8 November 2017

Bowleven plc ('Bowleven' or 'the Company')

Preliminary Results Announcement

Bowleven, the Africa focused oil and gas exploration group traded on AIM, today announces its preliminary results for the year ended 30 June 2017.

HIGHLIGHTS

Operational

Etinde, offshore Cameroon

·    Ongoing operator evaluation of development options, including scope for early-stage development plans that align with the Government's preferred offtake solutions.

·    Two carried appraisal well locations agreed with our partners targeting combined additional in-place volumes of up to 2 tcf of gas and associated liquid resource; drilling to progress once agreed by the Etinde JV partners.

Bomono, onshore Cameroon

·    Bomono development concept defined to access existing Cameroon infrastructure and potential monetisation route.

·    Prospect inventory compiled highlighting both Tertiary and Cretaceous prospectivity.

Other

·    Pre-March 2017, the Board signed an agreement to farm out 80% of the Group's interest in the Bomono Production Sharing contract to Victoria Oil & Gas Plc ("VOG"). The commercial terms and legal documentation remain the subject of negotiations owing to various stakeholder discussions.

·    Cameroon Government approval for the completion of this farm-out arrangement has not been received to date.

·    Impairment of Bomono Intangible exploration asset by $46 million, reflecting the impact of the VOG farm-in agreement on the asset valuation.

Corporate

·    Group cash balance at 30 June 2017 circa $86 million; no debt. No outstanding work programme commitments.

·    Under the Etinde transaction, access to further $40 million (net) carry for two appraisal wells (including testing) and $25 million at FID.

·    Completed organisational restructuring commensurate with our non operated portfolio giving rise to significant G&A cost reductions.  

OUTLOOK

Key objectives for the next 12 months include:

·    Ongoing focus maintaining the significant reduction in G&A into FY2018

·    Ensuring our capital is rigorously guarded to maximise value of every dollar invested for our shareholders

·    Working with our partners on Etinde development options and on the appraisal drilling programme in 2018

·    Leveraging partner relationships in de-risking Bomono.

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

"After a year of significant strategic change for Bowleven, I am confident that the Company is well placed to support the advancement of its existing asset base in Cameroon and has the potential to deliver shareholder value into 2018 and beyond.  

We enter the year with  a strong cash balance and a deferred consideration structure in place post completion of the Etinde farm-out transaction, no debt or outstanding work programme commitments. Additionally, we have scaled back the overhead base of the organisation, but retained a fit for purpose operating model from which to progress the monetisation of our assets.

On Etinde, we anticipate commencing a tightly managed appraisal drilling campaign, according to a comprehensive plan developed with our joint venture partners. In Bomono, we have maintained the farm-in option with Victoria Oil and Gas, which allows us to leverage their infrastructure, but as a non-operator. Key to our business model is partnering, whilst continuing to scrutinise work programme costs and exercise capital discipline wherever possible.

As an experienced and focused management team, we move forward from a position of financial strength, confident that we can meet future demands and protect our interests in Cameroon, whilst at the same time maximising value for all shareholders."

ENQUIRIES

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This announcement may include statements that are, or may be deemed to be "forward-looking statements".  These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "projects", "expects", "intends", "may", "will", "seeks" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions.  These forward-looking statements include all matters that are not historical facts.  They include statements regarding the Company's intentions, beliefs or current expectations concerning, amongst other things, the results of operations, financial conditions, liquidity, prospects, growth and strategies of the Company and its direct and indirect subsidiaries (the "Group") and the industry in which the Group operates.  By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.  Forward-looking statements are not guarantees of future performance.  The Group's actual results of operations, financial conditions and liquidity, and the development of the industry in which the Group operates, may differ materially from those suggested by the forward-looking statements contained in the announcement.  In addition, even if the Group's results of operations, financial conditions and liquidity, and the development of the industry in which the Group operates, are consistent with the forward-looking statements contained in the announcement, those results or developments may not be indicative of results or developments in subsequent periods.  In light of those risks, uncertainties and assumptions, the events described in the forward-looking statements in the announcement may not occur.  Other than in accordance with the Company's obligations under the AIM Rules for Companies, the Company undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.  All written and oral forward-looking statements attributable to the Company or to persons acting on the Company's behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in the announcement.

