Following a number of leadership changes led by an activist shareholder, Bowleven, the Cameroon focused oil and gas group traded on AIM, will reduce its headcount after deciding there will be no new exploration activity at this time.
To remind, Bowleven’s shareholders at a general meeting in March voted in favor of certain resolutions thereby ousting most of the company’s board and naming replacements selected by the Monaco-based shareholder Crown Ocean Capital (COC).
Shortly after the general meeting, a strategic review was launched to consider all options open to the company, with a view to maximizing value for all shareholders.
The strategic review was completed with the company announcing that the board would remain focused on maximizing value for its shareholders and was committed to the rationalization of the cost base, alongside the preservation and enhancement of Bowleven’s existing assets. The board also confirmed that it did not expect to pursue any new exploration activity at the current time.
The board has initially focused on the implementation of a number of efficiency programs, which include a reduction in head office staff to a level commensurate with the future strategy of the organization as a holding company that does not expect to pursue any new exploration activity. A process to reduce overall U.K. headcount from 18 to 5 full time employees is underway. The use of contractors will underpin any additional support needed to maintain a proper stewardship over the Etinde and Bomono assets in Cameroon.
The company also added that streamlining Cameroon headcount and costs has also started. The company will continue to maintain an appropriate presence in Cameroon to preserve and enhance value from its offshore Etinde and onshore Bomono assets. The board intends to retain technical capacity and institutional knowledge as required so as to enable Bowleven to meet its contractual obligations under the terms of the joint venture and to pursue the most efficient route to value maximization in relation to both Etinde and Bomono, in due course.
“We are confident that these changes will allow the company to move forward on a more appropriate cost base…”
As a result of these changes, the board anticipates that, once staff reductions and other cost rationalizations efforts are complete, the monthly group G&A costs will be reduced to approximately $0.35 million per month in the second half of 2017, compared to monthly group G&A costs of $0.6 million per month in the six months to December 2016. In order to achieve these material cost reductions, the group expects to incur one off costs in the region of $3-4 million during 2017.
The Etinde JV continues to engage with La Société Nationale des Hydrocarbures du Cameroun (SNH) and the Cameroon authorities through the JV Operator, New Age (African Global Energy) Limited, to agree the plans for the development of the Etinde resources. The JV Operator has submitted a request to SNH to convene an Operating Committee Meeting to agree the forward plan.
Once the development options as to gas monetization of both the Etinde and Bomono assets have been determined and costed, the board anticipates being in a position to determine the cash requirements of the business and whether there are surplus assets that can be returned to shareholders.
Eli Chahin, who had been appointed as acting chief executive on March 30, 2017, has since been confirmed as chief executive on a full time basis.
Chahin said: “We are confident that these changes will allow the company to move forward on a more appropriate cost base, whilst retaining the necessary skills, relationships and capacity to progress a route to shareholder value at both Etinde and Bomono. We move forward from a position of strength, with a robust balance sheet, strict capital discipline and an experienced and focused core management team.”