This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

30 March 2023

Bowleven plc

('Bowleven' or 'the Group' or 'the Company')

Interim Results

Bowleven, the Africa focused oil and gas, Exploration and Production Company with key interests in Cameroon, today announces its unaudited interim results for the six months ended 31 December 2022.

HIGHLIGHTS

Operational

Etinde

·    Etinde operations are currently in a "care and maintenance" mode with limited ongoing activity other than New Age's maintenance of the Cameroon project office. This activity level is expected to continue until the conditions precedent to the completion of the disposal of New Age's Etinde operating interest to Perenco are satisfied and regulatory approval is provided. As such Bowleven expects minimal capital outlay related to the Etinde asset until the completion of New Age's disposal.

Corporate

·    The loss for the 6-month period was $1.0 million compared to $1.3 million for the same period in the prior year. The decreased loss is primarily due to lower recharges from Etinde, as project development activities have been reduced, and further expenditure reduction measures imposed by Bowleven's Board.

·    The Group cash balance as at 31 December 2022 was approximately $0.25 million with a further $2.2 million held in a financial investment, with no debt or material financial commitments. As at the end of March 2023 the financial investment has been partly converted to cash to be used to fund ongoing operations, with the net financial investment now at $1.4 million. As at 29 March 2022 the Group cash balance is circa $0.9 million.

·    The Directors have temporarily reduced UK staffing and overhead costs from January 2023 until Perenco become the operator at Etinde and further financing is secured. As a result, the current Bowleven expenditure run rate has been temporarily reduced to between $125,000 and $200,000 per month (with actual monthly expenditure depending on Etinde cash call amounts) to extend Bowleven's current cash resources.

·    As set out in the Group's final results statement on 1 November 2022, whilst expenditure on the Etinde project is currently low, Bowleven anticipates a higher expenditure later in 2023 on the basis that, once Perenco's Etinde interest acquisition has been completed, it may seek to take a fresh look at Etinde development options and put in place a full development team. Assuming Perenco and New Age's transaction completes in June 2023, Bowleven estimates that FID could be in late 2024, subject to Perenco's initial review of the Etinde development options. Based upon this potential timing, when combined with Bowleven's current cash and liquid resources, the Directors' cash flow forecasts and projections indicate a material risk that Bowleven will fully utilise its existing cash resources by the end of 2023. This gives rise to a material uncertainty regarding the going concern status of the Group.

·    The Board has therefore been considering its fundraising options and expects to seek to raise additional equity capital in 2023 to help to finance the Group's ongoing corporate activities and to assist financing its share of the future expenditure as the Etinde project progresses towards FID. Planning for an equity fundraising remains at an early stage and there can be no certainty that a fundraising will be concluded, nor as to the structure or terms of any such fundraising. To the extent possible, the Board will seek to respect shareholders' pre-emption rights. Bowleven will make further announcements as appropriate.

Eli Chahin, Chief Executive Officer of Bowleven plc, said:

"We remain on the verge of what we believe to be a major turning point in the business with the expected upcoming change of the Etinde operatorship once Perenco secures regulatory approval.

This is expected to be a key milestone in progressing what is hoped to be a transformational energy project for Cameroon, accelerating what has to date been a challenging timetable towards hydrocarbon production at Etinde for the benefit of all the JV Partners. As demonstrated by the recent signing of a bilateral co-operation agreement on hydrocarbon monetization with neighboring Equatorial Guinea, we are on the cusp of a new energy horizon for Cameroon that will impact the lives of many. We look forward to keeping our shareholders abreast of the anticipated positive developments over the coming months."

A copy of this announcement is available on the Bowleven website www.bowleven.com

Notes to Editors:

Bowleven plc is an African focused oil and gas group, based in London and traded on AIM. It is dedicated to realising material shareholder value from its Etinde asset in Cameroon, whilst maintaining capital discipline and employing a rigorously selective approach to other value-enhancing opportunities. Bowleven holds a strategic equity interest in the offshore, shallow water Etinde permit (operated by New Age) in Cameroon.

Notes to Announcement: 

The information in this release reflects the views and opinions of Bowleven and has not been reviewed in advance by its joint venture partners.

Terms not otherwise defined have the meanings given to them in the definitions section at the foot of this announcement.

CEO's REVIEW

The 6 month period ending 31 December 2022, has been another frustrating period with little in the way of positive developments to report on regarding our stake in the Etinde development project following the agreement of the conditional sale of the Operator's stake to Perenco in June 2022.

