The Motley Fool

Why Shares In BowLeven PLC Spiked Today

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

oilSo what: Shares of Africa-focused oil and gas explorer Bowleven (LSE: BLVN) spiked by 12% to 45p during early trade this morning on the decision to sell-down its stake in a project off the coast of Cameroon. Russia’s second-largest oil producer, Lukoil, and NewAge (African Global Energy) will pay $250m (£147m) to acquire 50% of Bowleven’s offshore Etinde block.

Claim your FREE copy of The Motley Fool’s Bear Market Survival Guide.

Global stock markets may be reeling from the coronavirus, but you don’t have to face this down market alone. Help yourself to a FREE copy of The Motley Fool’s Bear Market Survival Guide and discover the five steps you can take right now to try and bolster your portfolio… including how you can aim to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now!

Now what: LukOil and NewAge will pay Bowleven $170m at completion of the deal, a $40m deferred cash payment on completion of appraisal drilling, and cover $40m in costs for two appraisal wells.

The chief executive of Bowleven, Kevin Hart, commented:

“Bowleven’s strategy is to focus on our core strengths of exploration and appraisal and enable the conversion of resources to reserves, ensuring that we realise value for shareholders at the appropriate time. This transaction endorses the value of Etinde while allowing us ongoing participation in its significant remaining potential.”

Now what: The significant cash component of the deal will strengthen Bowleven’s balance sheet and increase financial flexibility. As such, Bowleven is in a position to progress multiple exploration opportunities across its wider African portfolio, including planned and potential exploration drilling in Borneo, onshore Cameroon and Kenya. As the Etinde project moves forward Bowleven retains exposed to future upside potential.

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to read our presentation.

Mark does not own shares in BowLeven.