TIDMBPC
RNS Number : 2483T
Bahamas Petroleum Company PLC
24 March 2021
24 March 2021
Bahamas Petroleum Company plc
("BPC" or the "Company")
High-Impact Exploration Update
BPC, the Caribbean and Atlantic margin focused oil and gas
company, with production, appraisal, development and onshore and
offshore exploration assets across the region, provides the
following update on its high-impact exploration assets in The
Bahamas and Uruguay.
Highlights
-- Since the completion of the drilling of Perseverance #1 , the
Company has had discussions with industry counterparties in
relation to a potential farm-out of its licences in The Bahamas,
and is working to formalise an entirely new farm-out process.
Consequently, the Company intends to renew the four southern
licences in The Bahamas into a third, three year "drill or drop"
exploration period
-- Final Perseverance #1 drilling cost expected to be approx.
$45 million compared to pre-drill estimate of approx. $35 million;
additional costs of approx. $10 million incurred as a result of
heightened Covid-19 procedures (approx. $3 million) and
side-tracking operations related to mechanical debris in the well
(approx. $7 million)
-- Formal contract execution for Off -1 block in Uruguay
expected 2Q 2021; independent technical work undertaken by
Uruguayan national oil company ANCAP indicates a P(50) estimated
ultimate recovery volume (EUR) of 1.34 billion barrels at the
Lenteja prospect
-- Cash on hand of approx. $13 million (as at 1 March 2021,
including unconditionally committed convertible notes); anticipated
additional capital requirement in 2021/22 across the business of
$25 - $40 million, the Company expects to more than cover the
difference from various potential funding sources
The Bahamas
Until mid-2020, the Company's licences in The Bahamas were its
sole asset and therefore the drilling of an initial exploration
well was the Company's dominant strategic focus. Consistent with
this focus, the Company secured approximately $50 million of
funding since early 2019 (as detailed in the Company's
announcements over the period) which enabled the Company to retain
operatorship and 100% equity in its licences, as well as deliver
the Perseverance #1 well in the face of considerable challenges -
including a year's delay and significant disruption caused by the
Covid-19 pandemic, a collapse in oil prices, and an ultimately
unsuccessful last-minute legal action by environmental activists to
halt drilling. The Perseverance well was drilled safely and without
environmental incident, in the period 20 December 2020 to 6
February 2021.
The Perseverance #1 well did not result in a commercial
discovery. The Company is, however, encouraged that the results
from the Perseverance #1 well indicated the presence of
hydrocarbons. Technical results from the drilling campaign support
the view that other closures, structures and both shallower
stratigraphic and deeper structural plays in the Company's licence
areas continue to provide significant prospectivity with multiple
viable drillable prospects of scale which merit additional study
and exploration activity.
The newly acquired technical data from Perseverance #1 will
facilitate valuable updates and refinements to basin modelling,
biostratigraphy and geochemistry. In particular, the significance
of the new geothermal gradient data placing the oil maturation
window deeper stratigraphically has critical implications for the
deeper Jurassic play that produces oil in the Eastern Gulf of
Mexico from an analogous play type (and which is the current focus
for several companies actively exploring in the region).
Additionally, data derived from Perseverance #1 provides a
modern-day well tie to recalibrate existing 3D mapping of the
Aptian intervals untested in closures and structures elsewhere in
the licence areas. The primary focus of the ongoing post-well
evaluation work is on the deeper Jurassic pre-salt clastic,
structural play and the extent to which potential multiple-target
drilling locations can be optimised to access and evaluate untested
shallower closures whilst testing this primary, deeper play.
Given these technical results, since announcing the results of
the well the Company has had a number of discussions with industry
counterparties in relation to a potential farm-out of the licences,
and the Company is now working to formalise and launch an entirely
new farm-out process via Gneiss Energy. The farm-out will seek to
introduce a funding and operating partner for the next stage of
exploration activity in The Bahamas. The Company is in the final
stages of integrating the well information with its historical
dataset and expects to commence the farmout process upon completing
this work in the coming days.
Concurrent with the farm-out process, the Company intends to
exercise its right to renew the four southern licences into a third
exploration period at the end of the current second exploration
period (at the end of June 2021). The third exploration period will
last for three years, and will require a further exploration well
to be drilled before the period expires, failing which the licences
would be forfeited (i.e., "drill or drop").
Financially, the Company's most recent estimate, prior to
commencement of drilling, had estimated a total cost for
Perseverance #1 of up to $35 million. The Company is still awaiting
various final invoices relating to the drilling of Perseverance #1,
but the total cost of Perseverance #1 is presently estimated to be
approx. $45 million.