Whilst New Age and Perenco seek governmental approval and the resolution of a number of other conditions precedent to completion, New Age has placed the project on hiatus with little other than "care and maintenance" based operations.

On the regulatory side, New Age has assisted SNH in completing an audit of expenditure at Etinde covering the period from 2015 to 2020 and they are in negotiations regarding the 2023 work plan and budget.

Perenco has not, to date, sought to directly discuss its plans for the future of Etinde development with Bowleven or LUKOIL, although we have been made aware of some of their potential ideas indirectly. We consider the financial and strategic acquisition merits of Perenco's purchase to be compelling and there are options we think are currently being assessed that would lead to commencement of production at Etinde in a cost effective and profitable way for the benefit of all Etinde JV Partners.

The Board believes that Bowleven will need to raise additional funds in 2023 in order to fund its corporate overheads and the likely expenditure required of Bowleven from the point that Perenco becomes Etinde operator, which we currently anticipate by June 2023, towards a potential FID date in late 2024. It should be noted however that the timing of FID and the level of future expenditure required of Bowleven is an area of considerable uncertainty, as discussed later in this interim report. Alongside this, the Directors have reduced UK staff costs. The Board sees this as a temporary measure, which will be in place during 2023 until Perenco become operator and the Company has sufficient cash resources after additional finance is secured.

New Age's transaction with Perenco

New Age agreed to sell its 37.5% stake and Operatorship in Etinde to Perenco for an undisclosed amount in June 2022. Under the terms of the deal, a number of conditions precedent remain outstanding. Completion of this transaction is notably dependent on Perenco reaching both governmental agreement with SNH as well as commercial agreement with LUKOIL relating to some logistical matters.

We understand from New Age that regulatory approval is expected to be issued by SNH and the Government of Cameroon in mid-2023, and that discussions are ongoing between LUKOIL and Perenco. Bowleven has no involvement in these discussions. Under the terms of the June 2022 transaction, unless completed beforehand, the transaction termination date ('long stop date') is 12 months after signature (June 2023).

Going concern

The Directors' singular focus is to accelerate the path to FID and sanction a project that maximises the potential economics of Etinde's significant hydrocarbon resources.

As at 28th February 2023, the Company had (unaudited) liquid resources (comprising cash and a financial investment) of approximately $2.3 million.

The Group needs to secure funding to underpin the reduced cost base we have implemented during 2023, to fund our share of current and future joint venture spend as aligned with the preferred development plan, and the necessary cash buffer to meet cost contingencies.

As set out above, the Board is currently working on plans to raise additional equity capital in 2023 to help to finance the Group's ongoing corporate activities and to assist to finance its share of the future expenditure as the Etinde project progresses towards FID. However, planning for an equity fundraising remains at an early stage and there can be no certainty that an equity fundraising will be concluded, nor as to the terms of any such fundraising.

Since December 2022, the business has made further cost reductions, through a combination of redundancy and moving all remaining staff onto a part time basis to reduce the Group's controllable cash burn as far as possible. This is a temporary measure which Bowleven anticipates to change once it has sufficient cash resources after a fundraising occurs and Perenco completes its acquisition.

Monthly expenditure at Etinde remains low as New Age continues to operate the business on a largely suspended, care and maintenance basis. However, we expect that, on transfer of ownership to the new operator, Perenco will rapidly put a new project team in place and commence development planning activity over a short period of time. As previously discussed, the timing and financial impact of this remains uncertain, but its impact on Bowleven's current expenditure levels will likely be substantial. Without a further cash injection to fund the period to FID, there is a material uncertainty around the Group's ability to operate as a going concern.

As discussed in note 2 to the interim financial statements and the Outlook section below, the Directors have considered a number of different cash flow forecasts. On the basis of this modelling and Bowleven's current and forecast cash expenditure for FY 2023, the Directors have concluded that Bowleven is highly likely to need to complete a fundraising in 2023 in order to continue to fund the Group's operations as the Etinde project progresses towards FID, although the timing of FID and the level of future expenditure required of Bowleven is an area of considerable uncertainty.

Final Investment Decision for Etinde

The current JV partners have recommended to the regulator, SNH, that we move forward on the basis of the EG development option, which leaves essential commercial and large-scale governmental approval issues to resolve. There would also be a significant number of commercial and technical details that require further analysis and commercial negotiation with Marathon Oil, the Bioko Island facility operator. In addition, the EG option would need formal regulatory approval from both SNH and the Government of Cameroon and the signature of an intergovernmental agreement between Cameroon and Equatorial Guinea. In our opinion, the landmark signing during March 2023 of a bilateral cooperation agreement between Cameroon and Equatorial Guinea to jointly develop and monetise oil and gas projects along their respective borders bodes well for the monetisation of hydrocarbons and energy sovereignty. Currently the agreement is focused on two Chevron-operated fields and could serve as a template for the Etinde field optionality.

