Bowleven Regulatory News (BLVN)

12 Nov 2007 07:00

BowLeven Plc12 November 2007 12 November 2007 Bowleven Plc ('Bowleven' or 'the Company') Preliminary results for the year ended 30 June 2007 Bowleven, the African focused oil & gas company listed on AIM, today announcesits preliminary results for the year ended 30 June 2007. Highlights of the year include: • Two successful wells, in Block 7, Rio del Rey Basin; • New discovery in Block 5, Douala Basin; • Announced and completed a successful takeover of FirstAfrica Oil Plc; • Farmed out 50% of the onshore Epaemeno Block, Gabon to Addax; • P50 resource base increased by over 50% during year to 167 mmboe • Strengthened both the Board and Technical Team; and • Carried out equity fundraisings of £67 million (net of expenses) Commenting Kevin Hart, Bowleven CEO, said: "2006/7 was a year of strong delivery against strategy. The potential of ourasset base on blocks 5 and 7 has been substantially advanced, and we havestrengthened the resources of the Group through recruitment, acquisition andraising new equity. In the current year, we look to sustain this progressthrough exploration and appraisal drilling, and to provide Bowleven both withoptions for the commercialisation of the portfolio and the further developmentof value for our shareholders." ENQUIRIES For further information please contact: Bowleven plcKevin Hart, Chief Executive Officer 00 44 131 524 5656 Brunswick Group LLPPatrick Handley 00 44 207 404 5959Deborah Spencer Hoare Govett Limited 00 44 207 678 8000Andrew Foster Chairman and Chief Executive Officer's Review 12 November 2007 We are delighted to report that the last year proved to be a very successfultime for the Company. During the period, Bowleven made significant steps towardsevolving into a business that can ultimately deliver on its goal of consistentorganic growth and material shareholder value creation. The period was marked by a large degree of positive change and activity, withmany significant milestones being reached. These included: • Undertaking a successful three well exploration and appraisal programme in Cameroon that resulted in: - The flow testing of the E field appraisal well in Block 7 in the Rio del Rey Basin at 30 mmscfd of gas and 3,800 bpd of condensate. - The discovery of the D field in Block 5 in the Douala Basin that tested 26 mmscfd of gas and 1,454 bpd of condensate. - The discovery of gas, condensate and oil 700 feet high to prognosis on the IF structure in Block 7 indicating the possible connectivity of the IE and IF accumulations and a possible 1,300-foot hydrocarbon column. • Announcing and completing a successful takeover of FirstAfrica Oil Plc. • Farming out part of the onshore Epaemeno Block in Gabon to Addax, subject to government approval. • Strengthening both the Board and the technical team. • Carrying out equity fundraisings totalling £67 million net of expenses. Value Creation The Bowleven Board and management team strive to position the Company in such away as to maximise its chances of success and the creation of shareholder value.In so doing, the Board applies a set of aims that it believes is consistent withthese goals, namely: • Have an asset base with the potential for material exploration success, augmented with opportunistic niche acquisitions; • Create the environment for a competitive advantage to exist through the focused active management of political, commercial and technical risk; • Foster strong external partnerships and excellent relationships with host nations, based always on mutual respect; • Keep control of our destiny by acting as exploration operator; • Maintain a robust financial position; • Building a world-class team of motivated individuals and an environment where they, and the Company, maximise their potential. Cameroon In the past few years we understand that Bowleven, through its wholly-ownedsubsidiary EurOil, has invested more in Cameroon on exploration and appraisalactivities than any other oil and gas company. Recently significant time andeffort has been expended on reprocessing and interpreting the extensive 2D and3D seismic database that the Company has on its Etinde Permit covering BlocksMLHP 5, 6 and 7. The culmination of this work has been a successful three-well drilling programmethat was conducted earlier this year on the acreage. The first (IE-2) and third (IF-1) wells of the campaign, drilled on Block MLHP7, have helped build confidence that both these structures are connected. Whilstfurther appraisal of the IF structure is required to confirm the extent of thehydrocarbons present, it is considered likely, due to the excellent reservoircharacteristics and high condensate yields encountered, that this area willprove an excellent development candidate. The current development concept forthe area anticipates that, initially, the gas produced would be recycled and thecondensate extracted and transported to Cameroon via pipeline. Such a scheme hasthe benefit of negating any immediate requirement for gas sales and would enablethe recycled gas to be extracted and sold subsequently when a market becomesavailable. It is intended that at least one further appraisal well will be drilled on theIF structure. A tender process to secure a rig is ongoing and it is hoped that awell can be completed during the first quarter of 2008. The second well of the programme (D-1), a higher risk exploration well drilledin Block MLHP 5 in the Douala Basin, also