TIDMBLVN
RNS Number : 1145F
BowLeven Plc
10 November 2015
10 November 2015
Bowleven plc ('Bowleven' or 'the Company')
Preliminary Results Announcement
Bowleven, the Africa focused oil and gas exploration group
traded on AIM, today announces its preliminary results for the year
ended 30 June 2015.
PRELIMINARY RESULTS HIGHLIGHTS
Etinde Farm-Out Transaction Completed
-- Aggregate total consideration from LUKOIL/NewAge of
approximately $250 million, with $170 million cash proceeds
received and up to a further $80 million consideration to follow,
comprising:
o Up to $40 million (net) carry for two Etinde appraisal wells,
including testing;
o $15 million cash to be received on completion of appraisal
drilling (or end September 2016 at latest); and
o $25 million cash contingent upon, and to be received at,
Etinde development project final investment decision (FID).
-- Operatorship of Etinde transferred to NewAge; Bowleven
retains a 20% non-operated interest in the Etinde development,
including upside potential being targeted by carried appraisal
drilling.
Operational
Etinde, offshore Cameroon
-- Exploitation Authorisation (EA) award gives exploitation and
development rights for an initial period of 20 years.
-- Locations for two appraisal wells targeting substantial
additional volumes in the Intra Isongo reservoirs agreed by joint
venture; drilling anticipated during 2016, with Bowleven carried
for $40 million of net costs.
-- Operator-led review of additional gas offtake solutions
underway to ensure optimised development scheme post appraisal
drilling.
Bomono, onshore Cameroon
-- Hydrocarbon discoveries made with both Zingana and Moambe exploration wells.
-- Extended well test programme underway at Moambe, with Zingana expected to follow.
-- Memorandum of Understanding (MOU) signed with Actis/Eneo for
potential gas-to-power development scheme in event of successful
testing.
Other exploration
-- Evaluation of early-phase exploration activities in Kenya and Zambia ongoing.
Corporate
-- Group cash balance at end June 2015 $145.3 million (post
farm-out completion and $9 million payment to Petrofac); no
debt.
-- Adjustments to resources and carrying values as previously reported in the Interim Results:
o Group's P50 net contingent resources 58 mmboe (2014:244
mmboe); following farm-out of two-thirds of Etinde equity interest
and the relinquishment of blocks MLHP-5 and MLHP-6.
o $76 million impairment to reflect revised commodity price and
planning assumptions for Etinde development.
-- G&A cost reduction programme implemented and continuing.
OUTLOOK
Key objectives for next 12 months focusing on existing asset
base:
-- Work alongside expanded Etinde joint venture to:
o commence drilling as soon as possible to further appraise the
significant potential of the Intra Isongo reservoirs; and
o evaluate additional offtake opportunities and progress
development plans including finalisation of gas sales
agreements.
-- Planning for success and first production at Bomono by:
o Completing the Extended Well Testing (EWT) programme to
determine well deliverability.
o Progressing development plans with Actis/Eneo to enable
targeted near-term first production in event of testing
success.
o Submitting Exploitation Authorisation Application (EAA) to
Cameroon authorities in November 2015.
-- Protect balance sheet strength, with a disciplined approach
to the consideration of further investment opportunities.
Kevin Hart, Chief Executive of Bowleven plc, said:
"Following completion of the Etinde farm-out we are well
positioned with a strong financial foundation to deliver on our
strategic objectives.
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/Eneo for a gas-to-power development
scheme at Bomono.
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 $40 million (net) carry obtained under the Etinde
farm-out agreement. With well locations agreed we are looking
forward to the operator drilling these wells as soon as practicable
in 2016.
The sustained low oil price has created a challenging
environment for E&P 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. 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."
ENQUIRIES
For further information please contact:
Bowleven plc
Kevin Hart, Chief Executive 00 44 131 524 5678
Kerry Crawford, Finance Director
Brunswick Group LLP
Patrick Handley 00 44 207 404 5959
Simon Maine
Macquarie Capital (Europe) Limited (Nomad)
Jon Fitzpatrick 00 44 203 037 2000
Ken Fleming
Nick Stamp
A presentation to analysts is scheduled for 9.30am GMT
today.
The presentation will be recorded and an audio version will be
available on the Bowleven website from the afternoon of 10 November
2015. www.bowleven.com
A copy of the presentation materials and this announcement will
also be available.
This announcement may include statements that are, or may be
deemed to be "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "projects", "expects", "intends", "may", "will",
"seeks" or "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions.
These forward-looking statements include all matters that are not
historical facts. They include statements regarding the Company's
intentions, beliefs or current expectations concerning, amongst
other things, the results of operations, financial conditions,
liquidity, prospects, growth and strategies of the Company and its
direct and indirect subsidiaries (the "Group") and the industry in
which the Group operates. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future. Forward-looking statements are not guarantees of future
performance. The Group's actual results of operations, financial
conditions and liquidity, and the development of the industry in
which the Group operates, may differ materially from those
suggested by the forward-looking statements contained in the
announcement. In addition, even if the Group's results of
operations, financial conditions and liquidity, and the development
of the industry in which the Group operates, are consistent with
the forward-looking statements contained in the announcement, those
results or developments may not be indicative of results or
developments in subsequent periods. In light of those risks,
uncertainties and assumptions, the events described in the
forward-looking statements in the announcement may not occur. Other
than in accordance with the Company's obligations under the AIM
Rules for Companies, the Company undertakes no obligation to update
or revise publicly any forward-looking statement, whether as a
result of new information, future events or otherwise. All written
and oral forward-looking statements attributable to the Company or
to persons acting on the Company's behalf are expressly qualified
in their entirety by the cautionary statements referred to above
and contained elsewhere in the announcement.
