TIDMBPC
RNS Number : 5624A
Bahamas Petroleum Company PLC
30 September 2020
30 September 2020
Bahamas Petroleum Company plc
("BPC" or the "Company")
Perseverance #1 Operational Update
and exercise of options
In the lead-up to drilling of its first exploration well in The
Bahamas - Perseverance #1 - BPC, the Caribbean and Atlantic margin
focused oil and gas company, with exploration, production,
appraisal and development assets across the region, is pleased to
provide the following update in relation to preparation for well
operations. Perseverance #1, at 100% equity to BPC, is expected to
spud before Christmas 2020, and is targeting recoverable
prospective resources of 0.7 - 1.4 billion barrels of oil .
Highlights
-- Well control and associated insurance policies placed for Perseverance #1
-- Expansion of dedicated drilling team and facilities in Houston, Texas
-- Logistics planning and contracts progressed for a range of
necessary services and supplies, including entry into a Master
Service Agreement with Halliburton for provision of integrated well
services for the drilling of Perseverance #1
-- Updated conceptual development study and associated update of
potential full-field economics reaffirms economic robustness of the
project. In a successful development scenario of the estimated
Perseverance #1 P(50) resource, at US$40/bbl oil price, the project
would deliver an NPV(10) exceeding $2.5bn, and revenues of over
US$5 billion to the Government of The Bahamas
Simon Potter, Chief Executive Officer of BPC, said:
"Last week, we advised of an important milestone - the
nomination of the Stena IceMAX as our drillship facility for
Perseverance #1, and the anticipated spud date of that well, being
prior to Christmas 2020.
With the certainty around our forward schedule, we are now able
to push on with a wide range of important planning and logistics
tasks, such as completing our insurance placement and progressing a
range of necessary contracts for services and supplies. This
includes entering into a Master Service Agreement with Halliburton,
another important step as we progress towards drilling. The MSA
with Halliburton provides access to services on an integrated basis
from one of the world's pre-eminent oilfield services companies,
befitting of the flagship nature of this project.
Alongside this our drilling team has recommenced activity, and
whilst presently working remotely, office accommodation in Texas is
back up and running for when actual drilling operations are
underway, at which time the team can be physically co-located. I
look forward to updating shareholders on additional milestones in
the coming months."
Insurance Policy Placement
Under the terms of BPC's licences in The Bahamas, and in
accordance with global best practice standards, BPC is required to
secure an extensive suite of insurance policies to cover drilling
operations for Perseverance #1, including an appropriate well
control policy.
BPC is pleased to advise that it has now secured all required
insurances for the Perseverance #1 well drilling operations. The
insurance placement, arranged by Aon UK Ltd, follows an extensive
independent third-party review of BPC's well plan, design and risk
mitigation policies. The insurance placement has been with a panel
of insurers comprising of Lloyd's of London and International
Company markets (with all meeting local Bahamian insurance
regulations), all of which have a financial rating of "A" or higher
from Standard & Poor's. The policy utilises internationally
recognised wordings and complies with BPC's contractual
obligations.
Drilling Team and Facilities Expansion
Prior to the Covid-19 shut-down, BPC had established a drilling
field office in Houston Texas, and had assembled a core
Perseverance #1 drilling team with collectively nearly 300 years of
drilling and project support experience. All members of this team
were furloughed in March / April 2020, pending resumption of
drilling activities.
With the spud of Perseverance #1 now anticipated prior to
Christmas 2020, members of this team have returned to work, to
resume final operational planning in the run up to commencing
drilling. Activities are focused on ensuring continuous and safe
operations during this time of Covid-19 interruptions, logistics
planning to ensure the drilling vessel is fully and efficiently
supplied at the time of spudding and thereafter, and ensuring all
documentation, procedures, management systems and response plans
are accurate and up to date in light of the confirmed use of the
Stena IceMAX. Most of the drilling team is presently working
remotely, but a physical field office in Houston has reopened, such
that when drilling operations are underway the team can be
physically co-located.
Halliburton MSA
In August 2019, following extensive technical discussions and
mutual due diligence, BPC received proposals (including pricing)
for a range of integrated well-related services, for the
Perseverance #1 drilling campaign. At that time, and as previously
announced, BPC issued a notice of award to Haliburton for provision
of those integrated well services, as a precursor step to
finalizing a detailed contract as is customary in the industry.
As a result of the Covid-19 pandemic, in March 2020 drilling
operations were rescheduled, with the well now expected to spud
prior to Christmas 2020, as previously announced. Consistent with
that revised schedule BPC has now agreed terms for a Master
Services Agreement ("MSA") with Halliburton Overseas Limited (a
subsidiary of Halliburton Inc).
Pursuant to the MSA, Halliburton will provide a number of
services on an integrated basis for the drilling of Perseverance
#1. This includes provision of drilling fluids, directional
drilling (including measurement while drilling ("MWD") and logging
while drilling ("LWD") tools), cement and cementing services,
mudlogging, electric logging, liner hangers and casing accessories,
and review of the well control plans.
Other Significant Contracts & Activities
Prior to the Covid-19 shutdown, BPC had established a logistics
plan for personnel transit and crew change to and from the
drillship via S-92 Sikorsky helicopter with ERA Helicopters, and
had contracted for transport of consumables, equipment and
necessary supplies to the drillship via a range of supply boats
with Harvey Gulf International Marine. The Master Flight Services
and Master Time Charter agreements in respect of both of these
crucial logistics services have been reactivated, in accordance
with the revised drilling schedule, for implementation as
previously envisaged.
