A case in point is the ousting of the board of small cap Africa-focused oil and gas exploration group Bowleven (BLVN:30.75p) by activist shareholder Crown Ocean Capital, a Monaco-based private investment vehicle. The liklihood of a hefty capital return to shareholders is one of the reasons why the shares are up by more than 60 per cent since I first advised buying at just under 19p in my 2016 Bargain Shares Portfolio. In fact, I was so convinced of the likelihood of the large share price discount to book value to narrow further that I included the shares in this year's portfolio too at just shy of 29p. Interestingly, since I last advised buying ('Bargain shares on a tear', 3 Apr 2017), Crown Ocean Capital raised its stake from 22 per cent to 25 per cent. The new board has also issued an important corporate update, and one well worth flagging.
The key points to note are that in line with the new strategy of turning Bowleven into a holding company that does not expect to pursue any new exploration activity, UK headcount is being slashed from 18 to five employees, contractors will be used for any additional support needed to ensure a proper stewardship over the company's Etinde and Bomono assets in Cameroon, and headcount and costs in those operations will be streamlined. However, Bowleven will still retain the requisite technical capacity required to enable it to meet contractual obligations under the terms of the Etinde joint venture and to pursue the most efficient route to maximise value in relation to both Etinde and Bomono. The net result of which is that monthly overheads will be slashed to around $350,000 in the second half of this year, albeit at a one-off cost in the region of $3m-$4m.