Notes to Editors:
Bowleven is an African focused oil and gas exploration group,
based in Edinburgh and traded on AIM. Bowleven's strategy is
focused on creating and realising material value through
exploration led organic growth. Bowleven holds equity interests in
two Permits in Cameroon, with one located offshore in shallow water
(operated by NewAge) and the other onshore (operated by
Bowleven).
Bowleven also holds an equity interest in an onshore block in
Kenya, operated by Adamantine Energy, and has been awarded three
blocks in Zambia, with applications on two blocks pending.
Notes to Announcement:
(1) The technical information in this release has been reviewed
by Ed Willett and David Clarkson, both qualified persons for the
purposes of the AIM Guidance Note for Mining, Oil and Gas
Companies. Ed Willett, Exploration Director of Bowleven plc, is a
geologist and geophysicist, a Fellow of the Geological Society
(FGS) and a member of the Petroleum Exploration Society of Great
Britain (PESGB) with over 28 years' experience in oil and gas
exploration and production. David Clarkson, Operations Director of
Bowleven plc, is a Chartered Engineer and Fellow of the Institution
of Mechanical Engineers with extensive oil and gas industry
experience.
(2) The information in this release reflects the views and
opinions of Bowleven and has not been reviewed in advance by its
joint venture partners.
CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW
Over the last 12 months Bowleven has been striving to deliver on
its overriding objectives which were described in this year's
Interim Results, namely:
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1) Assisting the recently strengthened Etinde joint venture to
convert existing resources into reserves in Cameroon and to target
substantial hydrocarbon volume additions through further appraisal
drilling earmarked for the exciting Intra Isongo formations.
2) Creating additional value through exploration on our Bomono
acreage with a view to bringing any commercial finds into
production in an expedient and cost-efficient manner.
In respect of both of these goals we have made significant
progress, as demonstrated by the key highlights achieved during the
period:
-- Etinde farm-out transaction completed; $170 million cash
received with access to up to a further $80 million via $40 million
(net) drilling/testing carry and $40 million in staged cash
proceeds.
-- Two Etinde appraisal well locations agreed by joint venture and drilling planning initiated.
-- G&A reductions following the Etinde transfer of
operatorship and other cost reduction initiatives.
-- Bomono exploration well drilling success; both wells encountered hydrocarbons.
-- Bomono extended well test programme and success planning
initiated; testing underway and gas offtake Memorandum of
Understanding (MOU) signed with Actis/Eneo.
Looking ahead the challenge continues to be to deliver on these
objectives. Consistent with this our forthcoming activities now
encompass:
-- Etinde Appraisal Drilling
Part of the consideration receivable from NewAge and LUKOIL
comprises a net appraisal carry of up to $40 million to be spent on
the drilling and testing of two Etinde appraisal wells. The primary
target for these wells will be the Intra Isongo reservoirs which
have the potential to contain significant additional volumes of
both gas and condensate. Bowleven together with its partners have
now identified suitable appraisal locations and the joint venture
budget prepared by the operator contains a schedule targeting
drilling commencing as soon as practicable in 2016. The locations
of the wells have been selected to prove up to an additional one to
two tcf of wet gas-in-place together with considerable associated
liquids. The successful drilling of these wells and anticipated
volume additions form a key piece of the Etinde development and
monetisation jigsaw.
-- Etinde Development Progression
With the advent of the Etinde development operator role passing
to NewAge, the introduction of both LUKOIL and SNH to the joint
venture and the rapid change in the cost landscape, a thorough
operator-led joint venture review of the alternative development
plans is ongoing.
The number of competing users for gas in Cameroon is expanding
and includes fertiliser, power and LNG projects. Whilst at present
sufficient gas exists to meet the demand from one of these offtake
schemes it is hoped that the forthcoming appraisal drilling will
add additional volumes which are sufficient to enable a multiple
offtake development solution. Whatever the final development scheme
selected by the joint venture, it is a common goal of all concerned
to progress towards a commercially robust Final Investment Decision
(FID) with first hydrocarbon sales as expediently as possible. The
priority focus for Etinde meantime is on getting the appraisal
wells drilled so that the additional hydrocarbon volumes available
for development can be determined.
-- Bomono and testing
Following recent exploration drilling and logging activity, an
extended well test programme on the Moambe and Zingana wells has
been initiated. These tests are designed to provide the confidence
level required to enter into a gas sales agreement with Actis/Eneo
whereby the gas supplied will be used for domestic power
generation. As a result, the ongoing testing programme is targeted
at providing productivity and connectivity information on the
shallower gas-prone sands which it is intended will be used for the
initial feedstock.
In addition to evaluating the shallow reservoirs, the team will
also be focusing on determining the potential of the deeper sands
that were targeted and encountered with both wells.
-- Bomono success case planning
In the event of successful test results, it is the intention to
bring production onstream as soon as possible. Bowleven has signed
a Memorandum of Understanding (MOU) with Actis/Eneo and is working
closely with them in order to try and achieve near-term first gas
sales.
In parallel, an Exploitation Authorisation Application (EAA)
will be submitted to the Government of Cameroon for its approval.
Under the staged development approach envisaged, the gas will
initially be earmarked for power generation using in-situ gas
powered electricity generating engines, with any associated liquids
separated out and trucked to the local refinery at Limbe.
If sufficient volumes are ultimately confirmed on the acreage,
it is possible that the initial development will evolve to a larger
power generation project utilising gas turbines.
-- Kenya and Zambia progression evaluation
We continue to review early stage exploration plans for both
Kenya and Zambia.
