Bowleven — Update 19 November 2015

Bowleven — Update 19 November 2015

Bowleven

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Bowleven

Proposed Tanzanian acquisition

Acquisition

Oil & gas

20 November 2015

Price

24.50p

Market cap

£79m

Net debt (£m) at end August 2015

120

Shares in issue

324.3

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Free float

93%

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Code

BLVN

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Primary exchange

AIM

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Secondary exchange

N/A

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Share price performance

Business description

Bowleven is an AIM-listed, Africa-focused E&P with assets in Cameroon, Kenya and Zambia. It has a 20% net interest in the Etinde development, which will provide gas to a fertiliser plant for 20 years. Its partners are NewAge and Lukoil.

Analysts

Will Forbes

+44 (0)20 3077 5749

Elaine Reynolds

+44 (0)20 3077 5713

Bowleven is a research client of Edison Investment Research Limited

Bowleven has announced a proposed acquisition of Tanzanian assets from Aminex. The $28m deal (funded by a mixture of cash, carry, shares and contingent payments) will add a 25% interest in the Kiliwani North Development gas project and a 50% interest in the Rovuma PSA (appraisal/exploration). The Kiliwani North project is expected to produce first gas by the end of 2015, bringing in cash flows to offset Bowleven’s $10m carry of the Rovuma PSA work programme, where an existing discovery could be further de-risked and further upside explored for. Following this announcement and the recent full-year results, we expect to update our valuation and financial projections shortly.

Year end

Revenue
($m)

PBT*
($m)

Operating
cash flow ($m)

Capex
($m)

Net (debt)/
cash ($m)

Year end

06/14

0.0

(13.6)

(8.6)

(18.0)

20.5

06/14

06/15

0.0

(14.1)

(10.4)

(30.4)

144.8

06/15

06/16e

0.0

(11.2)

(9.2)

(74.2)

112.0

06/16e

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments

The Ruvuma PSA includes the appraisal of the Ntorya-1 gas/condensate discovery, which has been ascribed contingent resources of 70bcf best estimate (153bcf pMean) with upside to be appraised. According to Aminex’s last financial report, several well locations have been identified and drilling could start in Q116.

In keeping with existing strategy and expertise, this deal increases Bowleven’s footprint in African gas development on top of its core Cameroon development/appraisal assets. The Tanzanian assets also add numerous catalysts, so in 2016 investors will be exposed to appraisal wells in Cameroon (potentially unlocking significant resources from the Intra-Isongo horizons), FID on Etinde, testing and possible development at Bomono and drilling at Ruvuma. Bowleven retains a strong balance sheet with $120m cash as of October.

In a market of low activity and low sentiment, this is a meaningful collection of value-increasing events in the coming 12 months.

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New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

National Grid — Update 18 November 2015

National Grid

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