proved successful. The well, which wasthe first to be drilled on Bowleven's acreage in the Basin, tested 26 mmcfd ofgas and 1,454 bpd of condensate. The result of this well, combined with therecent positive drilling news in the adjoining acreage, also in the Douala Basin, bodes extremely well for the future exploration of this under-explored basin.The technical team has identified numerous further oil and gas prospects andleads on the acreage. It is intended that further drilling will occur on theacreage in the second half of 2008. A key objective for the Group in the next 12 to 18 months is to seek to monetiseour existing resource base in Block MLHP 7 in Cameroon together with anyadditional gas/liquids discovered in Blocks MLHP 5&6. Of particularencouragement is the Cameroon Government's announcement in early 2007 of acooperation agreement with the Government of Equatorial Guinea to investigatethe possibilities of a project to export gas from Cameroon to the gasliquefaction plant on Bioko Island. It is proposed that Limbe in Cameroon wouldbe the gathering hub for any such scheme. The close proximity (approximately 27km) of the Group's resource base to Limbe, combined with the high welldeliverability and liquids content of the gas, should help ensure that Bowlevenis ideally positioned to participate in any future gas export project. Gabon Bowleven gained entry to its position in Gabon through the acquisition ofFirstAfrica Oil, which it completed on 26 January 2007. Since then, progress hasbeen made on both of the contract areas (East Orovinyare and Epaemeno) that wereacquired through this transaction. On the offshore East Orovinyare PSC, extensive work has been carried out todetermine the optimal evacuation and processing solution for the production. Afinal decision on the preferred option is anticipated by the end of 2007, withproduction anticipated to commence from the field in early 2009. With regard to the onshore Epaemeno PSC, it was decided to bring into theacreage adjoining operators Addax. It is hoped that their local experience inthe acreage will help add value to Bowleven's position as we move forward withseismic and drilling activities in 2008/2009. Resource Base The combined 2p resource base for the Group, as independently certified by ScottPickford and Netherland, Sewell & Associates, is currently 167 mmboe. Inaddition, the mean unrisked in place exploration inventory comprises over 1.8billion boe. Finance The Group reported a loss of £4.8 million for the year ended 30 June 2007 as wework towards first production from our asset base. The main contributor to thisloss was an increase in administrative expenses during the year of £3.7 millionto £7.4 million, part of which reflected the expected expansion in the scale ofthe Group's operations to properly carry out both the work programme to exploitthe potential of the Etinde Permit and the integration of the Gaboneseoperations into the Group following the FirstAfrica acquisition. This was alsothe first period that the Group had applied FRS 20, which requires all companiesto recognise the fair value of employee share-based benefits in the financialstatements. This resulted in a charge of £0.8 million for the year ended 30 June2007 that has been included within administrative expenses (there was acorresponding adjustment to the comparative figures of £0.3 million to reflectthe adoption of this new accounting standard). There was a further charge of £1.4 million within administrative expensesresulting from translation differences on foreign exchange transactions chargedto the profit and loss account. With £67 million of new equity finance raised during the year and a £36 millionoutflow for Capex, the balance sheet is healthy. The Group had £53 million netcash resources at the year end. Outlook The next twelve months promise to be an exciting time in the ongoing evolutionof Bowleven. We have a high quality team that is capable of optimising andcreating additional value from our existing portfolio whilst also assessing newopportunities as they arise. Of key importance will be the progress towardsmonetisation of our resource base in Cameroon. The industry remains an extremely competitive one and if we are to succeed wemust ensure that we manage the political, technical and commercial risks we facewith energy, belief, integrity and teamwork. This will remain our focus. Finally, Steve Lowden, who has served as a non-executive director since 1995, isgoing to step down from the Board at the AGM. His contribution to the Group hasbeen highly regarded and we thank him for all his efforts during his period withBowleven. Ronnie Hanna Kevin HartChairman Chief Executive Officer 12 November 2007 GROUP PROFIT AND LOSS ACCOUNTFor the year ended 30 June 2007 2007 2006 Notes £'000 £'000 TURNOVER - - Distribution costs - - Administrative expenses 7,388 3,674 -------- -------- OPERATING LOSSContinuing operations (6,519) (3,674)Acquisitions (869) - -------- -------- (7,388) (3,674) Interest receivable and similar income 2,629 1,687Interest payable and similar charges (9) (2) -------- -------- LOSS ON ORDINARY ACTIVITIESBEFORE TAXATION (4,768) (1,989) Taxation - - -------- --------LOSS FOR THE FINANCIAL YEAR (4,768) (1,989) ========= ========== Basic and diluted Earnings Per Share (£/share) (0.09) (0.07) The operating loss for the year arises from the Group's continuing operations. GROUP BALANCE SHEET30 June 2007 2007 2006 £'000 £'000FIXED