TIDMBPC
RNS Number : 4940F
Bahamas Petroleum Company PLC
17 November 2020
17 November 2020
Bahamas Petroleum Company plc
("BPC" or the "Company")
Operational Update - 'one month out' to Perseverance #1
In the lead-up to the drilling of Perseverance #1, BPC's
obligation exploration well in The Bahamas, the Company is pleased
to provide the following update on preparations for well
operations. BPC is a Caribbean and Atlantic margin focused oil and
gas company, with exploration, production, appraisal and
development assets across the region.
Highlights
-- Perseverance #1 is on track to spud before the end of 2020:
o 100% equity to BPC, drilling of this potential basin-opening
well anticipated to take between 45 and 60 days, with 'tight-hole'
procedures in place
o targeting recoverable prospective resources of 0.7 billion
barrels of oil , with an upside of 1.44 billion barrels, solely for
the northern portion of the B structure
o in the event of success, Perseverance #1 would substantially
de-risk the total B structure, which extends for between 70 and 80
kms, has a mapped areal closure of over 400 km(2) , and has a 'best
estimate' aggregate recoverable resource potential in excess of 2.0
billion barrels
-- The Stena IceMAX, one of the most technically capable drill
ships in the world, has completed all necessary vessel and
equipment inspections, and is scheduled to leave dock in The Canary
Islands before the end of November 2020, heading to location in
preparation to drill the well
-- Specific transportation procedures, isolation mandates and
quarantine protocols are in place to minimise any risk of Covid-19
disruption to the operation, supplementing comprehensive, approved
environmental safety standards and procedures; the Bahamas Defence
Force and US Coastguard have been briefed on operating and safety
preparations
-- All material contracts and supply arrangements completed,
logistics and mobilisation plans finalised
-- Formal confirmation from the Government of The Bahamas of a
further extension of the 2(nd) exploration period of BPC's
licences, from mid-April 2021 to the end of June 2021, reflective
of the ongoing impacts of the Covid-19 force majeure
-- Within BPC, the outcome of the Perseverance #1 well is now
set within the strategic context of a portfolio business, with
production and cashflow generating assets and a growing opportunity
set of complementary assets across multiple jurisdictions
Commenting, Simon Potter, CEO of BPC, said:
"Many shareholders have been extremely patient and have stayed
the distance, as has the majority of the management team, and we
are now in the position to deliver the Perseverance #1 exploration
well in compliance with our long-held exploration licences in The
Bahamas. Perseverance #1 is a potentially basin-opening well, with
the kind of scale and associated value uplift exposure rarely
offered outside of oil majors.
At the same time, our activities, in the event of success, have
the capacity to be economically transformative for the nation of
The Bahamas, and could ultimately contribute billions of dollars in
royalty revenues to the national treasury, at a time when the dual
impact of recent hurricanes and the Covid-19 pandemic has been
especially hard-felt by most Bahamians. Many other nations in the
region such as USA, Mexico, Trinidad and Tobago, Suriname and
Guyana, have over the past decade safely and responsibly drilled
offshore wells, developed or continue to develop offshore
hydrocarbon resources, and reaped the economic benefits of an
established or a whole new industry. Moreover, these other nations
have been able to do so at the same time as seeing growth and
development of existing industry sectors, such as tourism.
BPC is fully committed to ensuring safe and responsible
operations, and has assembled an experienced team of drilling
personnel, supported by many of the world's largest and most
respected oil services contractors, with a collective track record
of drilling many thousands of wells safely, all around the globe.
We are especially pleased that one of the most modern, technically
capable drilling vessels in the world will soon leave port ahead of
drilling. In support of this, logistics plans to mobilise both
equipment and personnel safely to site have been finalised, funding
is in place, and we have completed a huge body of work to ensure
that best practices have been applied as our health and
environmental safety plans and protocols have been developed,
contracted, and approved.
