shares - bowleven plc oil and gas company
TRANSCRIPT
Private & Confidential 2
Important Notice
Nothing in this presentation or in any accompanying management discussion of this presentation (the "Presentation") constitutes, nor is it
intended to constitute: (i) an invitation or inducement to engage in any investment activity, whether in the United Kingdom or in any other
jurisdiction; (ii) any recommendation or advice in respect of the ordinary shares (the "Shares") in Bowleven plc (the "Company"); or (iii) any
offer for the sale, purchase or subscription of any Shares.
The Shares are not registered under the US Securities Act of 1933 (as amended) (the "Securities Act") and may not be offered, sold or
transferred except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in
compliance with any other applicable state securities laws.
The Presentation may include statements that are, or may be deemed to be "forward-looking statements". These forward-looking statements
can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "projects", "expects",
"intends", "may", "will", "seeks" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts.
They include statements regarding the Company's intentions, beliefs or current expectations concerning, amongst other things, the results of
operations, financial conditions, liquidity, prospects, growth and strategies of the Company and its direct and indirect subsidiaries (the “Group”)
and the industry in which the Group operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future
performance. The Group’s actual results of operations, financial conditions and liquidity, and the development of the industry in which the
Group operates, may differ materially from those suggested by the forward-looking statements contained in the Presentation. In addition, even
if the Group’s results of operations, financial conditions and liquidity, and the development of the industry in which the Group operates, are
consistent with the forward-looking statements contained in the Presentation, those results or developments may not be indicative of results or
developments in subsequent periods. In light of those risks, uncertainties and assumptions, the events described in the forward-looking
statements in the Presentation may not occur. Other than in accordance with the Company's obligations under the AIM Rules for Companies,
the Company undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future
events or otherwise. All written and oral forward-looking statements attributable to the Company or to persons acting on the Company's behalf
are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in the Presentation.
‘Bowleven’, ‘EurOil’ and the Bowleven logo are trade marks of Bowleven plc and copyright in the content of this document is owned by
Bowleven plc. They should not be used without permission.
Disclaimer
Private & Confidential 3
Overview – focused on Cameroon in Africa
• Deliver value to all our shareholders by
developing and growing our resource base in
our Cameroon assets whilst maintaining
rigorous attention to costs and value
• Right sized our organisation commensurate
with the needs of our current portfolio
• Convert portfolio resources to reserves and
monetise the gas and condensate
• Focus attention on monetising the existing
exploration assets ahead of deploying capital
on new exploration
• Seek and optimise value-adding partnerships
Strategic framework:
Creating shareholder value
“We are dedicated to realising
material shareholder value from our
assets in Cameroon whilst maintaining
capital discipline and employing a
rigorous approach to other value-
enhancing opportunities”
Private & Confidential 4
Delivering value for all our shareholders
New leadership
• Chris Ashworth was appointed Chairman
and Eli Chahin was CEO in March.
• The Board was subsequently expanded
with two new non-executive Directors. Joe
Darby was appointed in April and Matt
McDonald was appointed in August
Fresh approach
• Refocussed strategy away from exploration
to maximising value from our existing asset
portfolio
• Right sized organisation and moved to
London
• Enhanced capital discipline
• Aligned cost based with strategy
Average G&A costs reduced to less than
$350k per month
Executive Board costs reduced
significantly
Private & Confidential 5
Financial results
• Strong balance sheet with over $84m cash at
30 November 2017
• No debt and no outstanding work programme
commitments
• Etinde farm-out transaction:
o Access to $40 million (net) carry; covers
share of drilling/testing of two Etinde
appraisal wells2
o $25 million at Etinde FID
• G&A reduced to less than $0.35m net per
month on average
• Bomono asset fully impaired at an impairment
charge of $46m
• 7.8m shares purchased under share buyback
programme at total consideration of $2.6m1
B – current budget for calendar year 2017
Administrative expenses net of costs recovered against the asset base and includes UK and overseas costs1 Sterling gross consideration converted to USD at 1.26952 Cash alternative in 2020 available
Private & Confidential 6
Near-term Business Objectives
Maximise the value of Etinde
• Ensure appraisal drilling is carried out in 2018
• Work towards prompt development alignment
• FID to be achieved quickly thereafter
De risk Bomono
• Relinquish operator status
• Complete farm-out with VOG on agreeable terms
• Further appraisal/exploration activities may follow
Selective capital deployment
• Assess value enhancing opportunities across
Etinde value chain
• Seek to cover G&A with proactive cash
management
G&A containment
• Continuous G&A scrutiny whilst retaining execution
capacity
Private & Confidential 7
Ghana To
go
Be
nin
Nigeria
Gabon Congo
E.Guinea
20km
Cameroon
Douala