OPERATIONS
Etinde Exploitation, Offshore Cameroon
In July 2014, Bowleven and its joint venture partners were
awarded an Exploitation Authorisation (EA) from the Cameroon State,
which grants title over the Etinde development area for an initial
period of 20 years. Subsequent to the award, the State, represented
by SNH, exercised its rights to back-in to 20% of the Etinde
development. Following the completion of the Etinde farm-out to
LUKOIL and NewAge on 16 March 2015, revised participating interests
in Etinde are as follows:
NewAge (Operator): 30%
LUKOIL: 30%
Bowleven: 20%
SNH: 20%
The joint venture plans to drill two appraisal wells on the
Intra Isongo. The Intra Isongo reservoir interval encountered at
IM-5 highlighted the significant upside potential on the Etinde
Permit. The appraisal programme will both target additional
resources and help further define the shape of the full-field
development plans. If successful, the appraisal drilling has the
potential to create significant additional value from Etinde.
Bowleven maintains exposure to this upside potential via its
retained 20% interest and is funded via the carry for its
anticipated share of drilling and testing of the planned two well
programme. The partners have agreed the locations for the wells
with drilling planned during 2016.
Potential offtake solutions for Etinde gas include fertiliser,
power and LNG. With a new operator and expanded joint venture,
development optimisation and commercialisation remains at the
forefront. With discovered gas sufficient to supply one of the
offtake opportunities e.g. the Ferrostaal-led fertiliser scheme,
the Etinde joint venture is focused on drilling the two appraisal
wells as priority to determine the extent of gas available and
consequently scope for multiple offtake solutions.
Bomono, Onshore Cameroon
In December 2014, the Cameroon authorities granted a one-year
extension to the Bomono exploration licence to enabling the
drilling of two exploration wells on the Permit.
A two well exploration drilling programme was undertaken on
Bomono in 2015, fulfilling the remaining work programme obligations
on the licence. Operations were impacted by the non-performance of
contractors during both the preparation and operational phases of
the programme, and discussions around various remedial options are
ongoing with these service providers.
The Zingana and Moambe wells both encountered hydrocarbons in
multiple targeted reservoir intervals and an extended well testing
programme in the shallower horizons has been initiated. The
programme, designed to test the productivity and the connectivity
of the wells, is underway at Moambe, with testing at Zingana
expected to follow. With the wells both completed as producers, the
ability to move to production in event of testing success is
facilitated.
We are in advanced discussions with Actis and Eneo regarding a
gas-to-power scheme to supply the nearby Cameroon national grid in
the event of a successful outcome to testing. It is intended that
any associated liquids produced would be trucked for sale at the
local refinery at Limbe.
Alongside, the preparation of the EAA for Bomono is well
underway, with submission to the Cameroon Authorities scheduled
prior to the expiry of the exploration phase of the licence on 12
December 2015 to enable commencement of the development phase. In
addition to the near-term focus on gas delivery under a
gas-to-power solution targeted, the team will also continue to
evaluate the potential of the deeper reservoir intervals.
Bowleven, operator of the Permit, retains a 100% interest as the
conditional farm-out of 20% to Fortesa lapsed in the period.
Volumetrics Update
As announced in the Interim Results, the Group's P50 net
contingent resource numbers have decreased to 58 mmboe, compared to
the year end estimate of 244 mmboe. This reflects a reduction in
equity interest in Etinde from 60% to 20% following completion of
the Etinde farm-out on 16 March 2015, coupled with the removal of
resources associated with blocks MLHP-5 and MLHP-6 following the
expiry of the Etinde exploration PSC in December 2014. Although an
application for a new exploration PSC over these blocks was
submitted to the Cameroon authorities, alignment could not be
reached on the appropriate level of work programme obligations.
The Group does not currently include any contingent resource
volumes for the Bomono Permit where two exploration wells have been
recently drilled and an extended well testing programme is
currently underway. Updates for Bomono and Etinde, the latter
following completion of the Etinde appraisal drilling programme,
are expected in 2016.
Block 11B, Onshore Kenya
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A 2D seismic programme was expected to follow the acquisition of
an FTG survey. Logistical issues, including security concerns,
delayed the commencement of seismic activities and the operator was
unable to acquire this prior to the expiry of the first exploration
phase of the licence on 26 May 2015. A one-year extension to the
initial exploration phase was awarded to allow for this activity to
be undertaken and thus enable a decision regarding the second
exploration phase of the licence. The joint venture has already met
the financial obligations for this phase of the licence, and the
Group is considering the forward plan in the context of its wider
opportunities.
As disclosed in the notes to the financials, Bowleven (Kenya)
Limited (owned by First Oil and Bowleven) is currently in dispute
with the operator over continued title to the Bowleven Kenya
interest. Bowleven Kenya has taken legal advice which strongly
supports the Group's view that there is no legal basis for such a
challenge.
Zambia
In June 2013, Bowleven submitted an application for acreage as
part of the Zambian licensing round and was subsequently awarded
three exploration blocks out of a five block application.
Applications for the remaining two blocks are pending. The initial
four-year exploration period includes a minimum committed work
programme estimated at approximately $0.5 million for all five
blocks sought under the original application.
FINANCE
The Group has reported a loss of $90.0 million (includes $76.0
million impairment charge) for the year ended 30 June 2015 (2014:
loss $13.6 million).
As previously announced in the Interim Results, an impairment
charge of $76.0 million has been recognised following a review of
the Etinde intangible exploration asset. Given the current market
backdrop, the Group has reviewed the key commodity price and
planning assumptions used in calculating impairment (further detail
provided in notes to financials). The review has conservatively
considered the discounted cashflows of the fertiliser offtake
solution only.
