TIDMBPC
RNS Number : 0057I
Bahamas Petroleum Company PLC
14 June 2017
14 June 2017
Bahamas Petroleum Company plc ("BPC" or the "Company")
Placing to raise US$3.25 million (GBP2.6 million)
Bahamas Petroleum Company plc, the oil and gas exploration
company with a significant prospective resource in licences in The
Commonwealth of The Bahamas, is pleased to announce that it has
raised US$3.25 million (GBP2.6 million) before expenses through a
firm and conditional placing of 260,000,000 new ordinary shares of
0.002p each (the "Placing Shares") at a price of 1 pence each
("Placing Price") (the "Placing").
Highlights:
-- Placing to raise gross proceeds of US$3.25 million (GBP2.6
million) through the issue of 260,000,000 Placing Shares at a price
of 1p each.
-- Placing comprises firm placing of GBP1.1 million comprising
110,000,000 new ordinary shares (the "FirmPlacing") ("Firm Placing
Shares") and conditional placing of GBP1.5 million comprising of
150,000,000 new ordinary shares (the "Conditional Placing")
("Conditional Placing Shares").
-- Directors and certain Company executives have indicated an
interest in participating in the Placing on the same terms, such
participation to be advised once the Company has released its
Financial Statements to 31 December 2016 (expected to be released
on 15 June 2017) and is therefore out of the closed period for
trading. This participation, once confirmed, will increase the size
of the Conditional Placing.
-- Proceeds of the placing will be used to fund the Company as
it seeks to complete a farm-in or other financing sufficient to
enable drilling of an exploration well on the Company's southern
licences.
-- BPC is confident of being able to conclude a farm-in:
-- Oil market sentiment is improving, rig rates remain low and
there is renewed interest in frontier exploration plays by oil
industry majors - BPC believes the bottom of the cycle is
passed;
-- Bahamas regulatory framework now fully enacted, and BPC's
licences renewed and extended such that licence tenure, work
obligation and the overarching regulatory regime are clear;
-- Project fundamentals remain unchanged: potentially
multi-billion-barrel prospects, attractive fiscal terms, and
proximity to world's largest oil market with infrastructure and
services;
-- Commercial negotiations ongoing with several parties; given
improved industry sentiment others have re-entered the process.
-- Approximately 70% of funds raised with be expended to ensure
the Company's licences are maintained in good order pending and
through the farm-in process, for example, on licence fees and
direct in-country costs.
-- Director and executive fee deferral arrangements, as
previously announced, will continue to apply pending conclusion of
a farm-in or other financing sufficient for the drilling of an
initial exploration well on the Southern Licences, such that only a
relatively small percentage of the funds raised (less than 8%) will
be applied to Director / executive compensation.
-- Extraordinary General Meeting to be held on or about 14 July
2017 to approve Conditional Placing ("EGM"). Notice for the EGM
will be sent to shareholders in the near future.
Bill Schrader, Chairman of Bahamas Petroleum Company plc
commented:
"BPC has assets that are potentially world class in scale. Over
the past eight years the Company has substantially delineated and
de-risked its assets, both technically and commercially. The next
step is drilling.
In order to do this, BPC needs to source funding, and our
strategy remains to do so from an industry partner, via a farm-in.
BPC has made pleasing progress on this task, is in active
commercial negotiations with a number of parties, and the Board and
I remain confident that a farm-in will ultimately be concluded as
evidenced by our expressed interest in participating in the placing
once we are permitted to do so by the closed period trading
rules.
I would like to thank all our existing and new shareholders for
their continued support."
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2017
Announcement of the Placing 14 June
First Admission and commencement on or about
of dealings in the Firm Placing Shares 21 June
Latest time and date for receipt By 11 a.m. on
of Forms of Proxy for the Extraordinary 12 July
General Meeting
Extraordinary General Meeting 11 a.m. on 14
July
Second Admission, completion of the on or about
Placing and commencement of dealings 17 July
in the Conditional Placing Shares
An updated company presentation is also available on the
Company's website which can be downloaded using the link below:
http://www.bpcplc.com/media-centre/presentations-webcasts.aspx
Ends
For further information, please contact:
Bahamas Petroleum Company plc Tel: +44 (0)
Simon Potter, Chief Executive 1624 647 882
Officer
Strand Hanson Limited - Nomad Tel: +44 (0)
Rory Murphy / James Spinney 20 7409 3494
Shore Capital Stockbrokers Limited Tel: +44 (0)
- Broker 207 408 4090
Jerry Keen / Toby Gibbs
CAMARCO Tel: +44 (0)
Billy Clegg / James Crothers 20 3757 4983
Notes to editors:
Bahamas Petroleum Company is an oil and gas exploration company
with 100% owned offshore licences exclusively focused on the
Commonwealth of The Bahamas. The Company has significant
prospective resources, which have been de-risked through both
extensive 2D and 3D seismic. The four Southern Licences, with a
newly agreed well obligation date of April 2017, run until 2Q 2018
when the licences may be renewed a further two times. The Company
is intent on delivering safe and environmentally responsible
exploration.