Over and above the pre-drill estimated well cost, the Company
firstly incurred an estimated $3 million of additional expenditure
on enhanced Covid-19 related processes beyond those which had been
planned for prior to commencement of drilling. These processes were
put in place to prevent virus infection at the installation, which
could have resulted in premature termination of drilling. Strict
adherence to these Company processes, including pre-deployment
screening and protocols resulted in the detection of 14
Covid-positive personnel who were denied access to the facility.
Enhanced protocols involved chartering planes and additional
helicopter transit flights to the budget projections, along with
significantly increased accommodation and staffing costs as staff
remained quarantined or retained on the drilling vessel for
considerably longer than planned.
Secondly, a considerable amount of non-productive time (and
hence additional cost of approx. $7 million) was added to the
overall drilling program as a result of mechanical debris in the
hole lost from the Managed Pressure Drilling (MPD) system requiring
side-tracking.
In aggregate, these additional unbudgeted items have added up to
an estimated further approx. $10 million of cost to the overall
program cost. Whilst the majority of Perseverance #1 costs were
incurred and paid prior to and during the course of drilling, work
is ongoing to agree the final amounts remaining to be paid with
contractors and suppliers arising from the additional unbudgeted
costs (including some disputed amounts and some refunds owing), and
to finalise a schedule for those payments over the coming
months.
Those Perseverance #1 costs remaining to be paid (noting that
some items are being disputed or negotiated by the Company), along
with the Company's anticipated but discretionary 2021 work programs
in Trinidad and Tobago and Suriname (as announced by the Company on
18 March 2021), renewal of the Company's Bahamas licences, and the
Company's 2021 overheads, will require a total estimated spend over
the balance of 2021 and into 2022 of between $25 million and $40
million. However, the eventual actual spend will ultimately be
dependent on a number of factors, many of which are at the
Company's discretion - for example, the extent and timing of future
development drilling at the Saffron project, which in turn is
dependent on the outcome of the drilling of Saffron #2, expected to
commence in mid-May 2021.
As at the beginning of March 2021, the Company had current cash
and unconditionally committed cash resources of approximately $13
million, and a potential additional $14 million available under the
Company's conditional convertible note facility (the drawn down of
which remains subject to satisfaction of various conditions). The
Company also expects, dependent on oil price and production
volumes, to generate a level of surplus cash from increasing
production through the course of 2021. The potential prepay
facility (as announced by the Company on 18 March 2021), and any
proceeds from a successful farm-out process would be in addition to
these amounts.
Uruguay
The Company has been advised by ANCAP, the Uruguayan state-owned
oil and gas company, that the signing of the OFF-1 contract
presently awaits presidential approval, which has been delayed due
to the Covid-19 pandemic situation. The Company expects the formal
contract execution within Q2 2021, and will thereafter commence
initial desk-top and technical work.
In the interim, technical work undertaken independent of the
Company by ANCAP has sought to highlight exploration prospectivity
across the 15,000 km(2) licence area. This involves detailed
mapping of several play types and prospects, notably the syn-rift
play potential within the BPC OFF-1 block. The prospect and lead
screening includes the specific identification of the Lenteja
prospect with a P(50) estimated ultimate recovery volume (EUR) of
1.359 billion barrels and an upside case of several billion barrels
recoverable (source: ANCAP 2021), located in just 80 meters of
water. This volume estimate aligns well with the earlier guidance
provided by BPC of the potential within its OFF-1 licence area in
excess of a billion barrels.
As previously advised, the Company expects near-term activities
in Uruguay to be low-cost, and whilst there is no drilling
obligation during the initial four-year exploration term, the
Company will be working to confirm these attractive volumetrics and
mature a range of drillable prospects from reprocessed and improved
2D seismic imaging that has revealed new exploration upside
previously unable to be identified due to poor data quality.
Regulatory Statements
In accordance with the AIM Note for Mining and Oil & Gas
Companies, the Company discloses that Randolph Hiscock, BPC
Technical Lead, 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
Gneiss Energy - Financial Adviser Tel: +44 (0) 20 3983
Jon Fitzpatrick / Paul Weidman / Doug 9263
Rycroft
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 onshore in Trinidad and
Tobago, and Suriname, and offshore in the waters of The Bahamas and
Uruguay. In Trinidad and Tobago, BPC has five (5) producing fields,
two (2) appraisal / development projects and a prospective
exploration portfolio in the South West Peninsula. In Suriname, BPC
has on onshore appraisal / development project. BPC's exploration
licence in each of Uruguay and The Bahamas are highly prospective,
and offer high-impact value exposure within the overall portfolio
value.
BPC is listed on the AIM market of the London Stock Exchange. www.bpcplc.com
ENDS
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