The results for the year also include administrative expenses of
$11.9 million (2014: $12.0 million). Finance costs comprise mainly
of losses of $2.4 million arising from foreign exchange movements
on US cash balances under IFRS due to the parent Company's
functional currency being GB pounds. (2014: loss of $1.7
million).
The Group's current G&A charge (gross) is estimated at
around $1 million per month (previously $1.5 million). Managing and
reducing G&A costs continues to be a priority for the Group and
further cost saving initiatives are being implemented.
On completion of the Etinde farm-out transaction in March 2015,
the Group received $165 million in cash and a subsequent $5 million
cash for working capital. $9 million was paid to Petrofac for the
termination of the previously announced Strategic Alliance
Agreement intended to facilitate the development and funding of
Etinde on a stand-alone basis.
Capital expenditure cashflows during the period were $35.1
million (2014: $18.0 million). This relates mainly to expenditure
incurred preparing for and drilling two exploration wells on the
Bomono Permit, as well as activity on Etinde and on block 11B,
Kenya (which is primarily covered by First Oil funding). As
outlined in the Bomono update, operations were impacted by
contractor non-performance, both prior to and during the drilling
programme, and discussions are ongoing with the service providers
regarding the recovery of a proportion of additional expenditure
incurred.
At 30 June 2015, Bowleven had $145.3 million of cash and bank
deposits and no debt (2014: $25.5 million and no debt).
The Group has no remaining work programme obligations following
the completion of the two well exploration commitment on
Bomono.
The Group had a cash balance of circa $120 million at 31October
2015 and no debt. Under the terms of the Etinde farm-out
transaction, Bowleven will also receive a $40 million net drilling
and testing carry for two appraisal wells on Etinde (or cash
alternative in 2020) and $40 million in staged cash proceeds ($15
million receivable on completion of drilling/end September 2016 at
latest and $25 million at FID).
With a substantial cash balance, the deferred consideration
structure, no debt or outstanding work programme commitments, the
Group is well placed financially to progress its existing asset
base through the exploration/appraisal phase and on to development.
The Group will continue to review all available financing options
to achieve the optimum funding mix for its future activities. The
Company will also continue to focus on challenging costs within the
business and exerting capital discipline in the choice and timing
of future capital spending.
BOARD CHANGES
The Etinde farm-out completion and associated transfer of
operatorship, combined with the challenging nature of the current
economic environment, has rightly been accompanied by a review of
the Group's managerial and Board structure.
In May 2015, following completion of the Etinde farm-out and
associated transfer of operatorship, it was announced that Chief
Tabetando (Chairman of EurOil) and Peter Wilson (General Counsel)
both stepped down from the Board with immediate effect.
Going forward, the Board will consist of four Executive
Directors and four Non-Executives. Within this framework the roles
of David Clarkson (as Chief Operating Officer) and Ed Willet
(Exploration Director) have been reinforced. Operational delivery
and accountability is vested in the COO, who ensures effective
governance controls through an asset-based approach to technical,
commercial and financial coordination. Alongside Operations, the
Exploration Director leads the New Ventures group which scrutinises
opportunities for business development.
The Group's Head of Legal and Commercial, Brian Cassidy, was
appointed Company Secretary to the Board on 31 October 2015.
As announced in October, immediately following the Annual
General Meeting (AGM) both Ronnie Hanna and Caroline Cook will step
down from the Board each having served nine years on the Board as
Chairman and Chairman of the Audit Committee respectively. Ronnie
and Caroline have provided excellent stewardship and contribution
to Bowleven over the years and their presence will be greatly
missed by all within the Company.
As part of Board succession planning, John Martin and Billy
Allan were appointed Non-Executive Directors in May 2015 and
October 2015 respectively. It is intended that Billy Allan will
succeed Ronnie as Chairman of the Board and that John Martin will
take over responsibility for chairing the Audit Committee following
the AGM in December 2015.
OUTLOOK
Looking ahead the next 12 months promises to be a continuing
period of significant operational activity for Bowleven. The
ongoing testing programme at Bomono will hopefully confirm the
levels of deliverability and connectivity required to justify
sanctioning an initially modest gas-to-power development. This
would provide Bowleven with its first home-grown cashflow - a major
milestone for the Company. In addition, next year we should learn
whether the Etinde acreage and specifically the Intra Isongo
formation will yield the potentially substantial additional volumes
hinted at by the IM-5 well. The outcome of the two well appraisal
programme, which we are carried for up to a $40 million net
contribution, will help finally define the shape and size of the
development of Etinde. With fertiliser, power and LNG projects all
vying for the existing gas any additional volumes are likely to
find a good home.
The rapid fall in the oil price has undoubtedly resulted in the
entire sector re-evaluating their respective business models and
adapting in order to survive whilst confronting the challenge of
offering a viable investment proposition. The consummation of the
deal with LUKOIL and NewAge has helped ensure that Bowleven is well
positioned to ride out the storm and move forward with its assets.
Although the transaction has significantly strengthened the
Company's balance sheet, now more than ever, the focus needs to be
on ensuring every dollar spent is an attractive investment
proposition for stakeholders. These are undoubtedly difficult times
for the industry however such an environment can also create
opportunities. We are alive to this but will continue to exert
capital discipline when assessing potential opportunities as we
move forward.