I look forward to updating shareholders of our continued
progress - this is an exciting time for BPC . "
About Perseverance #1 Well
Perseverance #1 is an offshore oil exploration well , 100% owned
and operated by BPC, to be drilled starting in late 2020 at a
location in the far southern territorial waters of The Bahamas,
adjacent to the Cuba-Bahamas maritime border. The well site is
located within the Santaren Channel, a deep-water seaway that is
already a major oil transhipment thoroughfare, through which oil
super-tankers pass daily carrying millions of barrels of crude oil
to oil facilities in The Bahamas and beyond (The Bahamas is already
a significant player in the international oil industry, home to
some of the world's largest oil storage facilities). The
Perseverance #1 well site is located more than 90 miles from the
nearest inhabited Bahamian islands and over 40 miles away from the
nearest uninhabited Bahamian islands, yet less than 200 miles from
the infrastructure, services and customers of the world's largest
energy market (the US Gulf of Mexico).
The Perseverance #1 well is targeting the northern segment of
the B megastructure as previously identified by 3D seismic
analysis. This location has been chosen, based upon high resolution
3D seismic data, as the best balance of lowest technical risk,
geological conditions and recoverable volumes at the crestal point
on the northern segment of the very large B structure. The well
will be located in water approximately 520 metres deep, and will be
drilled to a target depth of 4,822 metres, but with a capability to
be able to reach 5,600 metres, affording the ability to evaluate
multiple reservoir horizons throughout the entire stratigraphic
column below the Tertiary cover. The ultimate decision on well
depth will depend on real-time drilling results and geological
information.
The best estimate prospective recoverable oil resource at the
Perseverance #1 location is 767 million barrels, with an upside of
1.444 billion barrels (assuming the same recovery factor). It is
anticipated that any discovery at this location has the potential
to extend into a larger portion of the overall B structure
extending to the south-east. In aggregate, the entire B structure
extends for approximately 75 kilometres along strike and
accommodates over 400 km(2) of mapped closure with the entire
structure having a combined 'best estimate' prospective resource of
in excess of 2.0 billion barrels, and gross column height of up to
1,000 meters.
In accordance with Bahamian law and the terms of BPC's licences,
as a precursor to drilling operations BPC was required to prepare
and submit a comprehensive Environmental Authorisation to the
Government of The Bahamas, inclusive of a detailed Environmental
Impact Assessment and Environmental Management Plan. This was
reviewed for the Government of The Bahamas by independent
third-party industry experts, and certified to be in compliance
with not only all applicable Bahamian laws and regulations, but
consistent with all applicable international standards, guidelines,
regulations and global best practice. Following that review, BPC's
proposed drilling program for Perseverance #1 was approved by the
Government of The Bahamas, and Environmental Authorisation was
granted. The approvals obtained relate specifically to the drilling
of Perseverance #1, such that in the event of success, drilling of
any subsequent wells in The Bahamas will be subject to a separate
and equally exhaustive approvals process.
Perseverance #1 will be drilled making use of the Stena IceMAX,
one of the most technically capable, advanced drill ships available
in the world. The rig is dynamically positioned, dual-derrick, has
an integrated Managed Pressure Drilling system on board and an
advanced well management and safety system, which will be deployed
for the duration of drilling. Befitting of the transformational,
flagship nature of this well, a number of leading international
oilfield companies will be providing equipment and specialist
technical services for various aspects of the drilling program,
including Halliburton, Schlumberger, BakerHughesGE and
Weatherford.
The drilling program for Perseverance #1 is expected to take
between 45-60 days, and will be undertaken on a 'tight-hole' basis
- an industry protocol (and one required by the Government of The
Bahamas) whereby real-time well information and drilling results
will generally be kept confidential until the conclusion of
drilling and testing procedures, and until any appropriate
notifications to Government representatives have been made. The
well has been designed specifically as an exploration well, with
the sole objective of establishing the presence of hydrocarbons
through a range of tests that will be conducted as the well is
drilled. Perseverance #1 has not been designed to ever operate as a
production well, such that at the conclusion of the drilling
program the well will be permanently sealed and then abandoned.
