Bowleven and Petrofac Agree to Strategic Alliance
LONDON -- Shares in Bowleven (ISE: BLVN.L) have jumped more than 10% today to 82.5 pence on news that the Africa-focused oil and gas exploration group has agreed upon a strategic alliance with FTSE 100 oil major Petrofac (ISE: PFC.L) , which will support the former's proposed development of the Etinde Permit in Cameroon.
Production is expected to begin in 2016, with Petrofac providing up to $500 million to support the delivery of a field development plan for the proposed first stage of development. Bowleven will also have access to Petrofac's "world-class" engineering, design, and project-management personnel and training capabilities.
In return, the alliance allows Petrofac to build its presence in West Africa, and it will be remunerated by Euroil -- Bowleven's Cameroonian subsidiary -- for the provision of its services through a share of production revenue.
The transaction is subject to Bowleven shareholder approval, although it appears management is confident the alliance will go through, with chief executive Kevin Hart commenting: "Petrofac's excellent track record of service provision, including training, will augment significantly Euroil's strong local presence and capability. Our alliance with Petrofac will help deliver first production from our Etinde project, and represents a major step toward our goal of converting resources to reserves in Cameroon."
Andy Inglis, chief executive of Petrofac Integrated Energy Services, stated:
We are delighted to be working with Bowleven to help them unlock the value of their Etinde Permit. Creating this strategic alliance at an early stage of the project offers Petrofac the opportunity to provide integrated services covering, onshore and offshore facilities development, drilling services and training and operations, alongside the deployment of capital. This is in line with our strategy of providing our exploration-led customers with integrated project delivery services.
This morning also saw Bowleven release its preliminary results for the year ended June 30, revealing that group cash balance stood at a healthy $142.5 million with no debt. A loss of $13.1 million for the year was made, which was nevertheless better than 2011's loss of $76.8 million. Other highlights included news that $38.6 million in net proceeds were received from its EOV disposal and that discussions with a preferred bidder on its Bomono farm-out were at an advanced stage.
Petrofac's share price was little changed on today's news.
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