Ronnie Hanna, Chairman
Kevin Hart, Chief Executive
9 November 2015
Group Income Statement
for the year ended 30 June 2015
2015 2014
$'000 $'000
----------------------------------- ---- ---------- ----------
Revenue - -
----------------------------------- ---- ---------- ----------
Administrative expenses (11,868) (12,025)
----------------------------------------- ---------- ----------
Impairment Charge (75,959) -
----------------------------------- ---- ---------- ----------
Operating loss before financing
costs (87,827) (12,025)
----------------------------------------- ---------- ----------
Finance income 188 160
----------------------------------------- ---------- ----------
Finance costs (2,380) (1,737)
----------------------------------------- ---------- ----------
Loss from continuing operations
before taxation (90,019) (13,602)
----------------------------------------- ---------- ----------
Taxation - -
----------------------------------- ---- ---------- ----------
Loss for the Year from Continuing
Operations (90,019) (13,602)
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----------------------------------------- ---------- ----------
Loss attributable to:
----------------------------------- ---- ---------- ----------
Owners of the parent undertaking (89,859) (13,500)
----------------------------------------- ---------- ----------
Non-controlling interest (160) (102)
----------------------------------------- ---------- ----------
Basic and diluted loss per
share ($/share) from continuing
operations (0.28) (0.04)
----------------------------------------- ---------- ----------
Statements of Comprehensive Income
for the year ended 30 June 2015
2015 2014
Group $'000 $'000
---------------------------------- ---- --------- ---------
Loss for the year (90,019) (13,602)
---------------------------------------- --------- ---------
Other Comprehensive Income:
---------------------------------- ---- --------- ---------
Items that will be reclassified
to profit and loss:
---------------------------------- ---- --------- ---------
Currency translation differences 1,854 3,401
---------------------------------------- --------- ---------
Total Comprehensive Income for
the Year (88,165) (10,201)
---------------------------------------- --------- ---------
Attributable to:
---------------------------------- ---- --------- ---------
Owners of the parent undertaking (88,005) (10,099)
---------------------------------------- --------- ---------
Non-controlling interest (160) (102)
---------------------------------------- --------- ---------
2015 2014
Company $'000 $'000
---------------------------------------- --------- ---------- ---------
Loss for the year (93,687) (11,809)
--------------------------------------------------- ---------- ---------
Other Comprehensive Income:
--------------------------------------- ---------- ---------- ---------
Items that will be reclassified to
profit and loss:
--------------------------------------- ---------- ---------- ---------
Currency translation differences (43,992) 65,419
--------------------------------------------------- ---------- ---------
Total Comprehensive (Loss)/Income for
the Year Attributable to Owners of
the Parent Undertaking (137,679) 53,610
---------------------------------------- --------- ---------- ---------
Group Balance Sheet
30 June 2015
2015 2014
$'000 $'000
---------------------------------- ---- --------- ----------
Non-current Assets
---------------------------------- ---- --------- ----------
Intangible exploration assets 304,662 550,745
---------------------------------------- --------- ----------
Property, plant and equipment 1,896 701
---------------------------------------- --------- ----------
306,558 551,446
--------------------------------------- --------- ----------
Current Assets
---------------------------------- ---- --------- ----------
Inventory 5,370 10,404
---------------------------------------- --------- ----------
Trade and other receivables 6,431 6,493
---------------------------------------- --------- ----------
Deferred consideration 54,977 -
---------------------------------- ---- --------- ----------
Bank deposits 500 5,000
---------------------------------------- --------- ----------
Cash and cash equivalents 144,751 20,454
---------------------------------------- --------- ----------
212,029 42,351
--------------------------------------- --------- ----------
Total Assets 518,587 593,797
---------------------------------------- --------- ----------
Current Liabilities
---------------------------------- ---- --------- ----------
Trade and other payables (12,695) (6,274)
---------------------------------------- --------- ----------
Total Liabilities (12,695) (6,274)
---------------------------------------- --------- ----------
Net Assets 505,892 587,523
---------------------------------------- --------- ----------
Equity
---------------------------------- ---- --------- ----------
Called-up share capital 55,060 55,038
---------------------------------------- --------- ----------
Share premium - 746,477
---------------------------------------- --------- ----------
Foreign exchange reserve (52,866) (54,720)
---------------------------------------- --------- ----------
Shares held by Employee
Benefit Trust (105) (489)
---------------------------------------- --------- ----------
Other reserves 15,414 14,644
---------------------------------------- --------- ----------
Retained earnings / (deficit) 485,949 (174,730)
---------------------------------------- --------- ----------
Total Equity 503,452 586,220
---------------------------------------- --------- ----------
Attributable to:
---------------------------------- ---- --------- ----------
Owners of the parent undertaking 503,452 586,220
---------------------------------------- --------- ----------
Non-controlling interest 2,440 1,303
---------------------------------------- --------- ----------
Total Equity 505,892 587,523
---------------------------------------- --------- ----------
Company Balance Sheet
30 June 2015
2015 2014
$'000 $'000
------------------------------- ---- --------- ----------
Non-current Assets
------------------------------- ---- --------- ----------
Property, plant and equipment 314 575
------------------------------------- --------- ----------
Investments 351,408 604,102
------------------------------------- --------- ----------
351,722 604,677
------------------------------------ --------- ----------
Current Assets
------------------------------- ---- --------- ----------
Trade and other receivables 2,116 2,415
------------------------------------- --------- ----------
Bank deposits 500 5,000
------------------------------------- --------- ----------
Cash and cash equivalents 141,575 20,277
------------------------------------- --------- ----------
144,191 27,692
------------------------------------ --------- ----------
Total Assets 495,913 632,369
------------------------------------- --------- ----------
Current Liabilities
------------------------------- ---- --------- ----------
Trade and other payables (1,688) (2,292)
------------------------------------- --------- ----------
Total Liabilities (1,688) (2,292)
------------------------------------- --------- ----------
Net Assets 494,225 630,077
------------------------------------- --------- ----------
Equity
------------------------------- ---- --------- ----------
Called-up share capital 55,060 55,038
