Bowleven shares drop as offer talks terminated

Oil explorer BowLeven said on Tuesday talks regarding a possible offer for the company had been terminated, sending its shares down 40 percent.

Bowleven said it is continuing to review all funding options, including the potential farmout of part of the group’s existing positions in Cameroon and Gabon and the raising of equity and debt finance.

The Edinburgh-based group added that it has sufficient funding for its work programme in 2009.

On March 27, Bowleven said an offer approach from an unnamed party had been cut to 100 pence per share from 150 pence proposed on March 18, but said it did not know if the revised offer was related to due diligence.

At 1153 GMT, the shares were down 31.7 pence at 44.01 pence, valuing the company at just under 40 million pounds ($59.68 million). Earlier they fell as low as 41.50 pence, just above the 41 pence close the day before offer talks were announced.

The AIM-listed explorer, which has no revenues, had about $29 million in cash at the end of December. “It’s back to drawing board re financing for the Cameroon exploration programme,” said Evolution Securities in a research note. “There is insufficient funds to drill the IF appraisal well which could cost anywhere between $25 million and $40 million.”

Bowleven had been looking for a partner for its operations in Cameroon and told Reuters last September it had not ruled out going to shareholders for fresh funding.

A number of oil deals have been announced in recent weeks as strong oil companies take advantage of crude prices below record highs and tough debt markets to acquire weaker rivals.

Premier Oil agreed to buy the North Sea unit of Canada’s troubled Oilexco Inc, and Centrica Plc is mulling a cash offer for Venture Production.

Oil prices are currently trading around $50 a barrel, almost $100 below the record prices reached last July. (Editing by Rupert Winchester) ($1=.6702 Pound)

Reuters.