Bowleven Etinde news delivered
Jun 3, 2014 at 9:08 am in AIM by contrarianuk
As expected after the volume surge on Friday the news on Bowleven’s Cameroon Etinde development came through today and it looks like the approval is almost in the bag with only the President Paul Diya to sign the decree after the Cameroon state approved the EEAA. A big relief for shareholders and a slight personal disappointment given I divested my holding last week. A nod to those who kept their nerve last week!
Still the response to the announcement has been rather more muted than I expected on this good news with the shares up only 11.8% to 37.75p. If the news had been bad, i.e. a further delay to the Etinde approval, knowing AIM the price would have crashed! The muted response to this major announcement could be the uncertainty that Diya actually signs the final decree (but this seems unlikely) or is another placing possible to tide the company over until Petrofac release $60 million at Final Investment Decision (again seems a long shot since a placing would go down like a lead balloon right now and they seem to have enough cash to last them a little while yet)? Certainly not the bonanza I was expecting on this announcement. With the likes of Range Resources and Leni Gas and Oil surging in recent days, it shows very large gains are still possible in AIM stocks when the right RNS’s arrive and if the management team have got their act together there should be several updates over the coming weeks.
Broker Cenkos said this morning about Bowleven, “Four months after submission the formal resolution confirming the Cameroonian State’s support for and approval of the Etinde Exploitation Authorisation Application (EEAA) has been signed. The EEAA defines the means of monetising the Etinde licence hydrocarbons through supply to a Government sponsored feriliser plant and also through an LNG scheme. The award of Exploitation Authorisation will give development and exploitation rights over Block MLHP-7 for an initial 20 year period. We now await the approval of the environmental impact assessment regarding the fertiliser plant, a process in which Bowleven is not directly involved. The shares trade at 1/3 of their 2013 highs and offer significant upside if the company can achieve FID on Etinde later this year which will trigger the release of the Petrofac funding for the venture.”
The RNS read:
Bowleven, the Africa focused oil and gas exploration group traded on AIM, today is pleased to announce that a significant milestone has been achieved in the development of the Etinde Permit. Following a Special Operating Committee Meeting (OCM), held between the Cameroon State and the Contractor (EurOil and its partner CAMOP) on 21 May 2014, a formal resolution confirming the State’s support and approval of the Etinde Exploitation Authorisation Application (EEAA) has been signed. The formal decree is expected to follow in due course.
The EEAA, which was submitted to the Cameroon authorities for their approval in early January 2014, defines the means of monetising the Etinde hydrocarbons by supplying treated gas to a Government sponsored fertiliser plant and also through a liquefied natural gas (LNG) scheme. The award of the Exploitation Authorisation (EA) will give development and exploitation rights over block MLHP-7 for an initial period of 20 years.
Kevin Hart, Chief Executive of Bowleven plc, said:
“We are delighted to have achieved this key milestone in the plans to develop Etinde and to have taken this important step towards the award of an EA. We thank the State for signalling its support of the application and look forward to the support of the Head of State, H.E. President Paul Biya, via the official award. This will enable the progression of the exciting development opportunities on Etinde as we support Cameroon in its ambition to further develop its considerable hydrocarbon resources.”
Contrarian Investor UK
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Slightly bitter comment there, “if the news had been bad, i.e. a further delay to the Etinde approval, knowing AIM the price would have crashed!”
As it stands the EEAA is legally binding because it’s been signed by all relevant parties, including (and most importantly) the MoM. The President’s signature is a formality because the MoM can approve (and has approved ) the EEAA.
I expect a slow rise as most people bought heavily at these low prices. However, even a sniff of a bid during this window before FID will send the sp flying. I’ll keep holding rather than trade.
Justin