------------------------------------- --------- ----------
Share premium - 746,477
------------------------------------- --------- ----------
Foreign exchange reserve (70,690) (26,698)
------------------------------------- --------- ----------
Other reserves 9,993 9,223
------------------------------------- --------- ----------
Retained earnings/(deficit) 499,862 (153,963)
------------------------------------- --------- ----------
Total Equity 494,225 630,077
------------------------------------- --------- ----------
Group Cash Flow Statement
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:01 ET (07:01 GMT)
for the year ended 30 June 2015
2015 2014
$'000 $'000
------------------------------------- ---- --------- ---------
Cash Flows from Operating
Activities
------------------------------------- ---- --------- ---------
Loss before tax (90,019) (13,602)
------------------------------------------- --------- ---------
Adjustments to reconcile Group loss before tax
to net cash used in operating activities:
-----------------------------------------------------------------
Depreciation of property,
plant and equipment 397 421
------------------------------------------- --------- ---------
Impairment of intangible
exploration assets 75,959 -
------------------------------------- ---- --------- ---------
Finance income (188) (160)
------------------------------------------- --------- ---------
Finance costs 2,380 1,737
------------------------------------------- --------- ---------
Equity-settled share based
payment transactions 1,949 2,299
------------------------------------------- --------- ---------
Gain on sale of property,
plant and equipment - (3)
------------------------------------------- --------- ---------
Adjusted loss before tax
prior to changes in working
capital (9,522) (9,308)
------------------------------------------- --------- ---------
Decrease in inventory 316 619
------------------------------------------- --------- ---------
Increase in trade and other
receivables (1,429) (524)
------------------------------------------- --------- ---------
Increase in trade and other
payables 604 716
------------------------------------------- --------- ---------
Exchange differences (407) (79)
------------------------------------------- --------- ---------
Net Cash used in Operating
Activities (10,438) (8,576)
------------------------------------------- --------- ---------
Cash Flows from/(used in)
Investing Activities
------------------------------------- ---- --------- ---------
Proceeds from sale of intangible
exploration assets 165,000 -
------------------------------------- ---- --------- ---------
Costs of sale of intangible
exploration assets (9,395) -
------------------------------------- ---- --------- ---------
Net proceeds from sale of
intangible exploration assets 155,605 -
------------------------------------- ---- --------- ---------
Receipts from working capital
adjustment on sale of intangible
exploration assets 5,083 -
------------------------------------- ---- --------- ---------
Purchases of property, plant
and equipment (1,641) (193)
------------------------------------------- --------- ---------
Purchases of intangible exploration
assets (33,500) (17,849)
------------------------------------------- --------- ---------
Release funds on bank deposit 5,000 -
------------------------------------- ---- --------- ---------
Reclassification of funds
to bank deposit (500) -
------------------------------------- ---- --------- ---------
Receipts from sale of property,
plant and equipment - 5
------------------------------------------- --------- ---------
Receipts from sale of inventory 193 -
------------------------------------- ---- --------- ---------
Interest received 139 177
------------------------------------------- --------- ---------
Net Cash from/(used in) Investing
Activities 130,379 (17,860)
------------------------------------------- --------- ---------
Cash Flows from Financing
Activities
------------------------------------- ---- --------- ---------
Proceeds from issue of share
capital 71 21,353
------------------------------------------- --------- ---------
Costs of issue of share capital - (429)
------------------------------------------- --------- ---------
Net proceeds from issue of
ordinary shares 71 20,924
------------------------------------------- --------- ---------
Funding from non-controlling
interests 4,323 4,482
------------------------------------------- --------- ---------
Net Cash Flows from Financing
Activities 4,394 25,406
------------------------------------------- --------- ---------
Net Increase/(Decrease) in
Cash and Cash Equivalents 124,335 (1,030)
------------------------------------------- --------- ---------
Effect of exchange rates
on cash and cash equivalents (38) 1,742
------------------------------------------- --------- ---------
Cash and cash equivalents
at the beginning of the year 20,454 19,742
------------------------------------------- --------- ---------
Cash and Cash Equivalents
at the Year End 144,751 20,454
------------------------------------------- --------- ---------
Company Cash Flow Statement
for the year ended 30 June 2015
2015 2014
$'000 $'000
----------------------------------- ---- ---------- ---------
Cash Flows from Operating
Activities
----------------------------------- ---- ---------- ---------
Loss before tax (93,687) (11,809)
----------------------------------------- ---------- ---------
Adjustments to reconcile Company loss before
tax to net cash used in operating activities:
----------------------------------------------------------------
Depreciation of property,
plant and equipment 234 288
----------------------------------------- ---------- ---------
Impairment of investment 246,000 -
----------------------------------- ---- ---------- ---------
Finance income (164) (160)
----------------------------------------- ---------- ---------
Finance costs 1,930 1,581
----------------------------------------- ---------- ---------
Equity-settled share based
payment transactions 1,949 1,894
----------------------------------------- ---------- ---------
Dividend received (164,472) -
----------------------------------- ---- ---------- ---------
Adjusted loss before tax
prior to changes in working
capital (8,210) (8,206)
----------------------------------------- ---------- ---------
(Increase)/Decrease in trade
and other receivables (130) 2,199
----------------------------------------- ---------- ---------
(Decrease)/Increase in trade
and other payables (604) 620
----------------------------------------- ---------- ---------
Exchange differences (6) 73
----------------------------------------- ---------- ---------
Net Cash used in Operating
Activities (8,950) (5,314)
----------------------------------------- ---------- ---------
Cash Flows from/(used in)
Investing Activities
----------------------------------- ---- ---------- ---------
Dividend received from subsidiary
undertaking 164,472 -
----------------------------------- ---- ---------- ---------
Funding to subsidiaries (38,866) (16,711)
----------------------------------------- ---------- ---------
Purchases of property, plant
and equipment (14) (117)
----------------------------------------- ---------- ---------
Release funds on bank deposit 5,000 -
----------------------------------- ---- ---------- ---------
Reclassification of funds
on bank deposit (500) -
