica has a 100% equity interestin both the East Orovinyare ("EOV") offshore block in Gabon, which contains anexisting oil discovery that we are seeking to develop, and the Epaemeno Blockwhich is 1,340 km2 of exploration acreage in onshore Gabon which sits next to anumber of recent discoveries in surrounding blocks. Following on from the net £11 million placing in July 2006, the Company'sfinances were further significantly strengthened by the successful placing of26.4 million shares at 220 pence a share on 19 December 2006 to raiseapproximately £56 million net of expenses. These funds will be used to helpfinance the development of the EOV field and to provide funds for explorationactivities and working capital purposes. Fostering strong external partnerships with the right risk reward profile is asound strategy for helping develop our assets. Accordingly, we continue toconsider our needs and opportunities for timing on farm-outs. Financial Results As yet we have no operating income. Against this background, the Group reporteda loss of £2.1 million for the six months ended 31st December 2006. The maincontributor to this loss was administrative expenses of £3.1 million reflectingthe Group's efforts to develop its assets. This was also the first period thatthe Company had applied FRS20, which requires all companies to recognise thefair value of employee share based benefits in the financial statements. Thisresulted in a charge of £0.3 million for the six months ended 31 December 2006which has been included within administrative expenses. Also included withinadministrative expenses was an amount of £1.1 million primarily relating tovarious translation differences on foreign exchange transactions that have beencharged to the income statement. This partly occurred as a consequence of theCompany managing currency exposures by, to the extent practical, matchingreceipts and payments in the same currency. The balance sheet is healthy, with net cash of £89 million at the period end. Long Term Incentive Plan ("LTIP") A LTIP was approved by Shareholder's at an EGM of the Company held on 6 December2006. The plan seeks to help align the remuneration of senior management withthe underlying long term performance of the business. Board Changes This has been a period of quite a few Board changes. I am delighted that Kevin Hart has joined the Company as Chief ExecutiveOfficer. His combination of skills, enthusiasm determination and leadership willprove to be a key appointment for the organisation. As well as being appointed Non Executive Chairman myself following the AGM on 6December 2006, I was also joined on the Board at that date by Caroline Cook as aNon Executive Director. She has considerable experience in the oil and gassector and I welcome her to the Company and look forward to her valuablecontributions. I would like to register my thanks to Terry Heneaghan and Easton Wren whostepped down as Executive Chairman and Non Executive Director respectively atthe AGM in 2006. Both gentlemen deserve much credit for their efforts in helpingsecure the position that BowLeven is in today. I am very sorry to report the death of Jerry Anthony, our Exploration Director.He died just before the end of 2006 after a short illness. He was a muchrespected and admired colleague and will be greatly missed. It is our intention to make further appointments to the Board and managementteam as the business develops. Outlook Our business is of course one of potentially high risk and high reward. Ourapproach is to recruit and maintain a very high calibre and motivated team, tobe highly professional in assessing and managing the risks and rewards in ouroperations - such that our prospects are maximised. The outlook is positive for your Company. I believe that we have the managementteam and asset base that can provide us with significant opportunities forsuccess in creating value for shareholders. Yours sincerely R G HannaChairman22nd March 2007 GROUP PROFIT AND LOSS ACCOUNT Six months Six months ended ended Year ended 31 December 31 December 30 June 2006 2005 2006 Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Turnover - - - ---------- ---------- ----------Administrative expenses (3,058) (1,554) (3,674) ---------- ---------- ---------- Operating loss (3,058) (1,554) (3,674)Interest receivable and similar income 972 746 1,687Interest payable and similar charges - - (2) ---------- ---------- ----------Loss on ordinary activities beforetaxation (2,086) (808) (1,744)Taxation - - - ---------- ---------- ----------Loss for financial period (2,086) (808) (1,989) ---------- ---------- ---------- There are no recognised gains or losses other than those included in the profitand loss account. GROUP BALANCE SHEET At 31 December At 31 December At 30 June 2006 2005 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Fixed assetsIntangible assets 49,218 27,496 40,953Tangible assets 386 356 381 ----------- ----------- ---------- 49,604 27,852 41,334Current assetsStocks 4,199 841 810Debtors 11,041 956 435Cash at bank 88,750 62,355 42,453 ----------- ----------- ---------- 103,990 64,152 43,698Creditors: amounts falling duewithin one year (4,328) (6,955) (1,003)Net current assets 99,662 57,197 42,695 ----------- ----------- ----------Total assets less current liabilities 149,266 85,049 84,029 ----------- ----------- ----------Capital and reservesCalled up equity share capital 6,041 2,961 2,961Share premium 149,969 86,002 86,002Other reserves 3,494 3,057 3,218Profit and loss account (10,238) (6,971) (8,152) ----------- ----------- ----------Shareholders' funds 149,266 85,049 84,029 ----------- ----------- ---------- GROUP CASH FLOW STATEMENT Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Net cash flow from operating activities (16,412) (2,301) (3,411)Returns on investments and servicingof finance 971 744 1,685Capital expenditure and financialinvestment (5,258) (9,700) (29,433) ----------- ----------- ---------Cash outflow before financing (20,699) (11,257) (31,159) Financing 66,998 53,094 53,094 Increase in cash in the period 46,297 41,837 21,935 ----------- ----------- --------- Reconciliation of net cash flow to movement in net funds Increase in cash in period 46,297 41,837 21,935 ----------- ----------- ---------Change in net funds 46,297 41,837 21,935Opening net funds 42,453 20,518 20,518 ----------- ----------- ---------Closing net funds 88,750 62,355 42,453 ----------- ----------- --------- NOTES FORMING PART OF THE INTERIM RESULTS 1. Basis of preparation The financial information contained herein does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Theunaudited interim financial information has been prepared on the basis of theaccounting policies set out in the Group's accounts for the year ended 30 June2006 with the exception of the adoption of Financial Reporting Standard 20"Share Based Payments" ("FRS 20") which was adopted with effect from 1 July2006. The figures for the year ended 30 June 2006 have been extracted from theGroup accounts as amended for FRS 20 as this requires prior period adjustmentsto the published financial statements. Those accounts have been filed with theRegistrar of Companies and contained an unqualified auditor's report. Adoptionof FRS 20 results in an increase in general and administrative expenses as setout below: Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £'000 £'000 £'000Value of share options/LTIPsexpensed in period 276 84 245 2. Reconciliation of movement in shareholders' funds Six months ended 31 December 2006 £'000 Loss for the period (2,086)New shares issued 3,080Premium on new share capital subscribed 63,967Other reserves movement 276Opening shareholders' equity funds 84,029 -----------Closing shareholders' equity funds 149,266 ----------- 3. Reconciliation of operating loss to net cash outflow from operatingactivities Six months ended 31 December 2006 £'000 Operating loss (2,086)Depreciation 78Increase in stocks (3,389)Increase in debtors (10,667)Decrease in creditors (348) -----------Net cash outflow from operating activities (16,412) ----------- 4. Interim report This document represents the Interim Report and half yearly results of BowLevenplc. Copies of the Interim Report will be sent to shareholders and can beobtained, free of charge, from the Company at 68-70 George Street, Edinburgh,EH2 2LT for a period of one month. 5. Post-balance sheet event - acquisition of FirstAfrica Oil On 26 January 2007, BowLeven announced that the recommended all share offer madefor the entire issued share capital of FirstAfrica Oil plc had been declaredwholly unconditional. Accordingly, FirstAfrica will now form part of theBowLeven Group with effect from 26 January 2007. 6. Financial Instrument Commitments The Group has outstanding forward contracts to manage foreign currencies bycommitting to purchase US$3 million per month @ $1.8625 from 1 January 2007 to30 June 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BLVN.L