Bowleven in Cameroon Farm-Out
Two AIM-listed Africa-focused upstream gas firms, each with shareholder disputes, have agreed a farm-in agreement in Cameroon.
Bowleven has agreed to farm out an 80% interest in its Bomono production sharing contract to Victoria Oil & Gas (VOG), under which gas produced from Bomono will be fed into the customer distribution grid owned and operated by VOG subsidiary Gaz du Cameroun (GDC), after certain approvals.
Bowleven will retain a 20% interest and will remain Bomono’s operator. Gas from Bomono will be sold to GDC, less a tolling fee, at a price equivalent to a weighted average received by GDC for its total gas sales in Cameroon, much of which is sold in or around the port city of Douala.
GDC will fund and manage the pipeline connection from Bomono to the main network at a cost of some $6mn, although Bowleven has agreed to pay half of any deficit up to a maximum of $2mn if the first three years of net income received by GDC is less than the development expenditure incurred.
Bowleven CEO Kevin Hart (Photo credit: Bowleven)
Bowleven will receive a 3.5% royalty from GDC’s share of Bomono production, up to an aggregate cap to $20mn. On completion, Bowleven will also receive £100,000 worth of new ordinary VOG shares at £0.6923/share which it plans to retain initially.
Bowleven completed extended well flow tests on the Moambe well that exceeded 7mn ft³/d. The Moambe and Zingana exploration wells drilled at Bomono were then suspended as future producers. The Cameroon state has the right to take a 10% stake in the block’s development.
Shareholder disputes
Bowleven is fending off a hostile takeover bid from Monaco-based private equity fund Crown Ocean Capital, which owns 13% of Bowleven. COC's proposal will be voted on by Bowleven shareholders at a special March 14 meeting. Meanwhile VOG too has an ongoing dispute with one of its shareholders Denver-based RSM Production Corp.
As of the evening of March 6, Bowleven said that Crown Ocean Capital's shareholding in Bowleven had reached 22%.
Mark Smedley