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LONDON (Alliance News) - Bowleven PLC Tuesday said it has sold a 50% stake in the Etinde oil and gas permit, offshore Cameroon, to Russia's LUKOIL OAO and NewAge Ltd, for a total cash payment of USD250 million.
The oil and gas exploration and development company said it will now reduce its interest in the Etinde permit from 75% to 25%, providing LUKOIL with a 37.5% interest and NewAge an additional 12.5% stake, bringing its holding to 37.5%.
Bowleven said the USD250 million payment will comprise of USD170 million on completion of the deal, a USD40 million deferred cash payment upon final investment decision for Etinde and the completion of appraisal drilling, with another USD40 million payment that Bowleven would have paid for two appraisal wells being covered by the buyers.
The company said that NewAge's subsidiary Camop will now become operator, allowing Bowleven to focus on its exploration plans in Cameroon, Kenya and Zambia, but the company will retain the 25% interest in Etinde to be exposed to its development.
"With the Exploitation Authorisation approved and nearing formal award, gas sales discussions well advanced, and significantly increased scope for expansion to additional gas offtake solutions, we believe now is the right time to bring in a new partner and transfer operatorship," Chief Executive Kevin Hart said in a statement.
Bowleven said the deal is subject to it being granted the formal decree awarding the Exploitation Authorisation over block MLHP-7 of the Etinde permit for an initial 20 years, which was submitted in January and was approved in May, along with certain other conditions.
The Exploitation Authorisation defines the means of monetising the Etinde hydrocarbons by supplying treated gas to a government-sponsored fertiliser plant and also through a liquefied natural gas scheme.
The deal should go through 15 days after these conditions are achieved, but it has a long stop date of August 31, 2014.
Bowleven shares were up 15% to 45.85 pence, making it the top AIM ALL-Share riser in early trading on Tuesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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