HIGHLIGHTS
Operational
Etinde, offshore Cameroon
- In June 2022, New Age announced that it had signed a conditional agreement to sell operatorship and their 37.5% gross stake in Etinde to Perenco SA ('Perenco') for an undisclosed sum, subject to the resolution of a number of conditions precedent, including regulatory approval from SNH. This transaction has not yet completed.
- The contractual 'long stop' date of 12 months from signature passed in July 2023; New Age and Perenco informally agreed to extend this date until completion is possible. We understand that the conditions precedent have yet to be met with formal approval of the transaction by the Government of Cameroon being the most significant issue. We continue to believe that governmental approval will be forthcoming and the transaction will complete either in late 2023 or more likely early 2024. However, this has remained outstanding for a significant period and Bowleven reminds stakeholders that there can be no guarantee that it will complete, nor as to the timing of completion.
- Whilst the New Age/Perenco transaction is awaiting completion, a limited 'care and maintenance' Etinde Permit work plan and budget for 2023 has been approved by the JV partners on a quarter-by-quarter basis. New Age have proposed that the JV partners submit a similar proposal for FY2024 at the next OCM meeting with SNH.
Financial
- The loss for the financial year was $2.0 million.
- Bowleven closed the year with $0.9 million of cash and a financial investment of $0.6 million giving a total value of available funds of $1.5 million. The cash balance at 31 October 2023 was $1.0 million with the remaining financial investment having been sold and its value realised subsequent to the year end.
- In the current situation, where the Perenco transaction has yet to be completed and our working capital funds are depleting, Bowleven has previously communicated a pressing need to raise additional equity to fund our operations. The Group's cash flow forecasts and projections indicate a material risk that Bowleven will fully utilise its existing cash resources in spring/summer 2024 without new investment. This gives rise to a material uncertainty regarding the going concern status of the Group.
- The Board has spent considerable time discussing and evaluating future debt and/or equity fundraising options during 2023, having implemented actions to reduce our cash burn and preserve the business' cash resources during the year.
- The Board has been in discussions with the Company's major shareholder in relation to the provision of new equity capital and has been considering an indicative proposal which contemplates it providing equity capital at a very substantial discount to the current market price of Bowleven's ordinary shares. The Board considers it appropriate to ensure it has explored all available options before pursuing this proposal. The availability of any new equity capital, and the final terms of such an equity raise, is highly uncertain, as is the timing.
- Following further discussion with our major shareholder, the Board has agreed that the Directors will defer the receipt of their emoluments to the extent there is insufficient liquidity within the business over the course of the following 12 months. This will prioritise the funding of costs necessary to retain going concern status whereby the Directors' emoluments will be accrued until such time the liquidity situation improves or there is a capital raise. In addition, the major shareholder of the Group has provided a comfort letter confirming their intention to provide financial support to the extent that cash resources are not otherwise available for a period of not less than twelve months from the date the FY2023 financial statements are authorised or the date the audit report is signed, whichever is later. This will allow the Group to discharge its liabilities primarily relating to general and administrative expense and Etinde monthly cash calls. In the Board's opinion, this should provide sufficient time for it to seek and formalise new equity investment.
Eli Chahin, Chief Executive Officer of Bowleven plc, said:
'While clearly, we find ourselves in a challenging financial situation, Bowleven remains on the verge of a significant turning point with a new Etinde operatorship offering a renewed focus and clearer vision to the monetisation of the asset. The timing of the completion of Perenco's acquisition of New Age's interest at Etinde is still not clear and while we stay in somewhat of a holding pattern, our focus is on the careful management of our balance sheet so that we remain funded for the foreseeable future. I am still confident that within a manageable timeframe we will see progress within the Etinde JV and be in a position to accelerate our timetable towards hydrocarbon production at Etinde for the benefit of all the JV Partners.'
Source: Bowleven
