(Reuters) - West Africa-focused explorer Bowleven Plc said British oil services company Petrofac Ltd will help it develop its Etinde Permit blocks, offshore Cameroon, and invest up to $500 million there.
Shares in Bowleven shot up almost 22 percent on the London Stock Exchange in early trading on Tuesday, and were among the top percentage gainers on the exchange.
Petrofac said it will provide engineering capability to Bowleven’s Cameroonian subsidiary Euroil to chalk up a Field Development Plan (FDP) for the first phase of development at Etinde, where Bowleven operates three shallow blocks.
“(The deal) should help alleviate funding concerns and validate Etinde project in the eyes of investors,” N+1 Singer analyst Jack Allardyce wrote in a note.
Euroil will pay Petrofac, which designs and builds oil and gas infrastructure for state-run firms in Turkmenistan, Abu Dhabi and Algeria, for its services before the FDP is approved.
Petrofac will subsequently execute the plan. Its investment will be part of Bowleven’s financial commitment to develop the asset.
Bowleven said a share of revenue from Etinde will go to Petrofac.
Shares in Bowleven were trading up 13 percent at 84.25 pence at 0842 GMT. They touched a high of 91.11 earlier in the session.
Petrofac shares were little changed at 1574.40 pence at 0844 GMT on the London Stock Exchange.