BowLeven faces fresh challenges after a leading analyst said he thinks the oil and gas firm is dead in the water, prompting former chief executive Philip Rhind to indicate he might bid for the firm that sacked him.

Edinburgh-based Bow-Leven was the subject of a sobering assessment in a research note from Richard Griffith of Evolution Securities, who highlighted the prospect that the firm would not be able to raise the funding it needs to progress.

Directors say BowLeven has developed a promising portfolio of assets in Cameroon and Gabon in west Africa. Last week they obtained shareholder clearance to issue up to 250 million shares to raise funds to develop them.

However, following the plunge in oil prices, shares in BowLeven have nosedived from 275p in August. Yesterday they closed down 4p at 33.5p. The company has $43m cash that is worth around 33p per share.

Griffith questioned BowLeven's ability to raise funds at a price that would be acceptable to shareholders amid considerable volatility in both the oil and gas and financial markets.

"BowLeven is at a financing crossroads that we believe on balance reduces the attractiveness of the shares. The environment for raising funds or farm-out deals couldn't be worse."

He said that issuing 250 million shares could reduce the price to 12p. He added that BowLeven might struggle to get an industry partner to buy into the acreage in a farm-out.

He continued: "Is it dead in the water? We suspect so. A bid for the whole company may be the best solution and while the price should be above the cash value this is a buyer's market."

Led by chief executive Kevin Hart, management has made clear its belief that BowLeven has a future as an independent.

Yesterday there were indications that a bid may yet emerge from someone who would make his presence felt in the boardroom: Philip Rhind. The south African oilman was sacked in February 2005 after saying he had a red button that he could press to destroy the firm if he was ousted.

He is now focusing on developing an oil and gas business in Angola, called Lussadisu Resources.

Yesterday he told The Herald: "Lussadisu Resources is actively considering a number of acquisition opportunities on the African continent. I may take another look over the company over the holidays but frankly if we acquired it there would be further changes, particularly at board level."

He added: "It is absolutely clear that the company should have concluded a couple of farm-out deals during the last two years. Current management have hung on too long and seen the price crash during the last few months."

Rhind, who still has shares in BowLeven, sided with the company's former executive chairman, Terry Heneaghan, in voting to oppose giving directors authority to issue up to 250 million shares at a general meeting last week. Heneaghan and Rhind clashed bitterly at the time of his dismissal.

A spokesman for Bow-Leven said: "At the general meeting, 93% of shareholders gave management the discretion to conduct a placing. That's indicative of shareholder support for management and strategy."

A sector watcher noted that BowLeven had enough cash to mothball its developments until oil and gas prices increased. He added that by selling stakes in acreage too cheaply, BowLeven could disadvantage shareholders.