www.bpcplc.com
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
1. Introduction
The Company is proposing to raise GBP2.6 million (before
expenses) through a firm and conditional placing of 260,000,000
Placing Shares at the Placing Price of 1pence. Further details of
the terms of the Placing are set out below under the heading
"Details of Placing" and "Use of proceeds".
The Firm Placing is conditional, inter alia, on First Admission
(which is expected to become effective with dealings in the Firm
Placing Shares to commence on or about 21 June 2017); and the
Conditional Placing is conditional, inter alia, on Second Admission
(which is expected to become effective with dealings in the
Conditional Placing Shares to commence on or about 17 July 2017).
The Placing has not been underwritten.
Shore Capital Stockbrokers Limited, ("Shore Capital"), has acted
as a broker for the Company for the purposes of the AIM Rules for
the Placing, and has been appointed as broker to the Company on an
ongoing basis.
2. Details of the Placing
The Placing will raise, in aggregate, GBP2.6 million (before
commissions and expenses) through the conditional placing of the
Placing Shares at a price of 1 pence per share with institutional
and other investors. Having considered the price at which the
Ordinary Shares are currently traded, feedback from investor
marketing and other factors, the Directors have resolved that the
Placing Price is appropriate.
The Firm Placing Shares (110,000,000 shares) are being placed
pursuant to existing authorities granted to the Directors by clause
6.4.4 of the Company's Articles of Association while the
Conditional Placing Shares (150,000,000 shares) are being placed
conditional, inter alia, on the passing of the relevant resolutions
at the EGM.
The Placing Shares in aggregate, when issued, will represent
approximately 17.5% per cent. of the Company's Enlarged Share
Capital immediately following Second Admission. The Placing Shares
will rank in full for all dividends with a record date on or after
the date of Admission and otherwise equally with the Ordinary
Shares in issue from the date of Admission.
Directors and certain Company executives have indicated an
interest in participating in the Placing on the same terms, such
participation to be advised once the Company has released its
Financial Statements to 31 December 2016 (expected to be released
on 15 June 2017) and is therefore out of the closed period for
trading. This participation, once confirmed, will increase the size
of the Conditional Placing accordingly.
The Firm Placing (which is not being underwritten) is
conditional, amongst other things, upon:
(a) the Placing Agreement becoming unconditional in all respects
(save for First Admission and Second Admission) and not having been
terminated in accordance with its terms prior to First Admission;
and
(b) Admission of the Firm Placing Shares becoming effective on
or before 8.00 am on 21 June 2017 or such later date as the Company
and Shore Capital may agree, being no later than 8.00 am on 31 July
2017.
The Conditional Placing (which is not being underwritten) is
conditional, amongst other things, upon:
(a) the Placing Agreement becoming unconditional in all respects
(save for Second Admission) and not having been terminated in
accordance with its terms prior to Admission;
(b) Shareholders passing the resolutions to be set out in a
circular granting the directors authority to
allot and issue relevant securities (including the Conditional Placing Shares); and
(c) Admission of the Conditional Placing Shares becoming
effective on or before 8.00 am on 17 July 2017 or such later date
as the Company and Shore Capital may agree, being no later than
8.00 am on 31 July 2017.
2.1. The Placing Agreement
Pursuant to the terms of a Placing Agreement entered into
between the Company and Shore Capital, Shore Capital has
conditionally agreed to use its reasonable endeavours, as agent for
the Company, to procure subscribers for the Placing Shares at the
Placing Price with certain institutional and other investors.