----------------------------------- ---- ---------- ---------
Interest received 116 177
----------------------------------------- ---------- ---------
Net Cash from/(used in)
Investing Activities 130,208 (16,651)
----------------------------------------- ---------- ---------
Cash Flows from Financing
Activities
----------------------------------- ---- ---------- ---------
Proceeds from issue of share
capital 71 21,353
----------------------------------------- ---------- ---------
Costs of issue of share
capital - (429)
----------------------------------------- ---------- ---------
Net proceeds from issue
of ordinary shares 71 20,924
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November 10, 2015 02:01 ET (07:01 GMT)
----------------------------------------- ---------- ---------
Net Cash Flows from Financing
Activities 71 20,924
----------------------------------------- ---------- ---------
Net Increase/(Decrease)
in Cash and Cash Equivalents 121,329 (1,041)
----------------------------------------- ---------- ---------
Effect of exchange rates
on cash and cash equivalents (31) 1,746
----------------------------------------- ---------- ---------
Cash and cash equivalents
at the beginning of the
year 20,277 19,572
----------------------------------------- ---------- ---------
Cash and Cash Equivalents
at the Year End 141,575 20,277
----------------------------------------- ---------- ---------
Group Statement of Changes in Equity
for the year ended 30 June 2015
Attributable
to owners
of parent
company
Retained $'000 Non-controlling
earnings Interests
Shares Other / Total
Equity Foreign held $'000
share exchange in
capital* reserve trust reserves (deficit) equity
$'000 $'000 $'000 $'000 $'000 $'000
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
At 1 July 2013 780,591 (58,121) (489) 13,932 (165,894) 570,019 - 570,019
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Loss for the
year - - - - (13,500) (13,500) (102) (13,602)
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Other
comprehensive
income for the
year - 3,401 - - - 3,401 - 3,401
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Total
comprehensive
income for the
year - 3,401 - - (13,500) (10,099) (102) (10,201)
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Proceeds from
issue
of share
capital 21,353 - - - - 21,353 - 21,353
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Cost of issue of
share capital (429) - - - - (429) - (429)
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Share based
payments - - - 2,299 - 2,299 - 2,299
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Funding from
non-controlling
interests - - - - 3,077 3,077 1,405 4,482
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Transfer between
reserves - - - (1,587) 1,587 - - -
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
At 30 June 2014 801,515 (54,720) (489) 14,644 (174,730) 586,220 1,303 587,523
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Loss for the
year - - - - (89,859) (89,859) (160) (90,019)
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Other
comprehensive
income for the
year - 1,854 - - - 1,854 - 1,854
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Total
comprehensive
income for the
year - 1,854 - - (89,859) (88,005) (160) (88,165)
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Proceeds from
issue
of share
capital 71 - - - - 71 - 71
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Share based
payments - - - 1,949 - 1,949 - 1,949
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Funding from
non-controlling
interests - - - - 3,026 3,026 1,297 4,323
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Transfer between
reserves (746,526) - 478 (1,464) 747,512 - - -
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Exchange arising
on transfer of
EBT - - 32 - - 32 - 32
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Shares purchased
by employee
benefit
trust - - (126) - - (126) - (126)
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
Grant of
warrants - - - 285 - 285 - 285
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
At 30 June 2015 55,060 (52,866) (105) 15,414 485,949 503,452 2,440 505,892
----------------- ---------- --------- ------- ---------- ------------ ------------- ----------------- ---------
*Includes both share capital and share premium
Company Statement of Changes in Equity
for the year ended 30 June 2015
Attributable to Owners
of Parent Company
Other Total
Equity Foreign
share exchange
capital* reserve reserves Retained earnings / (deficit) Equity
$'000 $'000 $'000 $'000 $'000
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
At 1 July 2013 780,591 (92,117) 8,511 (143,741) 553,244
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Loss for the year - - - (11,809) (11,809)
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Other comprehensive
income for the year - 65,419 - - 65,419
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Total comprehensive
income for the year - 65,419 - (11,809) 53,610
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Proceeds from issue
of share capital 21,353 - - - 21,353
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Cost of issue of
share capital (429) - - - (429)
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------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Share based payments - - 2,299 - 2,299
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Transfer between
reserves - - (1,587) 1,587 -
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
At 30 June 2014 801,515 (26,698) 9,223 (153,963) 630,077
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Loss for the year - - - (93,687) (93,687)
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Other comprehensive
income for the year - (43,992) - - (43,992)
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Total comprehensive
income for the year - (43,992) - (93,687) (137,679)
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Proceeds from issue
of share capital 71 - - - 71
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Share based payments - - 1,949 - 1,949
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Transfer between
reserves (746,526) - (1,464) 747,990 -
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Transfer from Employee
Benefit Trust - - - (478) (478)
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
Grant of warrants - - 285 - 285
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
At 30 June 2015 55,060 (70,690) 9,993 499,862 494,225
------------------------ ---------- ----------------- ---------- ------------------------------- ----------
*Includes both share capital and share premium
NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS
For the year ended 30 June 2015
(1) Accounting Policies
Basis of Preparation
The financial information in the preliminary financial
statements has been extracted from the statutory accounts which
have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU)
and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The financial statements have been
prepared under the historical cost convention as modified by the
revaluation of certain financial assets and liabilities (including
derivative instruments). The preliminary announcement has been
prepared on a basis consistent with the accounting policies applied
to the statutory accounts for the year ended 30 June 2015.
