I was doing my usual rounds this morning and came across this excellent post by “Fundfemale” on the “iii” bulletin boards. She kindly gave me permission to post it. It really summarises nicely why I have confidence in BLVN. – Have a read…

“Straight off the blocks with recognition and accolades, Telegraph recommendation for 2011, Barclays Capital to overweight, broker upgrades, on the list of Nomura most likely companies to be taken over…

Current market cap 713.57m GBP c 220mUS/137GBP cash = approx enterprise value so an enterprise value of just 576.57mGBP.

NB.We need to be careful, ladies and gentlemen(!), let us support our share price – we would not want someone buying them ALL up at that price, would we??!

So why is our share price so neurotic? Not out of touch with reality, but is excessively anxious and tense for sure…

Fox Davies articulated a guess re. our last rns: “This is a preliminary announcement and when the evaluation work has been completed down to the current TD, the Company intends to deepen the well to test additional objectives that have been identified and to ascertain the presence of potentially deeper hydrocarbon reservoirs, IN PARTICULAR OIL.

Bowleven has provided a revised resources estimate for the Lower Omnicron, with a mean estimate up from 190mmbbl to 217mmbbl but has not provided any resources estimate for the new discoveries in light of the evaluation work that remains to be done.

The stock price reaction this morning accounts for the fact that the portion of the Epsilon complex that has been penetrated has confirmed gas/condensate rather than oil and the uncertainty regarding the potential size of the discovery. We believe that (i) even in that case a higher share price can be justified and (ii) the Company is well funded to pursue similar exploration targets in the permit”.

Recommendation BUY – price target 450p – but a higher share price target can be justified one the potential of the cretaceous discovery is clearer.
Unrisked potential previously quoted by FD c. 1800p.

The Etinde story so far:

A number of discoveries made in MLHP-7, first of all IE by Total in 1981 followed by a number of successful wells by Bowleven subsequently.

String of exploration successes on the IE-1, ID-1 and IF-1 wells. A few years ago, BLVN shares reached above 400p just before the 2008 financial meltdown and performed in-line with the AIM Oil&Gas index.

IE-3 2010:
Measured flow rates per interval ranged from 845 to 11,778 boepd with a cumulative maximum rate of 14,576 bpd of liquids and in excess of 50 mmscfd of gas (total 22,909 boepd). Strong development/appraisal partner in Vitol.

Sapele-1 (MLHP-5):

Deep Omicron Bowleven’s (as operator) in-place volumetrics on a P90 to P10 range have been revised upwards to 65 to 430 mmbbls (updated mean 217 mmbbls). These numbers are subject to ongoing revision following further evaluation and additional appraisal drilling. Due to the stratigraphic nature of the Omicron discoveries, further appraisal will be required and is being planned.

Cross-cut event: Gross hydrocarbon interval of approximately 18 metres provisional net pay is estimated to be approximately 4 metres.

Epsilon Complex: Discovery. The well has intersected a log evaluated gross hydrocarbon interval of approximately 9 metres in moderate to good quality reservoir sands. The Cretaceous net pay encountered TO DATE is estimated to be approximately 4 metres.

We are in the process of drilling into unknown cretaceous Doula Basin potential right now. News of “the new” Sapele-1 TD should be in a few days/weeks.

Quote from last RNS:
“A principal objective of the Sapele-1 well was to prove the concept of the Cretaceous play offshore Douala Basin. The well has now confirmed the presence of reservoir a hydrocarbons in the Cretaceous, offshore Douala Basin, and as a result extends the Cretaceous play fairway significantly offshore”.

I have no doubt that the Etinde Permit IS ALREADY (and will become more of) a very DESIRABLE piece of Hydro-carbon real estate.

As exciting as all this waiting for more news on Sapele-1 is; EQUALLY EXCITING is the forward planning of exploration and appraisal. With 220mUS to spend and balancing prudent appraisal with outrageous wildcatting – we could afford and have time for maybe, 4 or 5 wells on in 2010. Who knows where that will take us.

Cheer up Bowleven, be confident.

Maybe Bowleven just needs a bit of retail therapy, a nice new of pair of rigs maybe ??

Very happily invested here, FF”


Please remember that although I will do my best, I cannot guarantee that any info given on this site is accurate and my opinions should not be taken as advice.

Next weekly update will be on Wednesday – Good luck all. As usual, keen to hear your thoughts – Use the comments system or email me at websitemail AT dailytrading.co.uk

DT.