The Placing Agreement contains warranties from the Company in
favour of Shore Capital in relation to, inter alia, the accuracy of
the information in this announcement and other matters relating to
the Group and its business. In addition, the Company has agreed to
indemnify Shore Capital in relation to certain liabilities it may
incur in respect of the Placing. Shore Capital has the right to
terminate the Placing Agreement in certain circumstances prior to
Admission, in particular, in the event of a material breach of the
warranties given in the Placing Agreement, the failure of the
Company to comply in any material respect with its obligations
under the Placing Agreement, the occurrence of a force majeure
event which in Shore Capital's opinion may be material and adverse
to the Company or the Placing, or a material adverse change
affecting the financial position or business or prospects of the
Company. 15.6 million unlisted warrants to subscribe for new
Ordinary Shares at the Placing Price per share for a period of 24
months from Second Admission, are to be issued to Shore Capital as
part compensation for services provided under the Placing
Agreement.
2.2. Settlement and dealings
Application will be made to the London Stock Exchange for the
Firm Placing Shares to be admitted to trading on AIM. It is
expected that First Admission will become effective and that
dealings in the Firm Placing Shares will commence on or about 21
June 2017.
Application will be made to the London Stock Exchange for the
Conditional Placing Shares to be admitted to trading on AIM. It is
expected that Second Admission will become effective and that
dealings in the Conditional Placing Shares will commence on or
about 17 July 2017, subject to the passing of the relevant
resolutions at the EGM.
The Placing Shares being issued pursuant to the Placing will, on
Admission, rank in full for all dividends and other distributions
declared, made or paid on the Ordinary Shares after Admission and
will otherwise rank pari passu in all respects with the current
issued Ordinary Shares.
3. Use of proceeds
The Company intends to use the net proceeds of the Placing for
licence fees, project development, and general business expenses
while the Company seeks to complete a farm-in with an industry
partner or secure other financing sufficient to enable drilling of
an initial well on the Company's Southern Licences. The net
proceeds of the Placing will ensure that the Company has sufficient
working capital for at least the next 12 months, by which time the
Directors expect to have completed a farm-in or otherwise secured
the funding to enable drilling to occur on its Southern
Licences.
Approximately 70% of the funds raised will be expended on costs
and expenses considered necessary to ensure the Company and the
Southern Licences, which comprise the Company's primary asset, are
maintained in good order pending and through the farm-in process.
These costs and expenses include, inter alia, licence fees, direct
in-country costs and expenses (for example, the cost of maintaining
a physical office presence and data-room in The Bahamas), essential
staff costs (and in particular, local Bahamian staff), and other
necessary fees and expenses.
A further approximately 10% will be applied towards general
expenses considered necessary to see the Company through the
farm-in process, including the costs associated with maintaining
the Company's AIM listing (for example, AIM fees).
It is noted that the Company had previously announced that the
directors of the Company had agreed to defer 50% of their fees,
with such deferred fees to be repaid in shares conditional on
successful conclusion of a farm-in or other financing sufficient
for the drilling of an initial exploration well on the Southern
Licences. The Company had also previously announced that the CEO of
the Company had agreed to defer 90% of all salary on the same
basis. These arrangements will continue to apply such that only a
relatively small percentage of the funds raised (less than 8%) will
be applied to remuneration of the Chief Executive and Board (in the
absence of a farm-in).
4. The Company's Business and Assets
Overview
The Company currently has five exploration licences for oil
exploration covering approximately 16,000 km(2) (4 million acres)
in the territorial waters and maritime Exclusive Economic Zone of
The Bahamas. The five exploration licences, referred to as Bain,
Cooper, Donaldson, Eneas (these four licences together referred to
as the Southern Licences) and Miami are held through wholly-owned
subsidiaries of the Company, and were initially awarded on April
26, 2007 for a period of twelve years, with renewal nominally every
three years. Subsequently, the Company received a number of
extensions on the initial three-year term of each of the licences
such that the second term for the Southern Licences commenced on
the 8 June 2015.
On entering this second term for the Southern Licences the
Company was obliged to commence activity on an initial exploration
well with equipment capable of drilling to a depth of at least
18,000 feet by April 2017. In March 2017 this date was subsequently
extended by agreement with the Government of The Bahamas to April
2018, with all attendant licence obligations correspondingly
extended.
In respect of the Miami licence the Company remains in
discussion with the Government concerning the nature and extent of
any future obligations associated with entering a second term
should it so wish.
In addition to the Southern Licences, the Company made
applications with the Government initially for a further five
licences in the Cay Sal region of The Bahamas on-trend from the
existing acreage holdings but in 2015 consolidated these
applications from five to three. For these three revised
applications, approval is pending.
At the conclusion of the second term for the Southern Licences
they may be extended for two further exploration periods of up to
three years, on approval of The Bahamas Government, with an
obligation to commence the drilling of a new exploration well
essentially every two years following the initial exploration well.
