Bowleven reports $2m loss as it looks to shore up funding

The AIM-traded firm said it had $0.9m in cash and a financial investment of $0.6m at the end of the period on 30 June, totalling available funds of $1.5m.

However, by 31 October, the cash balance had decreased to $1m, with the remaining financial investment having been sold and its value realised after the year-end.

The company highlighted its urgent need to raise additional equity to fund its operations, as its cash flow forecasts indicated a material risk of depleting its existing cash resources in the spring and summer of 2024 without new investment.

That, the board said, raised a material uncertainty regarding the going concern status of the group.

The directors said they had been exploring debt and equity fundraising options throughout the year to address the challenges.

Discussions also took place with the company’s major shareholder regarding the provision of new equity capital, though the availability and terms of such an equity raise remained uncertain.

To prioritise the business’s financial stability, the board took measures to reduce cash burn and preserve cash resources, including deferring directors’ payments when there was insufficient liquidity.

Additionally, the major shareholder provided a comfort letter indicating their intention to provide financial support for a minimum of twelve months from the date of authorisation of the 2023 financial statements or the date of the audit report’s signing, whichever was later.

That support primarily covered general and administrative expenses and Etinde’s monthly cash calls.

On the operational front, Bowleven updated shareholders on the Etinde project offshore Cameroon.

It said the operator, New Age, signed a conditional agreement in June 2022 to sell its 37.5% gross stake in Etinde to Perenco, subject to various conditions precedent, including regulatory approval from SNH.

As of July, the contractual long-stop date had passed, but New Age and Perenco extended it, awaiting formal approval from Cameroon’s government.

While Bowleven expected completion in late 2023 or early 2024, it said there was no guarantee when or if the transaction would be finalised.

During the waiting period, the joint venture partners approved a limited care and maintenance Etinde permit work plan and budget for 2023 on a quarter-by-quarter basis, with plans for a similar proposal for the 2024 financial year in discussion.

“While clearly, we find ourselves in a challenging financial situation, Bowleven remains on the verge of a significant turning point with a new Etinde operatorship offering a renewed focus and clearer vision to the monetisation of the asset,” said chief executive officer Eli Chahin.

“The timing of the completion of Perenco’s acquisition of New Age’s interest at Etinde is still not clear, and while we stay in somewhat of a holding pattern, our focus is on the careful management of our balance sheet so that we remain funded for the foreseeable future.

“I am still confident that within a manageable timeframe we will see progress within the Etinde JV and be in a position to accelerate our timetable towards hydrocarbon production at Etinde for the benefit of all the joint venture partners.”

At 0924 GMT, shares in Bowleven were down 3.85% at 0.63p.

Reporting by Josh White for Sharecast.com.