Bowleven Share Discussion Threads

[ham74] 17/12/2023 11:39

An interesting item in the Q&A is BowLeven entertaining the possibility of New Age selling its stake to some party other than Perenco...any idea who that might be? Of course, it may be pure speculation anyway.

[warbaby43] 09/12/2023 08:34

Thanks again ham74, all helping to build a picture albeit not a pretty one.

[ham74] 08/12/2023 19:47

There might be a bit more time than that, given that Crown Ocean would keep the firm a going concern for a year or so...

My take is we may have most of 2024.

And in one of the Q&A responses, Bowleven are even raising the possibility of some new party taking the New Age stake.

[ham74] 08/12/2023 19:35

Here are some other bits and bobs gleaned from the AGM:

Limited communication

The joint venture between Bowleven, Lukoil and New Age, is technically an “unincorporated JV”. This gives the parties commercial rights, such as pre-emption rights that were not exercised when Perenco bid for New Age’s stake, but does not guarantee communication. Therefore, the discussions between New Age and Perenco have been bilateral, and the directors admit they are confused, baffled and surprised by the delays.

Nonetheless, they are aware that Perenco and New Age agreed to an addendum to the long stop date. Bowleven has had sight of it but cannot share it as it is private.

Recoverable costs

Regarding the difference of opinion over USD 10 million of recoverable costs, there are a few angles. Bowleven’s share of this is only 25% or USD 2.5 million. The money can only be recovered from future cashflows from Etinde In the greater scheme of things, USD 10 million is not that much for a project that could generate over USD 1 billion of cashflows. There has been a 10 year audit trail on costs, which is naturally a big exercise. Bowleven anyway expect this dispute will be resolved.

Other Perenco licenses

One possible source of complication and delays, is that Perenco could be negotiating /renegotiating multiple licenses with some inter-related and overlapping issues. We already know they renewed the Rio del Rey license earlier this year.

Possible sale of Bowleven Etinde stake

If this ever happened, the SNH approval process should be less complicated, because Bowleven is a financial investor and not an operator.

Geopolitics and costs of capital

The Chad pipeline dispute, and change of regime in Gabon, could raise fears of contagion risk, increasing the country risk profile. Equatorial Guinea however looks relatively stable.

Geopolitics might increase costs of capital but the auditors agreed to a 15% figure in line with previous years.

Perenco in West Africa

Perenco is the largest player in Cameroon, and is also active in Ghana, as well as Gabon.

Capital raise

Bowleven would prefer to see the share price rebound to minimise dilution. The aim is to offer it to existing shareholders, but they could also be open to new shareholders. Some form of hybrid structure could be considered, though a pure loan would be unlikely. Any offer probably needs to be fully underwritten to take out the execution risk.

They cannot disclose details of the Crown Ocean proposal, such as the share price, because it is private, and is anyway an ongoing discussion.

Domestic Gas

This could be important as part of the ESG agenda, in terms of obligations to the host government.

Development Finance Institutions

If the project gets to development plan and FDI stage, it is possible that development banks and other multilateral agencies might provide some financing. Bowleven has had discussion with banks in African and France before, but there needs to be a clear development plan agreed.

Lukoil logistics

Bowleven think that Lukoil needs to be aligned on the development plan.

Costs

There are currently two directors, two finance staff and someone on the ground in Cameroon, at the Euroil subsidiary.

Overheads (excluding development spending) could be about 1.5 million a year next year, but not all would be a cash outlay. If the directors defer their emoluments, these amounts will be accrued.

The costs of being listed are about 300,000 to 400,000 a year.

[warbaby43] 08/12/2023 17:20

Yes much appreciated ham74 and your take from "the chat" looked forward to.

[nufckk] 08/12/2023 13:30

Thanks for this Hamz and also to Warbaby for the questions.

[gark] 08/12/2023 12:13

Does not look too optimistic. We either get resolution early next year or that is it I am afraid.

[ham74] 07/12/2023 21:31

1130 words Q&A

Firstly, is it known whether the absence of consent to the NA to Perenco transfer is down to no decision apparently being reached or is it because SNH are seeking to attach conditions to the transaction that are unacceptable to the parties?

There has been no formal correspondence from SNH to Bowleven or the JV partners as a whole on this subject. New Age has not provided any specific details of their negotiations on this point.

Annual Report page 5 query :- references to "a major shareholder" and "our major shareholder" - can we assume both references are to Crown Ocean only?

Crown Ocean Capital in this context.

Annual Report page 9 query :- "core initial IM Only field development" not even plus IE-2? What are the projected flow rates of gas and liquids for IM?

There is no simple answer as it depends on multiple factors, including (but not limited to) development concept, the acquirer of natural gas produced and the contractual terms of any gas sale agreement, the number of wells drilled, which reservoirs are being produced from and the capacity and design of the gas processing facility. Technically, the maximum rate of initial wet gas production is likely to be up to about 150 mmscf/d.

