Participant in Lukoil project in Cameroon seeking capital in expectation of a protracted change in operator
MOSCOW. Nov 10 (Interfax) - One of the shareholders in the Etinde field development project on the offshore shelf of Cameroon, UK-based Bowleven, is seeking capital to maintain operations in anticipation of a change of operator that has been delayed.
Bowleven recalls in its announcement that the project operator, New Age, has agreed to sell its stake to Perenco, which was a turning point for the Etinde joint venture. Bowleven expects the deal to close in the coming months. It was previously reported that this would happen in June.
"We have reason to believe that the intention of all counterparties is to proceed with closing this transaction. At the time of writing [the statement], customary regulatory approvals from the Government of Cameroon are yet to be completed," the statement said.
The company notes that government approval is the most challenging of the tasks, but still believe the deal will close in late 2023 or early 2024.
"Given the current situation, where the Perenco transaction has yet to complete, and where there is uncertainty as to the likely timing of completion, if it completes at all, and whilst its working capital funds are depleting, Bowleven has an urgent need to raise additional equity funding. The Board's preference would be to recapitalize the business in such a way that all shareholders are provided with an opportunity to participate whilst ensuring that Bowleven retains its stake in Etinde whilst our investment hypothesis is realized. This would allow Bowleven to continue to fund its ongoing operations and general corporate overheads, as well contribute its share of the potential expenditure at Etinde in the period between Perenco becoming Etinde Operator and a FID date (which the Board now expects to be in late 2024 at the earliest, subject to the New Age/Perenco transaction completing in late 2023 or early 2024)," Bowleven chief Jack Arnoff was cited as saying.
The board has had discussions with the Group's largest shareholder in relation to a potential issue of new shares to increase the business' cash position. However, our major shareholder has since been concerned at the potential high level of risk relating to the closure of the Perenco acquisition as well as other geopolitical issues and has subsequently communicated an indicative proposal to provide new equity capital at a very significant discount to current market price of Bowleven's shares. As a result, the board considers it appropriate to ensure it has explored all available options before pursuing this proposal.
As reported, in June 2022, New Age (African Global Energy) Limited signed a definitive conditional agreement with a unit of Perenco S.A. to transfer its interest in the Etinde JV joint venture. The 460 square kilometer block is located in the Gulf of Guinea, 20 kilometers offshore, close to the border of Equatorial Guinea. Sea depths within the block range from 10 to 100 meters. The project is being implemented under a production sharing agreement (PSA) signed on December 22, 2008. In July 2014, a 20-year development license was issued for the Etinde block.
FEED has shown that development of the field based on domestic gas sales only with re-injection and processing of excess feedstock will not provide sufficient return on investment for the JV partners in current market conditions. As an alternative, processing Etinde gas at Marathon Oil's facilities on Bioko Island in Equatorial Guinea was considered.
The project participants selected this option as preferable and started initial negotiations with Marathon Oil . The latter owns 63% in the offshore Equatorial Guinea PSA of the Alba 80% field in Block D, as well as 52% in the Alba LPG plant on Bioko Island. In addition, the U.S. company owns 60% of EGHoldings (an LNG plant with a capacity of 3.7 million tonnes per year) and 45% of AMPCO (a methanol plant), which are also located on Bioko Island.
Lukoil recently said it is considering with its project partners the possibility of producing liquefied natural gas (LNG) from a floating facility.
The Russian company entered the deepwater project in the Etinde area in offshore Cameroon in West Africa in 2014. The participants are: Jersey-based New Age Ltd. - 30% (operator), Lukoil - 30%, EurOil Ltd. (British Bowleven) - 20%, and SNH - 20%.
Perenco, founded in 1975, is a European independent oil and gas company. With a production of 270,000 barrels of oil equivalent per day, it is present in 14 countries. Perenco has been operating in Cameroon since 1993 in the Rio del Rey, Mudi and Ebom concessions. The company operates four PSAs, three of which - Bolongo, Dissoni, Moabi - are already in development, while one is in the exploration phase in the Rio del Rey basin.
In 2018, Perenco and Cameroon's Societe Nationale des Hydrocarbures (SNH) decided to implement an LNG project through the creation of FLNG Hilli Episeyo, the world's first floating liquefaction plant located off the coast of Kribi (a town in southern Cameroon).