Operational Update
The Perseverance #1 well in is on track to spud before the end
of 2020 - that is, within approximately 6 weeks of the date of this
announcement. A separate and distinct operational management and
execution group within BPC is entirely focussed on the successful
delivery of this core company objective. Key operational
developments include:
1. Schedule
-- Stena Drilling, the provider of the IceMAX drill ship, has
issued formal notification to BPC of the intended operational start
date, being 15 December 2020. BPC anticipates that it will take 4-5
days from this start date for the rig to be provisioned, loaded,
and then transitioned to the drilling location for spud of the
well.
-- Bridging documentation necessary to the proposed drilling
campaign has been agreed between Stena Drilling and BPC.
Accordingly, the well plan is complete, and a mobilisation plan has
been agreed between all parties and is currently being enacted.
-- A 'Drill the Well on Paper' exercise is scheduled to take
place on 23 November 2020. This is an industry standard
pre-operations readiness exercise, and involves active
participation from representation of BPC, Stena Drilling, all major
contractors, and nominated advisers / observers from the Government
of The Bahamas.
2. Operational Readiness
-- The BPC drilling team is assembled with the capability of
operating from a single operational location in Houston, Texas,
USA, consistent with BPC's Covid-19 protocols. The core
professional team, remobilised from being stood down in March 2020
as a result of the Covid-19 pandemic, consists of 12 highly
experienced drilling professionals, with a collective experience of
having drilled over 100 comparable wells around the world safely
and responsibly, and with over 400 years of collective oil and gas
experience.
-- As noted, t he Stena IceMAX is equipped with a Managed
Pressure Drilling ("MPD") system, an advanced well management and
drilling safety system that represents the 'cutting-edge' of
drilling technology currently available. The MPD is operated by
Schlumberger, one of the world's pre-eminent oil services
companies, who will have specialist technicians and representatives
on board the IceMAX for the duration of drilling operations. All
relevant MPD preparatory work is complete, including requisite
inspections completed and service agreements put in place with
Schlumberger.
-- The logistics plan for Perseverance #1 has been completed,
with complex arrangements finalised for inspection services, supply
boats, helicopters and charter airplane services knitting, together
operating/shore bases in the Canary Islands, the UK, The Bahamas
and the USA. In parallel, a number of major supply contracts have
been finalised for fuel, wireline testing equipment, the remote
ocean survey vehicle, and purchase of all remaining tubulars
required for the drilling campaign.
-- Consistent with industry standards and as required pursuant
to Bahamian and internationally applicable laws, a range of safety
drills and inspections have been successfully conducted by BPC
staff, independent third-party inspectors and relevant
Government/Ministry representatives (both in person and remotely).
This includes completion of the rig inspection, helideck
inspection, third-party equipment inspection, and inspection of the
blow-out preventor ("BOP"), equipment and materials storage
etc.
-- As previously announced, BPC has placed an extensive suite of
insurance policies to cover drilling operations for Perseverance
#1, including an appropriate well control policy. This is as
required under the terms of BPC's licences in The Bahamas, and is
in accordance with global best practice standards. The insurance
placement, arranged by leading global insurance agent Aon UK Ltd,
followed an extensive independent third-party review of BPC's well
plan, design and risk mitigation policies. The insurance placement
is 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, including cover levels considerably in
excess of those stipulated as being required by the Government of
The Bahamas.
3. HSE&S
-- In recent months, BPC has undertaken an extensive body of
work, in conjunction with Stena Drilling and a number of BPC's key
contractors, to develop a Covid-19 mitigation plan. This plan is
now complete, defining the Covid-19 protocols (testing, isolation
and quarantine) that will be applied to the drilling campaign. The
agreed plan is in accordance with all international requirements,
and indeed is more stringent than current domestic requirements in
each of The Bahamas, USA and UK in relation to Covid-19.
-- Safety and environmental management systems have been
finalised and documented along with bridging documents into Stena
Drilling's systems and Safety Case. BPC's incident response systems
and procedure will be tested/verified prior to commencement of
drilling by OSRL, the Company's contracted response specialists,
through the organisation of an extensive desktop exercise
simulating an incident requiring an emergency response. This
exercise will include participation of BPC management and operating
staff, the rig operations team, domestic Bahamian authorities, and
multiple invited governmental agencies from across the region.
