BOWLEVEN has revealed it has invested around $20 million (£15.3m) in US Government bonds after cutting losses in the wake of a boardroom cull at the firm last year.
The new management team at Bowleven said the oil and gas firm had made good progress following a shake-up that resulted in directors moving its head office from Edinburgh to London.
Former chief executive Kevin Hart and four other directors were voted off the board in March last year following a campaign for change led by the Crown Ocean Capital investment firm.
Under new chief executive Eli Chahin, Bowleven completed a restructuring which involved shedding around 30 jobs under a plan to focus spending on the Etinde permit off Cameroon.
In the annual results announcement made by the company yesterday, Mr Chahin said: “After many years of little meaningful activity, 2018 has seen the Company gain significant momentum.”
He noted that Bowleven recently completed a long-awaited appraisal programme under which it drilled its first wells off Cameroon since 2013.
The wells failed to discover additional resources on the scale hoped for. However, the initial results have left the new management team confident that Etinde contains enough to justify the investment required to bring the field into production.
Mr Chahin said the outcome of the drilling campaign to date validated the board’s determination to maintain a derisked corporate strategy, a strong balance sheet, and to focus on getting in position this year to make a Final Investment Decision on Etinde.
He noted that Bowleven would be due to receive $25m from partners on Etinde once FID is reached.
The payment was agreed under the $250m deal to sell stakes in Etinde to New Age and Lukoil struck by Mr Hart in 2014.
Bowleven’s share of the costs of the recent appraisal wells was covered by partners under the same agreement.
The company retained $63m cash at the end of the financial year on June 30.
The company has put $19m into income generating investments as it looks to cover its overheads. Chairman Matt McDonald said: “With US treasuries providing attractive returns, US treasuries are currently the home for nearly all of the portfolio.”
Bowleven cut administrative expenses to $6.3m in the latest year from $11.7m in the preceding period.
On Wednesday Mr Chahin claimed costs had run ahead of the progress achieved in the field under the old management team.
He said Bowleven had been able to reduce its annual accommodation costs from around £400,000 to £35,000 following the move from Edinburgh to London. The company can operate with fewer employees staff after deciding to focus its resources on Etinde.
The company lost $7m in the latest year against $54m in the preceding year, during which it wrote $45.6m off the value of the onshore Bomono licence in Cameroon.
Bowleven said yesterday it had actively considered developing a small scale gas to power generation scheme on Bomono in conjunction with a significant international partner without success.
After leaving Bowleven, Mr Hart defended the performance of the company in his 10 years in charge, noting it found a lot of oil and gas off Cameroon but was frustrated by geopolitical factors.
Shares in Bowleven sold for 25.5p yesterday. They closed at 33.25p on the day Mr Hart lost his place on the board.
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