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LONDON (Alliance News) - BowLeven PLC Wednesday said although its pretax loss ballooned in the first half of the current financial year, the company remains in a strong position as it has no work obligations, zero debt and over USD100.0 million of cash.
BowLeven shares were trading down 7.5% to 21.50 pence per share on Wednesday morning.
The oil and gas exploration company operating in Africa said its pretax loss widened to USD132.0 million in the six months to the end of 2015 from the USD81.0 million loss booked in a year earlier after the company booked a higher amount of impairments in the period.
The USD133.5 million impairment in the first half was almost the sole driver of the loss in the year, growing from the USD76.0 million impairment booked the year before.
BowLeven said the impairment was made due to the "prolonged market downturn" and because it revised its oil price assumption to USD65 per barrel, which is considerably higher than current prices, with Brent trading below USD40 per barrel on Wednesday morning.
To break down that down, a USD60.7 million impairment was booked against the Etinde permit and a USD61.0 million impairment was booked against the Bomono permit, both in Cameroon, whilst an additional USD11.8 million charge was made against Kenya Block 11B.
On a brighter note, BowLeven remains in a healthy financial position as it reported a cash balance of USD108.0 million with no debt and no work programme obligations, meaning expenditure is optional moving forward.
Under the terms of the farm-out on the Etinde permit in March 2015, BowLeven will secure a further USD15.0 million payment sometime before September 2016, and the company also has access to a USD40.0 million net drilling and testing carry which should fund two appraisal wells on Etinde this year.
BowLeven will also receive a further USD25.0 million once a final investment decision has been made for Etinde, however that is much further down the line.
"With a significant cash balance, the deferred consideration structure from the Etinde farm-out, and no debt or outstanding work programme commitments, the group is well placed to progress its strategic objectives of supporting its existing asset base, alongside the potential for new investment opportunities," said BowLeven.
At Bomono, the company has submitted an exploitation authorisation application to authorities in search of approval for a small scale gas-to-power development after completing extended well tests on the Moambe and Zingana wells.
BowLeven said it is reviewing its other assets as the company looks to rationalise its portfolio and look for new ventures that can either yield near-term production or ventures focused around infrastructure, it said.
"We are optimistic that portfolio enhancing transactions can be identified and delivered alongside the progression of our existing asset base and look forward to making further progress in the coming year," said Chief Executive Kevin Hart.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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