Africa-focused oil and gas firm Bowleven (LSE:BLVN) has delayed the appointment of a new non-executive chairman until it makes further progress on its latest drilling campaign. In December, the business said it had launched a search process to identify and appoint a successor to Chris Ashworth after he resigned as non-executive chairman with immediate effect.
But today, Bowleven said it would instead appoint non-executive director Matt McDonald as interim non-executive chairman with immediate effect. It will resume the search for Ashworth’s permanent replacement once it has more clarity on the likely outcome of the results of the two-well appraisal drilling campaign on the Etinde field, expected to begin this quarter. Shares were up 3.4pc, or 1.3p, to 38.5p as at the time of writing.
In February, Bowleven announced that it had secured a rig for drilling the appraisal wells at Etinde, based in Cameroon. What’s more, in last month’s interim results for the final six months of 2017, Bowleven revealed a healthy cash balance of $83.7m and no debt – a unique position for a name in its sector.
Bowleven also has access to a further $25m, which is receivable on achieving the Final Investment Decision (FID) on the Etinde project. Also, Bowleven’s share of the budgeted cost of the two-well Etinde 2018 appraisal drilling programme is carried up to a maximum of $40m. The company’s balance sheet recognises the value of the carry as a $39.6m asset. Add the potential $25m to the carry value and cash balance, and you reach a total of c.£105m.
At Bowleven’s current market cap of £120.7m, the market is attributing very little value to its 20pc stake in Etinde. It is worth remembering at this point that appraisal wells have a higher chance of success than exploration wells. These developments provide vindication for the shareholder activists who voted to boot out almost all of Bowleven’s former board led by chief executive Kevin Hart last March. From a shareholder perspective, the company was not performing well under Hart’s tenure, but the stage could now be set for Bowleven to regain some of its former glory.
Chartwise, the Bowleven share price broke through horizontal resistance this week, at 36.49p which could now offer support moving forward. The next major resistance level is formed by the top of the price channel, currently at 41.5p.