ASSETSIntangible assets 95,669 40,953Tangible assets 31,921 381 -------- -------- 127,590 41,334 CURRENT ASSETSStocks 3,893 810Debtors 1,039 435Cash at bank 52,550 42,453 -------- -------- 57,482 43,698CREDITORSAmounts falling due within oneyear (9,717) (1,003) -------- -------- NET CURRENT ASSETS 47,765 42,695 -------- --------TOTAL ASSETS LESS CURRENT LIABILITIES 175,355 84,029 ======== ======== CAPITAL AND RESERVESCalled up equity share capital 7,452 2,961Share premium account 177,750 86,002Other reserves 3,986 3,218Foreign exchange reserve (913) -Profit and loss account (12,920) (8,152) -------- -------- SHAREHOLDERS' FUNDS 175,355 84,029 ======== ======== GROUP CASH FLOW STATEMENTFor the year ended 30 June 2007 2007 2006 £'000 £'000Net cash flow from operatingactivities (10,533) (3,411) Returns on investments and servicing of finance 2,620 1,685 Tax (25) - Capital expenditure and financial investment (48,553) (29,433) Acquisitions and disposals (458) - --------- -------- CASH OUTFLOW BEFORE FINANCING (56,949) (31,159) Financing 67,046 53,094 --------- --------INCREASE IN CASH IN THE PERIOD 10,097 21,935 ========= ======== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2007 2006 £'000 £'000 Increase in cash in the year 10,097 21,935 -------- --------CHANGE IN NETFUNDS 10,097 21,935 NET FUNDS AT 1JULY 2006 42,453 20,518 -------- --------NET FUNDS AT 30 JUNE 2007 52,550 42,453 ======== ======== NOTES FORMING PART OF THE FULL YEAR RESULTS BASIS OF ACCOUNTING The financial statements have been prepared under the historical costconvention, in accordance with the Statement of Recommended Practice forAccounting for Oil and Gas Exploration, Development, Production andDecommissioning Activities and with applicable accounting standards. 1 BASIC AND DILUTED EARNINGS PER SHARE 2007 2006 £ £Basic and diluted EPS - Ordinaryshares of £0.10 each (0.09) (0.07) ======== ======== Basic and diluted calculation based on:Loss for the financial year 4,767,985 1,988,040 ======== ======== Weighted average number of ordinaryshares in the period - Basic EPS 53,980,015 27,138,432 ======== ======== Weighted average number of ordinaryshares in the period - Diluted EPS 54,126,857 27,285,274 ======== ======== 2 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2007 2006 As restated £'000 £'000 Loss for the financial year as previously stated (4,768) (1,744) Prior year adjustment - FRS 20 - (245) -------- --------Loss for the year as restated (4,768) (1,989)New equity share capital subscribed 4,491 850Premium on new share capital subscribed 91,748 52,244Exchange differences on consolidation (913) -Value of share options expensed 768 245 -------- --------Net increase to funds 91,326 51,350Opening shareholders'equity funds 84,029 32,679 -------- -------- Closing shareholders'equity funds 175,355 84,029 ======== ======== 3 CHANGE IN ACCOUNTING POLICY FRS 20 'Share-Based Payment' has been adopted with effect from 1 July 2006. Forthe year ended 30 June 2006, the change in accounting policy resulted in a netincrease in the loss for the year of £245,000. The balance sheet at 30 June 2006has been restated to reflect the recognition of a share options reserve of£335,000. For the year ended 30 June 2007 the change in accounting policyresulted in a net charge to the profit and loss account of £768,000. At 30 June2007, the share options reserve amounted to £1,103,000 4 ADOPTION OF IFRS Bowleven will adopt International Financial Reporting Standards (IFRS) with effect from 1 July 2007. The first results to be prepared under this basis willbe the 2007 Interim Results later this year. This will require adjusting prior periods to arrive at the opening balances and comparative figures. The conversion work has already been successfully completed and a first time adoption document will be released in the near future. This document provides details of the full year results of Bowleven Plc. Copiesof the Annual Report will be sent to shareholders and can be obtained, free ofcharge, from the Company at 1 North St Andrew Lane, Edinburgh, EH2 1HX for aperiod of one month. Notes to the Editor: Bowleven is an African focussed oil and gas group, based in Edinburgh and tradedon AIM since December 2004. BowLeven holds, through its wholly-owned subsidiary EurOil Limited, a 100%equity interest in the Etinde Permit area being three shallow water blocks inoffshore Cameroon, West Africa; namely Blocks MLHP 5, MLHP 6 and MLHP 7. Intotal BowLeven has approximately 2,300 km2 of exploration acreage located acrossthe Rio del Rey and Douala basins in the Etinde Permit. Bowleven has operated inCameroon since 1999. The Cameroon Government has announced a cooperation agreement with theGovernment of Equatorial Guinea to investigate a project to export gas fromCameroon to the gas liquefaction plant on Bioko Island on Equatorial Guinea. Itis proposed that Limbe would be the gathering hub for any such scheme. Bowleven also holds, through its wholly-owned subsidiary FirstAfrica Oil, a 100%equity interest in the EOV offshore block in Gabon, which contains an existingoil discovery that it is seeking to develop, and, subject to government of Gabonconsent of a farm out to Addax Petroleum, a 50% equity interest in the EpaemenoBlock which is 1,340 km2 of exploration acreage in onshore Gabon which sitsadjacent to a number of recent discoveries in surrounding blocks. This information is provided by RNS The company news service from the London Stock Exchange