At any time the Company may apply for a production lease in respect
of all or part of the area covered by the Southern Licences. Any
such production lease would give the Company the right to produce
petroleum from that production area for a term of 30 years.
After the Company was awarded its licences in 2007, the first
task was to collect all available historic geological and
geophysical data from previous oil exploration projects in the
country. As a result of a three-year international search and the
purchase of historical materials from oil companies, universities
and research institutions, the Company acquired extensive material
which included well cores, rock samples and thin sections, a large
amount of regional 2D seismic data (of varying quality), magnetic
and gravity data and well logs. Once acquired this data was
re-examined using modern technologies and interpretative techniques
the results of which provided the Company with the encouragement to
invest further in the acquisition of new information, particularly
seismic data, to better understand the detail of the petroleum
systems and ultimate scale potential within the Company's
licences.
In 2010 and 2011 the Company undertook the first modern seismic
survey in the southern Bahamas since the 1980s. The results of this
2D seismic acquisition confirmed the presence of several large
structures and provided the basis for an independent Competent
Person's Report ("CPR") completed by Ryder Scott and released in
July 2011. The CPR report provided an assessment of the hydrocarbon
potential in the Bain, Cooper and Donaldson licensed areas. The key
findings of the CPR report were the existence of multiple
structures over these areas with considerable unrisked recoverable
prospective resources of oil at a number of different reservoir
horizons.
Subsequently the Company completed a 3D seismic survey in 2011
of 3,076 km(2) within the Southern Licence area using the latest
BroadSeis technology. The results of this 3D seismic survey not
only better defined the prospective structures mapped on the 2D
seismic survey, confirming that The Bahamas has petroleum potential
within multiple, very large potential prospects, but also provided
the data necessary to be able to design a well with the best chance
of technical success at a reasonable cost estimate whilst being
optimised from a safety perspective.
Since 2012, the Company has undertaken the FEED phase of the
project to construct a number of well plan options, including
various reviews of the previously drilled wells and subsequent
updates taking into account changing global rig rates and
conditions and providing a range of locations for the drilling of
an exploration well to a depth of up to approximately 22,500 feet,
which could take up to 120 days to drill and log.
Hitherto, a prerequisite for any drilling campaign has been the
adoption of new safety and environmental regulations by The Bahamas
Government. Such modernised and strengthened regulations were,
following a three and a half year process, finally promulgated in
July 2016, following enactment of updated Petroleum Legislation in
March of the same year. These regulations for the first time
include the concept of Environmental Authorisation as a part of the
commencement of well activities which require the submission of
both an Environmental Impact Assessment ("EIA") and an
Environmental Management Plan ("EMP").
Accordingly, the Company has already submitted an EIA to the
Bahamas Environment, Science and Technology Commission. The report
determines the most likely impacts any exploration activities may
have on the environment within the country and seeks to illustrate
mitigating actions the Company could take. The Company has also
sought to submit its EMP, which includes amongst other things an
H(2) S plan, an Oil Spill Contingency Plan and an Emergency
Response Plan, incorporating worst case discharge results, to The
Bahamas Government and awaits its direction. The final preparation
of the EMP document relies on site-specific and rig-specific data
and will therefore be completed when The Bahamas Government mandate
is received and a rig is identified.
The current proposed location of the first exploration well is
in the Cooper - Donaldson licensed area, approximately 80 miles
from Andros Island and 25 miles from the nearest Cuban islands.
Ultimately the final well cost is highly dependent on spread rate,
which includes rig rate and all support costs, but given recent
developments in the global rig market is anticipated to be in the
range of $60 million to $80 million. If commercial quantities are
indicated from the exploratory well then the Company would proceed
to the appraisal drilling phase thereafter.
Funding
The Company has been engaged in an active process to secure the
financing required to undertake drilling on the Company's highly
prospective Southern Licences. This process is ongoing.
It has been and remains the Company's strategy to secure such
financing via a "farm-in", whereby another entity (ideally, but not
necessarily, a major or large independent international oil and gas
company) will acquire an interest in the Southern Licences, and in
exchange will pay for all or a substantial part of the cost of
drilling, and also reimburse the Company a proportion of the past
costs incurred by the Company on those Southern Licences. This is a
fairly typical structure for financing in the oil and gas
industry.