Bowleven plc as a company operates using a functional currency
of Great Britain Pounds. These financial statements are presented
in United States Dollars, the Group's presentation currency,
rounded to the nearest $'000.
The disclosed figures are not statutory accounts in terms of
section 434 of the Companies Act 2006. The statutory accounts give
full disclosure of the Group accounting policies and are scheduled
to be posted to shareholders on 23 November 2015 and will be filed
with the Registrar of Companies in due course. On the statutory
accounts for the year ended 30 June 2015 and 30 June 2014, the
auditor gave an unqualified opinion that did not contain an
emphasis of matter and did not contain a statement under section
498(2) or (3) of the Companies Act 2006. The statutory accounts for
the year ended 30 June 2014 have been filed with the Registrar of
Companies.
Going concern
After making enquiries, the Directors are satisfied that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, the financial statements
have been prepared on a going concern basis as the Directors are of
the opinion that the Group has sufficient funds, considering the
completion of the Etinde farm-out (and receipt of associated cash
consideration) in the year, to meet the ongoing working capital and
committed capital expenditure requirements. In making this
assessment, the Directors considered the Group budgets, the cash
flow forecasts and associated risks
(2) Other Notes
a) The loss attributable to ordinary shares and the number of
ordinary shares for the purpose of calculating the diluted earnings
per share are identical to those used in the basic earnings per
share. The exercise of share options or warrants would have the
effect of reducing the loss per share and consequently is not taken
into account. In the prior year, the loss attributable to ordinary
shares and the number of ordinary shares for the purpose of
calculating the diluted earnings per share were identical to those
used in the basic earnings per share.
b) Directors have not recommended a dividend (2014: nil).
c) An impairment charge of $76.0 million has been recognised
following a review of the book value of the Etinde intangible
exploration asset following the expiry of the Etinde exploration
PSC on 22 December 2014 and considering the current economic
environment. Given the market backdrop, the Group has reviewed the
key commodity price and planning assumptions used in calculating
impairment. The review has been based on a conservative development
case, considering only an initial fertiliser-led development.
d) On 16 March 2015 the Etinde farm-out transaction with
LUKOIL/NewAge completed. On completion, the Group retained a 20%
equity interest in the Etinde Exploitation area (previously 60%)
and operatorship transferred to NewAge. Initial cash proceeds of
$165 million were received on completion. A deferred consideration
of $55.0 million is recognised as a current asset on the Group
balance sheet at 30 June 2015 and is expected to be received during
2016. This comprises a $40 million net carry for the drilling and
testing of two appraisal wells planned on Etinde in 2016 (or cash
alternative in 2020 on non-utilisation of carry) and $15 million in
cash receivable due on drilling completion or by end September 2016
at the latest. One of the conditions of the Etinde farm-out
agreement was the cancellation of the previously announced Petrofac
strategic alliance which has been treated as a directly
attributable cost of the transaction. On completion of the Etinde
farm-out, $9 million was paid to Petrofac as full and final
settlement, to terminate the strategic alliance. As a result of the
above net proceeds of $211 million are recognised as a credit to
intangible exploration assets in the year. A further $5 million was
received as a working capital adjustment on completion of the
transaction and has been recognised in the year.
e) As at 30 June 2015 a contingent asset of $25 million is
disclosed for the FID consideration relating to the Etinde farm-out
and will be credited to intangible exploration assets once further
clarity around Etinde project sanction/FID is obtained.
f) Approval was given by shareholders at the AGM on 18 December
2014 to cancel the Bowleven plc share premium account by way of
capital reduction. The capital reduction was confirmed by the Court
of Session in Edinburgh on 20 March 2015 and the entire share
premium account of Bowleven plc (GBP422 million) cancelled with a
corresponding adjustment to retained deficit/earnings in the year
to 30 June 2015. The Court imposed a short term restriction on the
use of the distributable reserves created in Bowleven plc by the
cancellation of the share premium account. Up to 16 March 2016 the
consent of the Court is required for any distribution to
shareholders other than the reduction of share capital by purchases
in the market as approved at the 2014 AGM.
g) 30% of the shares in Bowleven (Kenya) Limited are held by
First Oil. Bowleven Kenya is included in the group accounts as a
subsidiary with the 30% First Oil shareholding recognised as a
non-controlling interest. Bowleven (Kenya) Limited is involved in
legal proceedings with the operator of Kenya block 11B, Adamantine,
who are seeking to force the assignment of Bowleven Kenya's 50%
interest in the block to them. Bowleven Kenya has taken legal
advice which strongly supports the Group's view there is no legal
basis for this action. The Group holds $11.8m in intangible fixed
assets for block 11B ($8.8m of which was funded by First Oil).
h) In the Company balance sheet, an impairment charge of $246
million has been recognised against the investment in Bowleven
Resources Limited. The net assets of the subsidiary group have
reduced following the payment of dividend from Bowleven Resources
Limited to Bowleven plc (following cancellation of Bowleven
Resources Limited share premium account in the year and subsequent
completion of Etinde farm-out) and impairment loss on the Etinde
asset as noted above. This adjustment does not impact the Group
results.
(3) 2015 Annual Report and Accounts
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