So the way this has traded since the seller at 29.25 a week ago... There is no way this deal is happening, 250 mIIliion and the cash we have 20 million, 30 million funding, that is 300 million... Thanks Cameroon for taking 750 million from BLVN and giving us nothing back.. not even a signature....
2823 sq Kms of permit, that is 575261 acres. The most productive acreage is that nearest Logbaba, in the South. This is where we are drilling first and that is only 15kms from Douala the main industrial centre of Cameroon with population of 1.5 million. We are definitely going to find gas in this first drill. It is an absolute certainty. The next question is how much gas? Followed by who do we sell it to and how? This was the problem with Etinde, we found a hell of a resource and could not get anyone to buy the gas at first. We now have a world class partner and a customer lined up. We can in future think about LNG exports for Etinde, but what about Bomono? Are we going to fund a pipeline to Douala or beyond or are ENEO Actis going to come to us and build another power station. I think the latter. They are currently in negotiations with VOG at Logbaba to supply 2 local heavy fuel oil power stations in Douala with gas on a temporary 2 year deal. That gives Bowleven less than 2 years to find the gas and engineer a supply pipe to Douala so we can undercut VOGs price. At VOGs current share price we could buy them out and become a utility company as well once we have the Lukoil lolly cashed.
Bowlevens 2D seismic reevaluation has confirmed (according to Envoi) that historic wells:
1. SUCCESSFULLY found GAS/CONDENSATE on the shallow Palaeocene that WILL BE COMMERCIAL TODAY.
2. failed to acquire seismic of adequate quality to accurately map the prospects and properly predict the resource that the modern seismic has been able to unlock.
3. Failed to properly predict the generative capacity of the Cretaceous source rocks and deeper play potential even although proven by the LOGBABA field.
Overall therefore we are going to make a discovery at Bomono and as Ed Willets stated it is not a question of whether we will find hydrocarbons, its a question of how much we will find and in what proportions.
Given analysts are attributing ZERO value to Bomono, the share price currently does not even reflect the cash we are about to receive or any of the proven Etinde asset, it strikes me that Bowleven will, even in a rubbish market re rate on a discovery here. The market is distracted by decrees at the moment but the cash will soon be in the bank and will very quickly focus attention on the drill about to begin.
At 29p, looks like the steal of the century to me given the cash and future cash position. A solid 20% asset in Etinde Block 7 worth an additional 17p currently (plus 14p of additional cash due next year) and 33p of cash upon deal. Then Bomono, and Sapele assets which we still have 75% of in the future. Upside potential for Etinde is a multiple of current value if successful and bowleven consider it low risk appraisal.
Valuation downside is so limited due to cash hedging and carried high impact drilling. Has to be one of the best hedged and equally high impact upside plays for 2015 on the whole of AIM due to balance sheet strength and carried high impact but low risk well activity
Plan is to appraise the B & C intervals and determine exactly how much gas and condensate is there based on the previous discoveries. My view is this will lead to immediate resources attributable to Bomono. The question is how commercial will they be. Bowlevens studies show that they should be commercial today. You would also expect much better flows 60 years on with improvements in drilling technology.
Then drill up dip to the D & E sands where they expect to find oil with associated gas based on previous drills, oil seeps to surface and analysis of the old and new 2D.
Macquarie estimate Zingana 1 to have potential for 114mboe recoverable of combined gas, oil and condensate across the stacked systems.
Ed Willets stating that expect to find 40bcf recoverable at each interval of gas with an upside of 0.8tcft.
The P10 numbers provided by Envoi for this appraisal are for 0.8tcft gas across the four intervals and 29.5mboe of condensate.
Given appraisal, and the not so small numbers involved, this is the reason why I think focussing on the decree is misplaced as it will come when it comes. Even 25% of the above would be very commercial and nearly equivalent to the Logbaba field held by VOG. The difference here is their field is in the lower cretacious deeper down and in Ed Willets words "we are going for the much easier and lower risk low hanging fruit."
Macquarie consider that Zingana 1 has an unrisked value of 76p. They have risked the upside potential as being 10p pre drill. This is therefore very high impact and game changing. the fact that it is appraisal makes the share price very lucrative at current levels.
Moambe Bomono Well 2:
Moambe is more exploratory principally because the area itself has not been drilled previously. It is not targeting the main Bomono canyon fill but a separate enclosure. However, it is testing the same B & C sands and D & E sands up dip.
Bowleven state that the fact not previously drilled does not increase the risk rating significantly given how prolific both the tertiary and cretaceous source rocks feeding these enclosures are. Given condensate, gas and oil presence is known to be in the sands at Zingana location you would expect there to be here also.
Based on modern 2D they believe they have the optimum location for Moambe.
Envoi have on a P10 basis 486bcf and 15mboe condensate for Moambe. Overall, Macquarie estimate 35mboe oil and 175bcf of gas likely on a P50 basis (65mboe in total)
Macquarie have an estimate of 65mboe recoverable across the gas and liquids for Moambe assuming 20% recovery of liquids and 75% recovery of gas. Macquarie value give an unrisked value of 44p per share with a heavily risked value pre drill of 5p. Given this form part of their upside potential no value for Bomono is included within the share price.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.