Given we have had two RNS re farm outs this, week which has seen little effect SP wise, what is the sentiment that is causing the market to be so underwhelmed. We have the GSA to come and lack of confidence can't entirely be placed at the BOD door. For what it is worth it does look like a scrambling defence this week though. Could it the simple fact the market is wary of the Cameroon govt. Almost 6 weeks since the EEAA was signed but we still await the moniker of President Paul 'Beady-eye' Biya. Could this be the trigger point to get SP moving North, when any lingering doubt is removed.
You mention bad timing,it will be awful for you to sell BLVN to go back to GKP as what i suspect will happen is BLVN will go to 50p and GKP back to 90p.Now that would be more bad timing,BLVN is officially the most undervalued stock trading anywhere which is always a could time to invest in,eh? Stay firm and do not jump because you see a stock rising elsewhere,remember why you invested here and you will see a just return in time.
I have been on the site and the Bowleven page is incorrect,it is a mess.They have some detail correct,however some is not(such as 12 billion market cap).The major shareholders are all wrong-so PLEASE ignore it,JPM have not gone to 20%.
I was holding 45000 shares in gkp, few days ago sold out and bought in here after the farm out news, only to lose 15% now feel I should get out of here with the loss and get back in gkp as I already missed a 40% rise.. Please suggest, will gkp go back to £3... I was holding gkp for more than a year, what a bad timing...
The business drivers/characteristics A key driver for this stock in 2014 is the Final Investment Decision on Etinde will allow the monetisation of the company resources offshore Cameroon, starting with the IM field. FID is currently scheduled before year-end. However, we would not be surprised if this further slips into 2015, given the previous delays, a new partners in the block and a gas-sales agreement not yet formally signed. Despite this, we believe that as project moves towards FID the material share price discount to our NAV should unwind. We believe that the recent farm-out to LUKOil and NewAge should also provide a clear external market validation for Bowleven shares at 70p/sh. Given the company’s weak balance-sheet position, we also believe this represents a conservative read-through valuation for the company’s 25% residual interest in Etinde. The company currently holds US$34mn of cash in-hand as of February 2014 and no debt. Opportunities & risks  In our view, a key catalyst for the shares is project FID, which we expect towards year-end. In 2015, the company is looking to drill two appraisal wells that could unlock further upside at Etinde, which on our numbers could be worth £1.7/sh. Risks  The key risks are potential additional delays in the FID, which could have a knock-on impact on first oil for Etinde. Assuming that IM will came in at its P90 estimates and one-year delay to first oil, no value for Sapele or Bowleven’s exploration acreage, our base case NAV would reduce down 40p from £1.1/sh.
Investment case and valuation analysis On our numbers, the shares are trading at a 70% discount to our Total NAV, which is the largest amongst the explorers. We believe that this is driven mainly by concerns around the economic viability of the Etinde and timing of first oil, which may slip in 2017/2018. However, as the recent proposed farm-out to LukOIl shows, the industry believes in the commercial nature of Etinde, and we are confident that over time equity investors will follow suit. The company’s acreage position in East Africa also provides further optionality that is also currently not priced in.
Barclays have released an equity update. Upside case now lifted to 2.10. Target price unchanged at 1.35. I will try and post the text here but as usual apologise for some of the formatting:
Price Target GBP 1.35 Why Overweight? Bowleven offers attractive exposure to Cameroon, a country in West Africa that historically has been under-explored but that could hold material oil accumulations for the company. In our view, the recent farm-out to LUKOIl also point to an EV for the company at 70p, which in our view highlights its distressed equity valuations.
Upside case GBP 2.10 In our upside case, we have reduced our discount rate to 10% from 15% to reflect a discount rate we use for majority of stocks under our coverage. All other assumptions have been left unchanged.
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