A considerable number of suitable partners have engaged with the
Company on the farm-out process, including undertaking technical
and commercial due diligence and entering into negotiations. On
this basis, the Company had hoped to have secured an acceptable
farm-in with a suitable partner by this stage. However, the process
of securing a farm-in partner has been hampered by a number of
factors, and has thus taken much longer than anticipated. These
factors have included the substantial reduction in the oil price
during 2016, which resulted in a freeze on or slow-down in
consideration of new business opportunities in many large oil
companies. This also included the longer than anticipated time that
it took to secure renewal of the Company's licences, and the longer
than anticipated period of time taken for the adoption and
enactment of new petroleum laws and regulations in The Bahamas.
More recently, the Company's view is that there has been a
noticeable improvement in general oil industry sentiment: the oil
price has appeared to stabilize, and recent market activity
suggests that major oil companies are more actively evaluating and
investing in exploration projects than they have in the past
several years. As such, the Company believes the industry has
passed the bottom of the cycle. At the same time, there is now
certainty in relation to a number of "above ground" issues specific
to the Company and its assets: the Company's licences have been
renewed and extended such that timing and work obligations are
clear, and the overarching legislative framework in The Bahamas is
now fully in place and enacted. And the fundamentals of the
Company's project have not changed: potentially
multi-billion-barrel prospects, attractive fiscal terms, and
proximity to the world's largest oil market with infrastructure and
services.
The Company thus remains committed to the strategy of seeking a
farm-in, and remains confident of eventual success. Discussions are
continuing with a number of potential farm-in partners or
investors, and in view of the general improvement in market
conditions others have recently been seeking to re-engage in the
process.
The purpose of the Placing is therefore to enable the Company
additional time and financial capacity to successfully complete the
farm-in process. If the Placing does not occur, the Company's cash
resources are such that there is a very real prospect of the
Company exhausting its available funding prior to a farm-in being
completed.
The Company also considers that its negotiating position in
potential farm-in discussions will be strengthened by having
additional capital and a deeper shareholder base.
It is noted that despite the Company's confidence in this
regard, no assurance can be provided that a farm-in or other
financing will be concluded, or on what terms, or in what
timeframe.
5. Extraordinary General Meeting, Shareholder Circular & Notice of Meeting
The EGM will be held at 11am on 14 July 2017 the Company's
registered office at IOMA House, Hope Street, Douglas, Isle of Man,
IM1 1AP. The purpose of the EGM is to consider and, if thought fit,
to pass the resolutions necessary to authorise and carry out the
Conditional Placing.
A circular containing a notice of extraordinary general meeting
will be sent to Shareholders shortly. Shareholders should read the
full text of the resolutions contained in the Notice of Meeting in
the Circular. Copies of the Circular & Notice of Meeting will
be available for inspection at the Company's registered office.
6. Application for admission
Application will be made to the London Stock Exchange for the
Firm Placing Shares to be admitted to trading on AIM. It is
expected that this admission will become effective and that
dealings in the Firm Placing Shares will commence on or about 21
June 2017 ("First Admission").
Application will be made to the London Stock Exchange for the
Conditional Placing Shares to be admitted to trading on AIM. It is
expected that this second admission will become effective and that
dealings in the Conditional Placing Shares will commence on or
about 17 July 2017 subject to the passing of the appropriate
resolutions at the EGM ("Second Admission").
7. Total voting rights
Following the First Admission but before the Second Admission,
the Company's issued share capital will consist of 1,340,479,096
ordinary shares of 0.002p each ("Ordinary Shares"), with each
Ordinary Share carrying the right to one vote. The Company does not
hold any Ordinary Shares in treasury. This figure of 1,340,479,096
Ordinary Shares may therefore be used by shareholders in the
Company, between the dates of First Admission and Second Admission,
as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a
change in their interest in, the share capital of the Company under
the FCA's Disclosure Guidance and Transparency Rules ("DTRs").
Following the Second Admission, the Company's issued share
capital will consist of 1,490,479,096 Ordinary Shares, with each
Ordinary Share carrying the right to one vote. The Company does not
hold any Ordinary Shares in treasury. This figure of 1,490,479,096
Ordinary Shares may therefore be used by shareholders in the
Company as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a
change in their interest in, the share capital of the Company under
the DTRs. As noted, the Conditional Placing may increase in size
once Directors and Company executive participation is advised.
Updated issued share capital numbers will be provided
accordingly.
8. Recommendation
The Directors consider the Placing to be in the best interests
of the Company and its Shareholders as a whole and accordingly
unanimously recommend Shareholders to vote in favour of the
resolutions to be proposed at the Extraordinary General Meeting as
they intend to do in respect of their beneficial holdings.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEMMGMVZFNGNZZ
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