Annual Report page 10 query :- "However, progress delays with the outstanding completion issues and obtaining governmental approvals has been much slower than anticipated. The June 2023 long stop date was not met and Perenco and New Age have informally agreed to continue to work together to resolve all outstanding issues and complete the transaction in due course" - "All outstanding issues", are these all entirely with SNH or are they also between the two parties and has even this Lukoil issue referred to in the H1 Results been settled - "Under the terms of the deal, a number of conditions precedent remain outstanding. Completion of this transaction is notably dependent on Perenco reaching both governmental agreement with SNH as well as commercial agreement with LUKOIL relating to some logistical matters. We understand from New Age that regulatory approval is expected to be issued by SNH and the Government of Cameroon in mid-2023, and that discussions are ongoing between LUKOIL and Perenco."

We are not party to the Transaction between New Age and Perenco or any discussions these parties have with LUKOIL regarding specific aspects of their deal that impinge on LUKOIL. So far as we are aware, given a level of communication with New Age and LUKOIL, none of the potential issues relating to the SPA between Perenco and New Age have been resolved. We understand that SNH has raised some issues with Perenco that impinge on Perenco obtaining Governmental approval to acquire New Age’s stake, but we are not aware of all the details and cannot comment more than we already have done.

21 Questions & Answers Annual Report page 10 query :- "We anticipate the current uncertainty will be resolved by early 2024 at the latest by either the transaction completing or by some other means" - what other means do management envision?

There is a possibility that SNH and the Government may not approve Perenco’s proposed acquisition, which will require a change of strategy by New Age or different steps by Perenco. In, addition, we also consider that there is a possibility that New Age may seek or be approached by an alternative buyer to Perenco.

Annual Report page 11 query :- Is it correct to interpret what appears under "Short Term Outlook" as a JVP ambition to avoid having to hypothecate c 70mmcfd for domestic gas generation to maximize gas available to render a Bioko or a Perenco Plan B development more viable?

No, not in the way implied by the question. When we study the technical requirements for producing wet gas (condensate) at a fixed rate, for a finite period of time (for example to meet the commercial requirements under a Gas Sales Agreement) there are corresponding IM-act on the way the field is operated, and this has practical ramifications on liquids production levels and therefore on other commercial and economic considerations which impact the valuation and future cash flow of the Etinde project. In our view, the supply of natural gas to the Cameroon domestic market needs to be assessed as part of the overall development project.

Annual Report page 14 query :- Clarification please on timing of possible money raise given mention of present funds lasting through to Spring/Summer and possibly "a small number of additional months in practice" set against on p14 "a raise will be required by early 2024"

There are two slightly different considerations:
• How long will the existing Bowleven Group working capital last and how can we maximise this period of time using specific expenditure control mechanism, whilst, as a minimum, maintaining our obligations under the PSC agreement, based on the existing draft 2024 work plan and budget (or any amendment following a change in Operator), whilst maintaining a necessary safety margin; and
• The second reflects the time it will need to find new potential investor(s), agree commercial terms with them and then seek the necessary shareholder approval at a subsequent EGM. This needs to be completed prior to Bowleven fully exhausting its current working capital.

22 Questions & Answers Annual Report page 14 query :- From the H1 Results of 30th March - "Perenco has not, to date, sought to directly discuss its plans for the future of Etinde development with Bowleven or LUKOIL, although we have been made aware of some of their potential ideas indirectly. We consider the financial and strategic acquisition merits of Perenco’s purchase to be compelling and there are options we think are currently being assessed that would lead to commencement of production at Etinde in a cost effective and profitable way for the benefit of all Etinde JV Partners." However, on P14 of the AR concern is expressed on the possible negative implication for Etinde development of an absence of "public comment" and "private communication" from Perenco. Would management care to comment on the apparent change of "vibe"

When New Age informed the JV partners of the proposed transaction, we were informed that they expected the transaction to complete in Autumn 2022, although they subsequently extended this at the end of the year. Since then, a further 11 months have passed, including the 12 month long stop date of the original transaction, essentially with little to no development.

This is a concern.

After 18 months, can management offer any possible suggestion for such SNH delays given the centrality of O&G revenues to the state set against the RDR fields being in significant decline and Sanaga gas output being projected to "fall off a cliff" in 2026?

No. We cannot speculate on the intentions of the Government of Cameroon.

[ham74] 07/12/2023 21:26

I attended. At the end of the AGM presentation, there is a Q&A section addressing many of the questions posed that reference the annual report.

hxxps://www.bowleven.com/system/files/uploads/financialdocs/agm-presentation-2023_1.pdf

In my next posting, I will try and copy and paste it, but there may be some kind of word limit (some other pastes seem to have been cut short ).

Then next week I will also send some notes from the chat at the AGM.

[gark] 06/12/2023 20:46

Anyone go to the AGM?

[gark] 05/12/2023 14:49

Couldnt agree more

[gark] 27/11/2023 13:55

Thanks for asking. I don't have anything in particular to add. This is for me a digital option at the moment. I wouldn't mind knowing whether they will sell if FID comes to fruition. To my mind they are difficult to finance and hence sale more likely.

