Bowleven, an oil and gas company focused on the Etinde project offshore Cameroon, saw its share price plunge by 58% on Tuesday after warned of a possible cash crunch and a heavily discounted fundraising. The company blamed the slow progress of a deal involving its partner New Age, which agreed to sell its 37.5% stake and operatorship of Etinde to Perenco, a private Anglo-French firm, in June 2022. The deal, however, has not been approved by Cameroon’s state oil company, SNH, despite repeated requests from Bowleven and New Age.
The uncertainty over the deal has cast doubt on the future of Etinde, which is Bowleven’s main asset. The project, which holds an estimated 2.1 trillion cubic feet of gas and 31 million barrels of condensate, has been delayed for years due to technical and commercial challenges. Bowleven was expecting to receive a $25 million bonus from New Age or Perenco once they reached a final investment decision (FID) on Etinde, but that milestone has also been pushed back indefinitely.
Bowleven said it had only $1.25 million of cash left as of last week, which would only last until the end of the first quarter of 2024. The company said it had received a proposal from a shareholder to provide equity capital at a “very substantial discount” to the current market price while allowing all current shareholders to participate at the same price. The company did not disclose the shareholders’ identities or the terms of the proposal but said it was not yet at an advanced stage, and there was no guarantee that it would be concluded.
Bowleven’s troubles come when Cameroon faces political and economic instability and security threats from neighboring countries. The country’s long-serving president, Paul Biya, who has been in power since 1982, faces growing opposition and discontent from his people over his handling of the COVID-19 pandemic, corruption scandals, and separatist violence in the Anglophone regions. The country also shares borders with Nigeria, where Islamist militants have been waging a brutal insurgency, and Gabon, where a failed coup attempt occurred earlier this month.
Bowleven’s shareholders have been frustrated by the company’s lack of progress and returns, which was once valued at more than $1 billion. In 2018, a group of activist investors led by Crown Ocean Capital ousted the previous board and management and installed a new team led by Eli Chahin. The company then paid out a special dividend of $50 million in 2019 and reduced its operating costs significantly.
Bowleven said it remained confident it could deliver value to its shareholders from Etinde despite the current challenges. It said it would continue to engage with SNH, New Age, Perenco, and other stakeholders to seek a resolution on the deal and the project. It also said it would explore other funding options and opportunities to diversify its portfolio. It said it hoped its shareholders would support its efforts to overcome the difficulties and secure the company’s future.
Source: Energy Voice