Physical inspection of the Stena IceMAX and all associated
equipment is scheduled to occur shortly, with the vessel location
currently in port in Las Palmas, in the Canary Islands, Spain. A
series of contracts for service providers in the region will be
awarded soon, to facilitate this process.
Conceptual Development Study and Update Potential Economics
In anticipation of drilling of Perseverance #1, BPC has
undertaken a study to update its view on potential full-field
development options, their potential costs in the current
environment, and the ultimate possible economic parameters of a
full-field development in the event of successful exploration and
thereafter appraisal drilling campaigns. The study was undertaken
with the assistance of an internationally recognized third-party
consultancy firm, and focused on (i) development options screening,
(ii) development option selection, definition and initial design,
and (iii) development capital and operating cost estimates.
Over the last 8 years of detailed geological and geophysical
study, BPC has refined both its view of the resource potential of
the B Structure, and in particular the BNorth segment targeted with
the drilling of Perseverance #1 (P(50) 0.77 billion barrels; upside
1 .44 billion barrels), along with the possible range of production
rates in the event of a successful development. These pre-drill
estimates, along with expected fluid characteristics, water depth
and distance from infrastructure have been combined to confirm the
preferred development concept, being the use of a subsea wells
system tied to a Floating Production Storage Offloading (FPSO)
vessel. This is a known technology operating safely up and down the
entire Atlantic margin on both sides of the ocean.
A preferred development concept for a field size of
approximately 0.7 billion barrels would involve an initial 16
wells, with Electric Submersible Pumps (ESPs), connected to subsea
wellheads, grouped in pods of 4 wells, then flowing through a
closed-circuit subsea flowline up individual risers to the FPSO.
Thereafter additional wells would be drilled over the field life in
similar configuration to maintain a production plateau and optimise
FPSO throughput.
In a successful development scenario of approximately 0.7
billion barrels (i.e., of the P(50) resource level at Perseverance
#1 only), and assuming a real US$40 oil price, the project remains
robustly economic with an NPV(10) exceeding US$2.5 billion. In such
a scenario, even at these relatively modest oil prices, an
aggregate revenue stream of over US$5 billion would flow to the
Government of The Bahamas in royalty income and other payments over
the life of the project.
In the event of a successful development being established at
the BNorth Perseverance #1 location, it is expected that the most
likely resource volumes identified for the remainder of the 70 -
80km long B Structure would be largely derisked. In such a scenario
it could thus be anticipated that one or more additional FPSO
developments would be required to effectively drain the expanded
resource base - for example one located at the northern end of the
structure, and the other at the southern end. With a similar wells
and subsea architecture configuration, a commensurate increase in
incremental economic worth to the project (and revenues to the
Government of The Bahamas) could be anticipated.
Exercise of Share Options
BPC has received notification for the exercise of share options
in respect of 5,429,206 ordinary shares of 0.002p each in the
capital of the Company by a former employee of Columbus Energy
Resources PLC. As previously announced, the exercise price in
connection with these share options is 0.002p per share.
Application has been made for the shares to be admitted to trading
on AIM ("Admission"), and Admission is expected to occur on or
about 2 October 2020. These shares will rank pari passu with the
ordinary shares of the Company in issue.
The Company's total issued share capital, following the issue of
the shares, will comprise of 3,419,807,846 ordinary shares. As the
Company does not hold any shares in Treasury, this figure may 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 to their interest in, the
share capital of the Company following Admission.
Regulatory Statements
In accordance with the AIM Note for Mining and Oil & Gas
Companies, BPC discloses that Nathan Rayner, the Company's
Operations Director, is the qualified person who has reviewed the
technical information contained in this document. He is a qualified
Petroleum Engineer, a member of the Society of Petroleum Engineers,
and a member of the Institution of Engineers Australia. He has over
20 years' experience in the oil and gas industry. Nathan Rayner
consents to the inclusion of the information in the form and
context in which it appears.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
For further information, please contact:
Bahamas Petroleum Company plc Tel: +44 (0) 1624
Simon Potter, Chief Executive Officer 647 882
Strand Hanson Limited - Nomad Tel: +44 (0) 20 7409
Rory Murphy / James Spinney / Jack Botros 3494
Shore Capital Stockbrokers Limited - Tel: +44 (0) 207 408
J oint Broker 4090
Jerry Keen / Toby Gibbs
Investec Bank Plc - J oint Broker Tel: +4 4 (0) 207
Chris Sim / Rahul Sharma 597 5970
CAMARCO Tel: +44 (0) 020 3757
Billy Clegg / James Crothers / Hugo Liddy 4980
Notes to editors
BPC is a Caribbean and Atlantic margin focused oil and gas
company, with a range of exploration, appraisal, development and
production assets and licences, located offshore in the waters of
The Bahamas and Uruguay, and onshore in Trinidad and Tobago, and
Suriname. BPC is currently on-track for drilling an initial
exploration well in The Bahamas, Perseverance #1, in late 2020 /
early 2021, with the well targeting recoverable P(50) prospective
oil resources of 0.77 billion barrels, with an upside of 1.44
billion barrels. In Trinidad and Tobago, BPC has five producing
fields, two appraisal / development projects and a prospective
exploration portfolio in the South West Peninsula. BPC's
exploration licence in Uruguay is highly prospective, with a
potential resource of 1 billion barrels of oil equivalent. In
Suriname, BPC has an onshore appraisal / development project.
BPC is listed on the AIM of the London Stock Exchange. www.bpcplc.com
END
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