Bomono
20km
In a strong financial position with $40M carry for
the 2018 appraisal wells
Asset overview
Etinde
Bomono
Equity Interest NewAge (operator) – 37.5 %
LUKOIL – 37.5 %
Bowleven – 25 %
SNH – 0%
P50 contingent
resources
290 mmboe
Equity Interest Bowleven (operator) –
100%*
* Victoria Oil and Gas plc have farmed-in for 80 % interest, but this is subject to
completion
Has exploration licence extended to December
2018 and PEA submitted to authorities. Farm-out
with VOG pending
Private & Confidential 8
2018 Etinde Appraisal drilling (1)
• Outline agreement to proceed with two
appraisal wells in 2018
• JV partners closely aligned re well
location
• Final decision in Q1 2018 following
shallow level drilling hazard assessment
and sea bottom survey
• Initial well designs completed
• Tender process for drilling contractor and
other major suppliers under way
• Well testing programme under evaluation
• Drilling vessel expected to mobilise on
site in Q2 2018
• IM-6 well spud planned for Q2 2018
• Two well drilling programmes expected to
conclude in Q4 2018
Work Programme and timeline Isongo
Marine
Discovery
ID/IE
Discovery
Intra
Isongo
Dicovery
Private & Confidential 9
2018 Etinde Appraisal drilling (2)
IM-5ZR well discovery
• Drilled to the SE of the earlier IM-3 well with
approximately 0.47 tcf of wet gas resource)
• Tested >10,800 boepd from 29m net pay
(37mmscfd & 4,664 bcpd)
Primary target
RMS Amplitude map showing the proposed IM-6 location due south of the IM-5Zr well (source: New Age)
IM-6 appraisal well
• Southward extension of the 410 intra-Isongo
sandstone horizon gas condensate discovery
from the IN-5ZR
• 200 to 280m potential column height targeted
• Well designed with the ability to convert to a
production well at a later date
• If well proves to be below the gas/water
contact, then data collected should be
sufficient to allow an up-dip side track
• In a success case, the well targets 0.87 tcf of
wet gas resource at P50 in the 410
sandstone horizon
Private & Confidential 10
2018 Etinde Appraisal drilling (3)
IM-6 well
• The IM-6 well located to explore two additional
potential reservoir formations above and below the
410 resource
• Shallower depth “510/Grinder” sandstone formation
• Deeper depth “310/Yankee” sandstone formation
• On a success case basis, the larger 510 sandstone
has up to 1.1 tcf (at P50 confidence) of wet gas
within the RMS amplitude defined structure
• The deeper 310 sandstone package may contain up
to 0.2 tcf of gas in place (P50)
IM-7 Appraisal well
• The IM-7 proposed well location is designed to
identify the likely size of the 510 sandstone
formation
Appraisal well success outcome
Both wells have the potential to increase total gas
condensate resource in place from c1 tcf to 3 tcf at the
P50 confidence level (total field basis)
Secondary target
Appraisal Success
GIIP (Bcf)
P90 P50 P10 Mean
Discovered
volumes
776 1.003 1,301 1,025
510 803 1,120 1,495 1,137
410
(remaining)
513 743 1,011 756
310 184 233 293 236
Total 2,276 3,099 4,100 3,154
Private & Confidential 11
Etinde exploitation
• JV focus is on achieving earliest possible development in a cost effective manner within
technical and timing constraints
• Early stages for approval of a two-phase development:
o 70 mmscd dry gas to be made available to the domestic market for use on Government
approved projects (eg. electricity generation)
o Sale of remaining gas production and condensate at JV choice
Private & Confidential 12
Gulf of Guinea – Floating LNG proving ground?
• Perenco, Gazprom marketing and trading and
SNH signed an 8 year deal with Golar LNG
• Golar provide a Floating LNG vessel (the “Hilli
Episeyo”) to process 500 bcf of gas from
Perenco/SNH’s Sanga Sud and Ebome fields off
Cameroon
• Hilli Episeyo arrived in Cameroon waters in late
November 2017
• Ophir Energy pursuing a FLNG solution for
Fortuna JV in Equatorial Guinea waters to
the SW of Etinde
• FID expected early 2018
• OneLNG (JV) to operate the FLNG facility
• Subsea Integration Alliance (JV) awarded in
October 2017 upstream construction
contract
• Targeting first gas with a planned 440
mmscf/d gas production in 2020
Schematic development design for Fortuna LNG JV (source: Fortuna presentation)
The Hilli Episeyo en route to Cameroon
Private & Confidential 13
Bomono
Monetising the asset is dependent of finalising the agreement with VOG
• Victoria Oil & Gas plc (“VOG”) represent an ideal partner to develop Bomono
• Farm-out transaction for 80 % stake signed with VOG in March 2017 subject to conditions precedent
• VOG, with our agreement, have rolled the long-stop date for the contract to 31 December 2017
• Should the farm-out arrangement not complete, we will not be in a position to generate an alternative
development plan before the existing exploration authorisation terminates in December 2018
• We consider a likely risk that the Government will not approve a further extension to the exploration
authorisation without attaching additional exploration work commitments
Given the ongoing discussion and fundamental uncertainty, the carrying value of the Bomono
intangible asset has been fully impaired, with a charge of $46 million being made in the year
Private & Confidential 14
Conclusion – creating shareholder value
• Deliver value to all our shareholders by developing our resource base in our Cameroon
assets
• Right sized our organisation commensurate with the needs of our current portfolio
• Convert portfolio resources to reserves and monetise the gas and condensate in Etinde
• Disciplined capital deployment conducive with the set near term objectives
• Seek and optimise value-adding partnerships across the Etinde value chain where
appropriate and commensurate with the risk/return proposition