[ham74] 27/11/2023 11:36

Thanks, I will add those to the list.

I had suggested yesterday as a deadline, but I might give it another couple of days in case anyone eg gark wants to weigh in?

[warbaby43] 26/11/2023 12:11

Ham74, many thanks for offering to collate our questions and herewith quite a lengthy list and while a great deal of information has been provided in this AR, any clarifications you can obtain will be most welcome though I would guess that they will be unable/unwilling to address some issues.

Firstly, is it known whether the absence of consent to the NA to Perenco transfer is down to no decision apparently being reached or is it because SNH are seeking to attach conditions to the transaction that are unacceptable to the parties?

P5 of AR - references to "a major shareholder" and "our major shareholder" - can we assume both references are to Crown Ocean only?

P9 "core initial IM Only field development" not even plus IE-2? What are the projected flow rates of gas and liquids for IM?

P10 "However, progress delays with the outstanding completion issues and obtaining governmental approvals has been much slower than anticipated. The June 2023 long stop date was not met and Perenco and New Age have informally agreed to continue to work together to resolve all outstanding issues and complete the transaction in due course" - "All outstanding issues", are these all entirely with SNH or are they also between the two parties and has even this Lukoil issue referred to in the H1 Results been settled - "Under the terms of the deal, a number of conditions precedent remain outstanding. Completion of this transaction is notably dependent on Perenco reaching both governmental agreement with SNH as well as commercial agreement with LUKOIL relating to some logistical matters. We understand from New Age that regulatory approval is expected to be issued by SNH and the Government of Cameroon in mid-2023, and that discussions are ongoing between LUKOIL and Perenco."

P10 "We anticipate the current uncertainty will be resolved by early 2024 at the latest by either the transaction completing or by some other means" - what other means do management envision?

P11 Is it correct to interpret what appears under "Short Term Outlook" as a JVP ambition to avoid having to hypothecate c 70mmcfd for domestic gas generation to maximize gas available to render a Bioko or a Perenco Plan B development more viable.?

P14 etc - Clarification please on timing of possible money raise given mention of present funds lasting through to Spring/Summer and possibly "a small number of additional months in practice" set against on p14 "a raise will be required by early 2024"

P14 From the H1 Results of 30th March - "Perenco has not, to date, sought to directly discuss its plans for the future of Etinde development with Bowleven or LUKOIL, although we have been made aware of some of their potential ideas indirectly. We consider the financial and strategic acquisition merits of Perenco’s purchase to be compelling and there are options we think are currently being assessed that would lead to commencement of production at Etinde in a cost effective and profitable way for the benefit of all Etinde JV Partners." However, on P14 of the AR concern is expressed on the possible negative implication for Etinde development of an absence of "public comment" and "private communication" from Perenco. Would management care to comment on the apparent change of "vibe"

After 18 months, can management offer any possible suggestion for such SNH delays given the centrality of O&G revenues to the state set against the RDR fields being in significant decline and Sanaga gas output being projected to "fall off a cliff" in 2026?

[riskyinvestor] 20/11/2023 21:56

I think I will wait for 0.25p

Placing price

[ham74] 20/11/2023 17:23

Warbaby et al,

Sure, if people can try and write down their "wish list" of AGM questions by this Sunday 26 November, I can try and group them together, and send them to Bowleven week of 27 November, to give them a good week and a bit to think about them. I can then try and report back anything interesting.

rgs

Ham

[warbaby43] 20/11/2023 12:34

"Has anyone else here eg gark, warbaby, ever been to the AGM?"

Living in rural N Yorks makes attendance entirely impractical for me but am glad that you will be attending and hopefully you will be able to provide a report for the rest of us.

One suggestion if I may, though, is to e mail the company several days prior with the questions you would like to see addressed on the day and I wonder if you would be prepared to collate any questions that the brethren here present might have?

[ham74] 19/11/2023 09:51

The most amazing thing about the years of delays, is that the Cameroon Government really do need the money - they need more tax revenues in general, and other fields are declining. This has to be approved and developed at some stage.

[ham74] 19/11/2023 09:48

Of course at this stage we cannot be sure if the development plan and eventual FID even includes fertilisers.

[ham74] 19/11/2023 09:47

I know how you feel, but when I atttended in 2021 it was a small room in London Bridge area, everyone could get the same bagels, fruit salads and coffee. There were 4 people from Bowleven - Eli Chahin, Nicholas Brough the Finance Director, Jack Arnoff the non-exec Director, and another one. There was also someone from Shore Capital the house broker, and Arden (now called Zeus) which writes research notes available on Research Hub. There might have been one or two others from a registrar or something like that.

[ctc1] 17/11/2023 10:03

If the fertiliser plant had been approved as originally planned, without NAge interference and wresting operatorship off blvn, we would all be wealthy now.

[ctc1] 17/11/2023 09:58

The last AGM I attended our illustrious leadership, Eli Chahin and cronies, cosseted themselves in a separate room for refreshments, while we small private investors were shepherded into the presentation room without even a cup of tea or glass of water.