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LONDON (Alliance News) - BowLeven PLC on Tuesday reported a huge pretax loss in its most recently completed financial year after booking substantial impairments as it continues to progress its two projects in Cameroon towards first production.
The African-focused oil and gas company reported a substantially wider pretax loss of USD90.0 million in the financial year ended June 30, compared to the USD13.6 million loss made a year earlier.
The exploration company does not currently generate any revenue and a huge USD76.0 million impairment charge was the cause of the wider loss in the last financial year. Those impairments reflect revised commodity prices and planning assumptions for its Etinde project.
BowLeven is currently focused on operations in Cameroon, where it has the offshore Etinde project and the onshore Bomono project. During the year, it completed a farm-out at Etinde to bring in LUKOIL and NewAge as partners, which left BowLeven with a 20% stake in Etinde.
That farm-out saw its P50 contingent resources fall to 58.0 million barrels of oil equivalent from the 244.0 million barrels on its books last year prior to its relinquishment of two blocks and when it wholly-owned Etinde.
Over the next financial year, BowLeven said the Etinde joint venture will begin drilling "as soon as possible" to appraise the potential of the Intra Isongo reservoirs. The partners also will evaluate additional offtake opportunities and progress development plans including the finalisation of gas sales agreements.
"The priority focus on Etinde is the drilling of the two appraisal wells, targeting the significant potential upside identified in the Intra Isongo reservoir interval. Bowleven is funded for its anticipated share of the drilling and testing of these wells via a USD40.0 million (net) carry obtained under the Etinde farm-out agreement," said the company.
"With well locations agreed, we are looking forward to the operator drilling these wells as soon as practicable in 2016," it added.
At its wholly-owned Bomono project, the company is planning for "success and first production" by completing the extended well test programme to determine the well deliverability at the project and to progress plans to begin early production should the extended well tests prove successful.
BowLeven said it will also submit the exploitation authorisation application to authorities in Cameroon before the end of November.
"Our recent exploration drilling at Bomono, onshore Cameroon, resulted in hydrocarbon discoveries at both Zingana and Moambe. A positive outcome from the extended well testing programme could deliver a home grown revenue stream for the group in the near-term. Consequently, alongside testing activities, we are continuing to progress plans with Actis [and] Eneo for a gas-to-power development scheme at Bomono," said BowLeven.
Previously, the company has said any associated liquids produced at Bomono in addition to gas will be trucked for sale to the local refinery at Limbe.
"The sustained low oil price has created a challenging environment for [exploration and development] companies and we have taken the time to examine our current cost base to ensure that it is right-sized for current plan, and our strategic objectives," said BowLeven.
"However, for those with balance sheet strength there are opportunities. We will evaluate this new business potential against a background of capital discipline and operational capability while continuing to drive forward progress on our existing assets," the company added.
At the end of the financial year, BowLeven remained debt free and reported cash and cash equivalents of USD144.8 million, substantially up from only USD20.5 million at the end of June 2014.
BowLeven shares were down 3.9% to 24.75 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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