Bowleven shares crashed on Tuesday after the oil exploration company said they were considered a deeply discounted placing as operations at their sole asset showed no signs of providing meaningful cashflow in the near term.
Bowleven has a 25% stake in the Etinde oil field which is operated by New Age African Global Energy. Bowleven’s problems stem from New Age seeking to sell its stake and operations effectively halted in the interim.
Despite months passing since New Age African Global Energy signed agreements to sell its 37.5% stake in the Etinde project and operatorship to Perenco, the transaction remains incomplete.
Several conditions must still be met, most critically approval from Société Nationale des Hydrocarbures, Cameroon’s national oil company. Their consent represents the next milestone, yet has been outstanding for an extensive period with uncertainty around if or when a decision will be made.
Although not party to the transaction discussions, Bowleven believes New Age and Perenco continue working to progress despite passing the formal long-stop date.
Bowleven will receive little income from the project until this situation is resolved.
Fundraise
Bowleven Cash reserves stand at approximately $1.25 million as of 23rd September 2023 after divesting remaining financial investments this year. A significantly reduced cost base was also noted in March. Per projections, these resources will only fund operations through calendar Q1 2024 assuming Bowleven’s Etinde contributions remain at current low levels, which may or may not occur pending transaction completion.
As announced in July, fundraising planning continues in 2023 with consideration of capital raising options to fund the Group. The Board originally expected an earlier transaction close.
Bowleven is currently reviewing a deeply discounted fundraising proposal from a shareholder that would allow all current shareholders to participate at the same price. While early stage, there are no certainties around if, structure or terms of any such fundraising.