Bowleven (LON:BLVN) has warned that slow progress in approving a deal in Cameroon may see the company need to raise more funds – and at a substantial discount.
The company’s share price has fallen 58% today, at the time of writing.
The company is working on the Etinde project, offshore Cameroon.
Perenco agreed in June 2022 to buy New Age (African Global Energy) out of the Etinde project for an undisclosed amount. The formal long-stop date passed on June 30 this year.
However, Bowleven said the two companies were still working on the transaction.
Bowleven noted there could be no guarantee that the deal would complete. It flagged as challenges the amount of time that has passed and the “geopolitical disruptions in neighbouring countries”.
Military officers seized power in Gabon, Cameroon’s neighbour to the south, recently. Cameroon President Paul Biya has been in power for more than 40 years and there has been some speculation the country could be susceptible to a coup.
When New Age – or Perenco – reach a final investment decision (FID) on Etinde, Bowleven is due to receive a $25 million bonus.
Given the uncertainty around the project’s ownership, FID has been repeatedly pushed back. In mid-2022, Bowleven suggested the partners might reach FID later that year.
That deadline has passed and Bowleven has not provided an update today on FID progress. The most recent update from Bowleven on FID timing was late 2024, depending on Perenco’s review of the Etinde development.
State-owned Société Nationale des Hydrocarbures (SNH) must give approval for the Perenco agreement to move forward. Bowleven said SNH’s approval had “remained outstanding for a significant period”. It is not clear when SNH will make the decision on approving the transaction, “if at all”.
Bowleven has around $1.25 million of cash as of the end of last week.
This should be enough to fund Bowleven only until the end of the first quarter of 2024. Earlier this year, the company put monthly running costs for the company at $125,000-200,000.
As a result, it has had to consider how best to continue. An unnamed shareholder has offered cash at a “very substantial discount” to Bowleven’s current market price.
It is not clear whether this fundraising will firm up or not, neither are the structure and terms clear.
A shareholder revolt in 2018 saw the previous board ousted and a new group brought in, led by Eli Chahin. The company then paid out a special dividend in 2019 of $50mn.
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