We do not know what, if any, alternative development scenario Perenco may propose to the JV partners nor whether these plans will meet with JV partner's collective approval. But we draw comfort that a precedent has now been established to mitigate the associated intergovernmental issues that previously challenged such bilateral developments.

We are not currently able to make any firm forecast as to when the JV partners will be able to reach a final investment decision for Etinde, although we continue to see the development of Etinde to be financially compelling, especially in the current global environment, with the increasing reduction of Russian sourced oil and gas on global markets.

One of our JV partners, Lukoil PJSC, has been impacted by the imposition of Russian sanctions, following the invasion of Ukraine. However, their day-to-day participation in the Etinde PSC as a non-operating minority partner has not been affected to date.

OPERATIONS REVIEW

Etinde Exploitation, Offshore Cameroon (25% equity interest)

During this 6 month operations period, New Age's technical staff completed the SNH agreed FY2022 technical work plan making several additional internal reports available to the JV partners. These built upon and finalised various outstanding economic and technical modelling issues as well as presenting a geo-technical risk and resources assessment of the IC discovery and several exploration targets to the west of the IM discovery. These were detailed in Bowleven's 30 June 2022 Operations Review, included within the previous annual report.

Since October/November 2022, New Age has scaled back its remaining operations to the maintenance of the Etinde project office in Cameroon and a small scale watching and management brief for a handful of its London based staff.

A draft FY 2023 Work Plan and Budget has been prepared on the basis of minimal technical activity, however this has yet to be approved. Expenditure is being approved on a quarter by quarter basis by the JV partners. All parties, including SNH, are aware that this interim budget will be replaced by Perenco once their transaction with New Age completes, unless terminated if it reaches its June 2023 long stop date.

During the second half of 2022, SNH completed a cost recovery expenditure audit of Etinde covering the periods from 2015 to 2020. As can be expected, SNH disallowed a percentage of the expenditure across that period, which moves from recoverable to non-recoverable under the PSC terms. This has been the subject of ongoing discussion with SNH by New Age, as Operator. At the current time, the JV partners and SNH remain in dispute regarding the PSC recoverability of $10 million of expenditure covering the period 2014 to 2020.

Volumetric Update

P50 (C2) net contingent resources to Bowleven on the current 25% licence interest are 61 mmboe following the Resource reassessment undertaken in late 2019. The next resource update is likely to be undertaken as part of the field development plan process to formerly re-categorise Etinde IM field Contingent Resources to Reserves in accordance with any field development plan produced at that point.

FINANCE REVIEW

The Group reports a loss of $1.0 million (H1 2021: loss of $1.2 million) for the six months ended 31 December 2022. 

The Group's current period G&A expense charge was $1.1 million (H1 2021: $1.3 million) which was somewhat lower than the equivalent period in the prior year, reflecting the impact of further cost saving measures. This includes $0.3 million of Etinde G&A costs (H1 2021: $0.3 million) charged by the Operator.

Finance income comprises interest and dividend income of $0.1 million (H1 2021: $0.1 million), foreign exchange loss of $0 million (H1 2021: loss $0.03 million) and a mark to market loss of $0.06 million (H1 2021: gain $0.02 million) arising from the revaluation of the Group's financial investment.

Capital expenditure cash flows during the 6 month period were $0.2 million (H1 2021: $0.3 million) all of which relates to Bowleven's share of the Etinde pe-development phase project expenditure recharged by the Operator.

At 31 December 2022, Bowleven had $0.2 million of cash and cash equivalents and no debt (H1 2021: $2.5 million and no debt). Bowleven owned $2.2 million of financial investments in preference shares (H1 2021: $2.5 million), which generates a reasonable financial return at relatively low investment risk. This investment is being liquidated in an orderly manner during 2023 and converted to cash to fund the Group's on-going operations. There will be a corresponding reduction in dividend income during 2023.

Under the terms of the Etinde farm-out transaction in March 2015, the Group is entitled to a $25 million payment from the JV partners, which is contingent on achieving Etinde FID. This is held as a contingent asset pending further clarity around Etinde FID project sanction.