-- A contract with International SOS has been finalised to
provide a project specific Medical Evacuation Response Plan
("MERP") including a credentialled network of medical providers,
that complements and progresses the offshore MERP that is provided
for on the Stena IceMAX. The MERP includes access to a project
specific medical assistance via a 24/7 designated Assistance
Centre, out-patient and in-patient case management, and medical
assistance for workforce travelling to and from the various project
sites.
4. Formation Evaluation Plan
-- BPC's geotechnical risk mitigation strategy for the drilling
and evaluation of the Perseverance #1 well seeks to effectively
de-risk each of the pre-drill risk elements - top seal, reservoir
quality, oil quality and source rock presence/maturity. However, as
previously noted, the primary objective of the well is to establish
the presence and distribution of hydrocarbons throughout the
targeted reservoirs.
-- Accordingly, BPC has developed a comprehensive formation
evaluation plan that prioritises the measurement, logging and
acquisition programme to fit this core objective. Considerable
attention has been placed on the reliability, robustness and
configuration of the Measurement While Drilling (MWD) / Logging
While Drilling (LWD) tool. This includes redundancy/duplication in
the data gathering processes, and planning for tool assembly in all
potential hole sizes. High bandwidth recording will be maintained
downhole at all time to be retrieved at each trip/bit run to
provide real-time drilling results.
-- In the normal course of drilling, a full suite of logging and measurement while drilling logs (gamma-resistivity, sonic density and neutron) will be acquired, thereby providing formation data and a synthetic seismogram (sonic-density), both of which will be used to calibrate real time well data to identified seismic markers to correlate the reservoir targets and age each of the penetrated horizons. In all instances, formation evaluation while drilling (FEWD) tools will gather data on temperature, formation pressures, porosity (including fractures), oil and water saturations and total thickness of the potential hydrocarbon bearing reservoirs regardless of outcome - further augmented by a wide range of wireline logging and sampling should results while drilling be merited.
-- The comprehensive formation evaluation data retrieved from
Perseverance #1 can be utilised to update the pre-drill volumetric
estimates in a successful outcome scenario.
Environmental Oversight
In accordance with the requirements of BPC's licences, BPC has
formally notified the Bahamian Department of Environmental
Protection & Planning ("DEPP") as to the precise well location,
as well as the specific details and technical specifications in
respect of the Stena IceMAX drillship, and has obtained the DEPP's
consent to same. BPC is currently working with the Government of
The Bahamas' appointed third-party expert adviser, international
environmental consultants Black & Veatch, on a number of
technical items relating to the Perseverance #1 drilling
program.
As agreed with the Government of The Bahamas, one or more Black
& Veatch experts will be stationed onboard the Stena IceMAX
during drilling operations, and will oversee the entire drilling
program, with a specific mandate from the Government of The Bahamas
to observe and report on specific tasks, activities and operations,
including observing the baseline seafloor survey and testing of
drilling fluids to ensure compliance with mandated safety
requirements, oversight of environmental compliance activities
during drilling activities and thereafter during decommissioning
and abandonment activities, and monitoring drilling practices,
procedures, and activities, to assure compliance with the program
Environmental Impact Assessment (EIA) and Environmental Management
Plan (EMP).
Government
BPC has received formal confirmation from the Government of The
Bahamas that the Second exploration period of BPC's licences will
now extend beyond mid-April 2021, to expire at the end of June
2021, given the ongoing impact of the coronavirus pandemic force
majeure. That said, because the proposed drilling program is
anticipated to be between 45-60 days, BPC expects to complete all
well activities considerably prior to even the previous mid-April
2021 date.
Regulatory Statements
In accordance with the AIM Note for Mining and Oil & Gas
Companies, BPC discloses Randolph Hiscock, BPC Business Development
Director, is the qualified person who has reviewed the technical
information contained in this document. He has a Masters in geology
and is a member of the AAPG. He has over 35 years' experience in
the oil and gas industry. Randolph Hiscock 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 market of the London Stock Exchange. www.bpcplc.com
END
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