Bowleven board bowled out

21 March 2017, Week 11, Issue 681

Virtually all members of Cameroon-focused Bowleven's board have been removed, following a shareholder vote. An activist investor, Crown Ocean Capital, is set to take the reins. The shake-up throws into question the fate of the Bomono deal, struck with Victoria Oil and Gas on March 6. Crown Ocean’s plan appears to support that of Bowleven as a single-asset company – focused on Etinde – with the most likely outcome being a sale to a third party. 

A statement from Bowleven on March 15 said five of its directors had been removed, including its CEO, Kevin Hart. One of the resolutions to remove a director failed, with Billy Allan maintaining his position. 

Major shareholders, apart from Crown Ocean, voted against the resolutions in the main, although one voted for the removal of Phil Tracy. Allan will continue as the company’s chairman, while David Clarkson will also remain as a director and chief operating officer. 

Voting at the meeting covered the election of Eli Chahin, who had served as a partner at Alix Partners, and Chris Ashworth, a senior lawyer at Ashurst. 

The votes were only narrowly passed and Bowleven’s statement noted that, without Crown Ocean’s vote, all of the resolutions would have been defeated. As of March 6, Crown Ocean had a 22% stake in the company. 

Voting advisory services Glass Lewis, ISS and PIRC all supported the previous board. The only point of difference was on Tracy, with PIRC supporting his removal, apparently on concerns over his independent status. 

Crown Ocean complained about the board on a number of fronts, including remuneration and a lack of focus on operations. 

Crown Ocean issued a request for another vote on March 17, calling for Allan to be removed and for two more of its directors, Julien Balkany and Didier Lechartier, to be appointed. Balkany is the chairman of Panoro Energy and is also involved in Nanes Balkany Partners, which was involved in activist investment work with Vaalco Energy. Lechartier is the managing director of Petroceltic International, which was acquired by activist investor Worldview Capital in 2016. 

 

Etinde

Bowleven’s main asset is the Etinde permit, where it works with New Age (African Global Energy), as the operator, and Russia’s LUKoil. The project, offshore Cameroon, has gross contingent resources of 290 million boe, covering 461 square km. 

The company farmed out the block – to New Age and LUKoil – in March 2015 for a total of US$250 million. Bowleven said that appraisal drilling on the licence was targeting up to 2 tcf (56.6 bcm) of gas. A range of options are being considered for the project, including floating LNG (FLNG), gas-to-power and export to Equatorial Guinea for liquefaction. 

Progress at Etinde has been slow – a main point of contention for Crown Ocean. The partners do not seem to agree on how best to develop the resource and the Cameroon government tends to move at a slow pace. 

Crown Ocean, in a letter in mid-February, said Etinde had “enormous potential” and was a “value creation opportunity”. Bowleven should preserve cash in order to participate in the development of Etinde, it said, and the board should ringfence the funds needed, allowing the project to be developed without any more equity issues. 

 

Bomono

Crown Ocean was sceptical of the deal with Victoria on the Bomono project. The investor said the deal put a low price on the asset and that it would not recover the US$100 million spent by Bowleven on it. 

It went on to say that its planned board – now an actuality – should review Bomono in order to determine the best way to proceed. 

Under the deal with Victoria, Bowleven would keep a 20% stake, and the role of operator, in Bomono. Gas from the licence would be sold to a unit of Victoria, minus a tolling fee. It should allow feedstock from the field to be swiftly moved to consumers, given Victoria’s expertise in this area and its existing pipeline network. 

Victoria has the right to exit the deal if Bowleven’s board was removed, but appears unwilling to exercise this. Following the news of the Bowleven board’s dismissal, Victoria issued a statement saying it alone had the option to terminate the agreement. As such, it appears content to press ahead with the plan, saying it would be in touch with Bowleven’s board. 

Crown Ocean did not respond to a request for comment, on Etinde or Bomono.