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 assets in Cameroon, whilst maintaining capital discipline and employing a rigorously selective approach to other value-enhancing opportunities.

Bowleven holds equity interests in three blocks in Cameroon, with one block located offshore in shallow water (operated by NewAge) and two onshore (operated by Bowleven), which are currently the subject of a farm-out transaction for 80 % interest.

Notes to Announcement: 

1.  The technical information in this release has been reviewed by David Clarkson, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies.  David Clarkson, Chief Operating Officer of Bowleven plc, is a Chartered Engineer and Fellow of the Institution of Mechanical Engineers with extensive oil and gas industry experience. 

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

CHAIRMAN'S REVIEW

2017 has been a transformative year for Bowleven, both in terms of its Board and its operating model.

Responding to Shareholders

Crown Ocean Capital P1 Limited ("Crown Ocean"), then and now a major shareholder of the Company, approached Eli Chahin and myself around the turn of the year. They shared their analysis of the Group's historic strategy, which had pursued expensive and unsuccessful exploration activities that resulted in significant value destruction to shareholders. They asked us if we would be prepared to be nominated as directors of Bowleven and we each agreed to stand for election as independent directors.

Board Changes

A General Meeting was requisitioned and, as shareholders now know, on 14 March 2017 Eli Chahin and I were elected Directors and the then Chief Executive Officer, Chief Financial Officer and three of the Non-Executive Directors were removed from office. David Clarkson, the Chief Operating Officer, was not the subject of a requisition to remove him and remained in post as COO.

On 30 March, it was announced that Billy Allan had resigned from the Board and I became Chairman of the Company. On 3 April it was announcement that Eli Chahin had been appointed as Chief Executive Officer and Joe Darby joined the board as Non-Executive Director, bringing extensive oil and gas experience. With David Clarkson, we were a newly constituted Board, determined to refocus the company's strategy on maximising value from our existing assets and reducing corporate expenses.  Subsequent discussions which we conducted with our institutional shareholders, confirmed that this strategy enjoys strong support throughout our shareholder base.

New Leadership

Six months have passed in which we have swiftly put this strategy into action. I would like to pay tribute to Eli Chahin for his bold and efficient leadership and to David Clarkson for his tireless efforts in support, which have allowed the Bowleven Group to achieve such a material transformation in such a short period of time.

Our overhead base has been substantially reduced with new exploration activity costs virtually eliminated.  We have relocated our head office from a large prestigious Edinburgh building to a small operation near London Bridge. This has resulted in a reduction in full time employees from 40 to fewer than ten, a workforce which has proven to be sufficient and effective for the Company's activities.  These were challenging steps for the individuals affected, and the Board would like to thank both current and former employees for their co-operation and patience during a difficult period. The Board is now able to look forward to executing its strategy from a sustainable footing. That is to maximise the value of both our  25% Etinde offshore interest (prior to SNH back-in)and our interest in Bomono, utilising the prospective arrangement with Victoria Oil & Gas plc, and dealing with any future demands for funding of these investments through careful deployment of the Company's $86 million cash balance.

Delivering Value

With Crown Ocean's representative, Matt McDonald, having recently joined the Board, we are completely aligned on our ambition to deliver value for all shareholders. We are looking forward to  the new operating model for the Group and the value of our Etinde and Bomono assets being recognised in the Bowleven share price, as progress towards monetisation of these fields materialises during 2018.

Chris Ashworth

Chairman

7 November 2017

CHIEF EXECUTIVE'S REVIEW

2017 was a year of significant change for Bowleven. Having substantially reduced the operating costs and maintained a strong balance sheet, the Company is well positioned to develop its assets.

As an incoming CEO, considerable effort was spent in engaging stakeholders to ensure the disruptive start to 2017 would result in a positive transformative change. Whilst the work is ongoing, Bowleven now has in place a fit-for-purpose organisation and business model that have the potential to deliver shareholder value into 2018 and beyond.

