African oil explorer Bowleven (BLVN:AIM) is on the march as it achieves a significant milestone in the development of its Etinde gas and condensate project offshore Cameroon.

The shares rise 11.6% to 37.7p with a formal resolution confirming government support for the Etinde Exploitation Authorisation application now signed. A formal decree from president Paul Biya is expected to be released before the company moves towards its full Exploitation Authorisation at the shallow water site, which will give development and exploitation rights over the block for an initial period of 20 years.

Earlier this year the company was dogged by doubts over its ability to bring Etinde into production and prior to today's update Westhouse Securities estimates the market was attributing a 16% probability the 350 million barrel of oil equivalent resource would be successfully developed.

The plan is to commercialise the first phase of the project through the sale of gas to a government-sponsored gas fertiliser plant which is to be built and operated by German industrial services firm Ferrostaal.

Bowleven has a strategic alliance with Petrofac (PFC) on Etinde, whereby Petrofac will fund up to $500 million of the development cost of this first phase. At present Bowleven has 60% equity in the project with private operator NewAge holding 20% and the state firm SNH holding the remainder.

Westhouse reiterates its 'buy' rating and 95p price target and comments: 'We think this is the first key step that will trigger a significant de-risking of the Etinde project. Given that the resource has been discovered, that a development plan is in place and that Bowleven is getting closer to a declaration of FID (final investment decision), we argue that the market should be attributing a much higher probability of successful development (30-40%).'

Issue Date: 03 Jun 2014