At the completion of the 2021/22 financial reporting cycle, Bowleven's auditors (BDO LLP) raised the question of the likely audit fees for the FY 2022/23 cycle and the subsequent period. BDO proposed to charge a substantial increase in the base fee plus a significant additional sum to cover the expected cost of a change in audit process driven by changes to UK audit regulation. Whilst we fully understand the current dynamics in the regulated UK audit marketplace, we considered the overall proposed fee increase to be unwarranted. On this basis, Bowleven and BDO have agreed to part company and BDO has tendered its resignation. We are currently in discussions with a number of other major UK audit firms to replace BDO for the audit of the Group financial statements for the year ending 30 June 2023.

OUTLOOK

There are two significant short term events that will significantly influence the future of Bowleven and its participation in the Etinde development. These are as follows:-

1.   The completion of the transaction between New Age and Perenco; and

2.   A fundraising to provide additional capital to allow the Group to continue its operations.

During the remainder of 2023, if the EG option is pursued, the Group expects to continue to work alongside the other Etinde JV partners to undertake commercial discussions with Marathon Oil as operator of the Bioko Island facilities JV. Subject to obtaining approval for the EG development option from SNH, we expect to support bilateral discussions between the Governments of Cameroon and Equatorial Guinea alongside SNH, Marathon Oil and other interested parties of those countries. Once the legal and commercial development framework is agreed, we expect the project to proceed to FID and to raise investment finance from commercial debt finance providers, our shareholders and other potential equity investors to support the investment required in project development.

As current cash and liquid investment resources continue to decline through the combination of normal operating costs and continued low level development planning-related capital investment at Etinde, our safety margin is continuing to decrease. Having reviewed a number of possible FID, opex and capex scenarios (which are described further in note 2 to these interim financial statements), the Directors' cash flow forecasts and projections indicate a material risk that Bowleven will fully utilise its existing cash resources by the end of 2023. The Directors are therefore of the opinion that it is highly likely the Group will need to complete a fundraising in order to meet its ongoing working capital and committed capital expenditure requirements as the Etinde project progresses towards FID.

There remains a considerable number of regulatory and commercial uncertainties regarding aspects of the Etinde development together with reaching multi-stakeholder approval of the JV partners' preferred development option. Whilst we currently expect FID to occur by late 2024, this is reliant on many of the above considerations being resolved during 2023, including the transaction between New Age and Perenco completing. Even with a successful Bowleven fundraising taking place in 2023, there will continue to be a high financial risk for Bowleven if FID slips to 2025 or if there is a requirement for the Group to contribute to higher investment spending on Etinde than currently expected.

In addition, it remains possible that Bowleven will need to seek additional short-term financing to allow the Group's cash expenditure to bridge any gap to attaining FID and the receipt of the $25 million FID payment (in addition to the proposed fundraising plans discussed above). Additional funding requirements will depend on the circumstances at the time and the time taken to attain FID. Further details are provided in note 2 to these interim accounts.

PRINCIPAL RISKS AND UNCERTAINTIES

The ultimate development of the Etinde wet gas and light oil discoveries is likely to be technically and commercially dependent on the extent to which the JV will be able to fully utilise the volume of gas potentially produced by the onshore processing of the production of gas and liquids. This is the most significant controlling factor, which governs the project's NPV. The substantial associated risks include:

·    Oil price volatility,

·    Joint venture partner alignment,

·    Governmental approval of a revised field development plan,

·    The timing between SNH and the Government of Cameroon approving the field development plan, commercial and technical discussions in relation to the field development plan, the JV partners giving FID approval and the exhaustion of our current working capital funds,

·    Timing of the completion of the transaction between New Age and Perenco,

·    Raising finance for Bowleven to continue its operations and to finance its share of project expenditure,

·    Raising sufficient debt and equity finance by both Bowleven and our JV partners, following FID, to finance the initial cost of the development,

·    Receipt of the FID success payment from both of the JV partners, Lukoil and New Age, when it falls due,

·    Domestic market demand for natural gas and the ability to monetise this demand,

·    Access to project capital,

·    Commercial terms and government permission to export gas.

RESPONSIBILITY STATEMENT

The Directors confirm that to the best of their knowledge, the interim management report includes a fair review of the important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year.

Eli Chahin                                          Jack Arnoff

Chief Executive Officer                    Chairman

29 March 2023                                    29 March 2023

GROUP INCOME STATEMENTS

GROUP STATEMENTS OF COMPREHENSIVE INCOME

GROUP BALANCE SHEETS

GROUP CASH FLOW STATEMENT