Edinburgh firm says new capital in needed to develop Cameroon discoveries
OIL and gas exploration firm Bowleven plans to raise $120 million (£76.1 million) of new equity from shareholders to develop its African oil discoveries.
Last week Bowleven struck oil at its Sapele-3 exploration well off the coast of Cameroon, its fourth find in the Douala Basin.
The Edinburgh-based firm said it now needs the new capital to carry out its proposed 2012 work programme.
In a market statement, Bowleven said: "Without the additional funding contemplated by the Placing there would be a significant impact on the Company's ability to carry out its proposed 2012 work programme and also to finance its working capital requirements through 2012."
Bowleven will make an official application to the London Stock Exchange on Wednesday with admission of the new shares expected to commence around November 8.
A trading statement posted today, Bowleven said it had approximately $15 million (£9.51 million) in net cash as of October 31 and expects to raise a further $35 million (£22.1 million) from the sale of subsidiary GGPC (EOV) Gabon Ltd.
However an unsuccessful drilling project onshore Gabon is expected will lead to a charge of $42 million (£26.6 million) on the income statement for the financial year to June 30.
The company also notes finance costs of $23 million (£14.5 million) in foreign exchange movements for the 2010 financial year as a result of the dollar weakening against sterling.
Bowleven said: "The Board believes that 2012 could be a significant year for Bowleven in terms of delivering organic growth in reserves and resources for Shareholders.
"However, the activities planned to deliver this growth will require additional capital.
"The Board considers that maintaining a robust financial base and retaining financial flexibility is key to ensuring business and value progression for the benefit of all stakeholders.
"The Board believes that, in order to position Bowleven to undertake this optimal appraisal and exploration programme across its acreage in 2012, it now requires additional funding.
"Having reviewed all available options for the timing and structure of finance, the Board has concluded that it is in the best interests of Shareholders as a whole to seek to raise the required finance by means of the Placing."
Bowleven said it will post its full-year results on November 3.
Last year the company reported a profit of $19.5 million (£12 million) for the year, turning around a loss of $10.2 million (£6.46 million) a year earlier, much of which came from gains in foreign exchange movements.
Shares in AIM-listed Bowleven dropped four per cent in early trading today.