Africa-focused oil and gas exploration group Bowleven has seen its shares plunge Wednesday after it told investors that current costs to develop the Etinde oil and gas project in offshore Cameroon could be more expensive than anticipated.
The company also warned that it may need to raise further funds.
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Bowleven and its JV partners said that the project would not deliver sufficient return on investment under the current market conditions.
Commercial and regulatory issues have yet to be resolved in conjunction with the uncertainty regarding the optimum development concept, with a decision expected in 2022.
However, any delays in the decision will create a high financial risk for Bowleven and it may need to raise additional funds if a decision is not taken quickly enough.
“At the current time, the Board considers that existing funds should be sufficient to take the business to FID in 2022, so long as the JV partners are not required to make further material investments in development planning prior to FID. At FID, we will receive a payment of $25 million from the JV partners.” Bowlevem said.
They continued: “The company may need to raise additional short-term finance to bridge the gap to attaining FID and the receipt of the $25 million payment.”
In addition, Bowleven also reported a pretax loss of £2 million for the year ended 30 June 2021.
At the time of writing, its shares are down 25% at 3p.
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