The Board has strongly supported the turnaround agenda, and within a short period, the Company right sized  its cost base, initiated a more disciplined approach towards capital allocation and retained the capacity to deliver meaningful progress in  its Etinde and Bomono assets. 

With a small central team we have been able to leverage our stakeholder relationships to navigate the complexity of these acreage developments with a view to delivering value from our assets.

This focus has delivered the positive progress made with Société Nationale des Hydrocarbures ("SNH") in Etinde, which has indicated support for the appraisal drilling programme  that supports an economically viable FLNG scheme. In Bomono, we have maintained the farm in option with Victoria Oil and Gas, which allows us to leverage their infrastructure, but as a non-operator. Key to our business model is partnering,  whilst continuing to scrutinise work programme costs and exercise capital discipline wherever possible.

Our capital discipline is underpinned by a strong financial position, which will remain a recurring theme into next year. With a strong cash balance and a deferred consideration structure in place post completion of the Etinde farm-out transaction, no debt or outstanding work programme commitments, the Group is well placed financially to progress its existing asset base.

The prolonged downturn in the industry is creating opportunities for Bowleven by providing the ability to access lower development costs for its assets and to continue to challenge cost efficiency in the investment cycle. With its robust financial position, Bowleven is in an ideal position to capitalise on these opportunities as they arise.  We remain determined and committed to challenging costs and proper capital allocation in operational delivery. The farm-in agreement with Victoria Oil & Gas Plc in respect of the Bomono licence area, has de-risked our funding obligations whilst retaining some long term ability to extract some shareholder value, notwithstanding the reduction in the Group's share of the asset. However, contractual terms of the farm-in as agreed by the previous Board, provide limited financial value for the 80 % of the asset transferred to VOG and efforts continue to mitigate the associated contingent liabilities.

Our discussions with VOG to date have suggested that there is limited prospects of negotiating more favourable commercial terms.  Should the farm-in arrangement with VOG not complete,  the Group will not be in a position to present the Government with an alternative development plan for the licence area in the remaining time before the existing agreement terminates in December 2018.

Furthermore, there is a risk that the Government will not approve a further extension to the Exploration Authorisation. In which case, any PEA would cease to be valid. Therefore, when considering these risks as a whole, the Board deems it unlikely that Government will seek to extend the existing licence any further at the current time without attaching additional work commitments.

Given the ongoing negotiations and fundamental uncertainties, the recoverable amount of the Bomono asset has been determined to be zero at the current time, resulting in an impairment charge of $45.6 million (2016: $61.0 million) in the Income Statement as detailed in the financial statements.

The focus on reducing G&A costs through organisational and work-process efficiencies was taken to a new level towards the end of the financial year. The ongoing costs savings will significantly reduce the Group's Corporate G&A footprint in both the UK and Cameroon. The Board is now focused on agreeing similar G&A efficiencies with the Operator of the Etinde asset. The outlook for Etinde is encouraging, and as the  proposed appraisal well drilling programme materializes, this has important implications for the Company.

OUTLOOK

Much progress has been made and the benefits of the relentless effort will be clearer into 2018. The task in hand is clear. We are determined to protect cash, maintain capital discipline and optimise the value and return from our assets.

We will continue to focus on a strategy that preserves our financial robustness within the context of developing our assets in a manner that manages the risks and creates value over the longer term. The potentially transformational Etinde appraisal drilling campaign during 2018 will enable us to further define the asset monetisation route for this potentially world class asset. The operating model is fit for purpose and I look forward to FY2018 and beyond as we grow shareholder value.

Eli Chahin

Chief Executive Officer

7 November 2017

Group Income Statement

for the year ended 30 June 2017

Statements of Comprehensive Income

for the year ended 30 June 2017

Group Balance Sheet

30 June 2017

Company Balance Sheet

30 June 2017

The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the individual parent undertaking Income Statement. The result for the Company for the year was a loss of $49,460,000 (2016: loss of $57,735,000).

Group Cash Flow Statement

for the year ended 30 June 2017                                                                              

Company Cash Flow Statement

for the year ended 30 June 2017