Bowleven, the Africa focused oil and gas exploration group traded on AIM, is pleased to announce that notification of the Cameroon Government's approval of the assignment of the Etinde equity interests to the nominated affiliates of LUKOIL/NewAge, and the associated transfer of operatorship to Camop, has been received from the Ministry of Mines.
As a result of the Government's official approval, the only remaining formality to transaction completion under the Etinde farm-out agreement announced with LUKOIL/NewAge on 24 June 2014, is the gazetting of the signed Presidential decree. To allow for completion of this final condition, all parties to the farm-out agreement are progressing the extension of the transaction longstop date to 31 December 2014. Upon completion Bowleven will receive an initial payment of circa $170 million.
Whilst we do not expect it to be required, a $30 million short term bridge facility has been signed with Macquarie Bank which, alongside the Group's current cash balance of circa $20 million, provides financial flexibility pending transaction completion. The bridge facility matures on 31 December 2015, but will be cancelled on completion of the Etinde farm-out transaction and amounts drawn (if any) under the facility repaid from the proceeds. If the facility is drawn, or is in place beyond 31 December 2014, Macquarie will be entitled to a series of warrants.
On Bomono, the arrangement with Africa Fortesa Corp Ltd (AFC) announced on 27 June 2014 has been effected, and the conditions satisfied in the signed rig contract with Africa Onshore Drilling LDC. The rig will be mobilised from Senegal shortly, with drilling expected to commence around end 2014. It is intended to drill two wells back-to-back targeting a series of stacked sands with oil and gas/condensate potential.
In addition to activity on Bomono, and on final completion of the Etinde farm-out, the Etinde joint venture intends to embark on an accelerated appraisal drilling programme to further appraise the potential of the Intra Isongo interval intersected by the IM-5 well in 2013. Bowleven's anticipated share of this two well appraisal programme is funded by a $40 million (net) carry that forms part of the deferred proceeds of the farm-out transaction. A further $15 million is receivable on completion of this appraisal programme, and $25 million on reaching project FID.
Kevin Hart, Chief Executive of Bowleven plc, said:
"We thank the Cameroon Government for approving the assignment of interests and transfer of operatorship and look forward to the gazetting of the official decree by His Excellency, the Head of State, H.E. President Paul Biya. Completion of the transaction will facilitate the advancement of Etinde development plans, including the acceleration of appraisal drilling, aimed at confirming further liquids potential alongside additional volumes for the expanding range of gas sales opportunities.
Pending receipt of the significant cash proceeds at completion, the $30 million bridge facility agreement signed with Macquarie Bank, provides additional short term financing flexibility. This ensures the timely progression of operations across the Group's portfolio, including drilling operations on Bomono.
As a consequence of the above transactions, we are ideally positioned to progress our assets and look forward to participating in two potentially high impact drilling campaigns within the next 12 months."