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Kevin Hart’s performance as CEO of Bowleven

Kevin Hart became CEO of Bowleven in November 2006. Bowleven Chairman Billy Allan believes the company has “a high calibre management team”. Some commentators have publicly come out in favour of Hart remaining in charge. However, none of Hart’s allies have been able to cite much evidence to support their stance. Based on Hart’s track record it is little wonder why. Below are the “highlights” of Hart’s reign at Bowleven.

Since Hart took over as CEO of Bowleven this is what he has achieved:

  • Bowleven entered Gabon and exited Gabon.
  • Bowleven entered Kenya and exited Kenya.
  • Bowleven entered Zambia, and exited Zambia.
  • Bowleven has diluted equity holders nearly 10 fold
  • Bowleven raised $650m from shareholders and a further $250m through the Etinde farm-out (including the free carry and future FID payment), but the company is now worth the equivalent of only $108million.
  • Bowleven’s interest in Etinde fell from 100% (subject to Government Back-in) to a 20% interest.
  • Bowleven relinquished operatorship of Etinde, and therefore lead control on the development of Etinde.
  • Bowleven spent >$200m drilling on Blocks 5 & 6, including sole risking a well, and then relinquished the blocks.
  • At the 2013 Bowleven AGM, Hart responded to a question from the floor that he personally valued Bowleven’s stake in Etinde at $1bn. Hart ended up selling 66% of Bowleven’s share in Etinde (40% of the project) for $170m cash and $80m in credits. Hart was unable to defend his own valuation through this transaction.
  • Hart has repeatedly changed his forecasts for the drilling of the appraisal wells at Etinde, from indicating that these would commence in 2016 and then 2017 to now offering no forecast at all. This emphasises how little influence Bowleven has over the project.
  • Bowleven has been involved in repeated legal actions with current and former partners over failed drilling campaigns, including the sole risked well at Etinde and the recent Bomono fiasco.
  • Bowleven has spent >$100m on Bomono so far with no tangible results.
  • Bowleven has gone from seeking a 20-year Exploitation Authorisation for Bomono to accepting a recommendation from the State Oil company of a 2-year Provisional Exploitation Authorisation
  • Bowleven received cash of $185m during the period May 2015 to October 2016, but has only $95m remaining as at 31 December 2016. Hart has therefore spent $90m with nothing to show for it.
  • Bowleven claims to have screened 50 new venture opportunities over the last financial period, but failed to complete any deals.
  • Bowleven has lost the support of its largest shareholder, Crown Ocean, who has vetoed the share buy-back scheme and blocked the disapplication of pre-emption rights (meaning no share for share deals on new ventures without their support). This largest shareholder has now requisitioned an EGM seeking wholesale change at boardroom level.

 

Considering all this is it any wonder that Kevin Hart narrowly avoided being voted out of office at the 2016 AGM?

This is a question for shareholders to ponder over the coming weeks.